MasterCard Proposes System For Speeding Up Cryptocurrency Transactions.
MasterCard – yes, the credit card company MasterCard – just released a proposal outlining how to speed up cryptocurrency transactions. As highlighted by CNBC earlier today, MasterCard’s system involves linking accounts holding fiat currencies and cryptocurrencies, allowing crypto transactions to be completed in “nanoseconds.”
The document was published by the US Patent and Trademark Office. This wasn’t some spur of the moment proposal published online by MasterCard. Instead, it’s a legitimate protocol designed to enhance the value of cryptocurrencies.
MasterCard’s proposal would speed up cryptocurrency transactions by linking accounts that hold both fiat currencies and cryptocurrencies. The MasterCard proposal mentions that long transaction times – like bitcoin’s 10 minute transaction times – are a barrier preventing the mass adoption of cryptocurrencies. Fiat payment transactions can be done in nanoseconds, so the average user has little incentive to use cryptocurrencies.
“This wide difference puts payments using cryptocurrencies at a big disadvantage, so merchants are wary about accepting blockchain currency and individuals may also have trouble proving their identity and ownership of a wallet,” explained Bob Pisano of CNBC.
How Does MasterCard’s System Work?
MasterCard would offer “a new type of user account that would allow a user to do transactions using cryptocurrencies but pegged to a fiat currency.”
That “fiat currency” would presumably be your credit – like the credit on your MasterCard. In other words, MasterCard would guarantee the value of the transaction using the credit on your account while still processing the payment in cryptocurrencies.
This transaction would use the payment system and security features of MasterCard, but the transaction would be completed in cryptocurrencies. Merchants could be guaranteed of receiving stable value, while users would be able to spend their crypto as they normally would.
The document also mentions that MasterCard can make cryptocurrency payments significantly more secure because MasterCard can use its existing risk algorithms to evaluate the potential for fraud – algorithms that aren’t currently available to blockchain networks.
“This is the first decent news for cryptocurrencies in a while,” explained Pisani earlier today. Pisani referenced the significant uptick in crypto markets that took place earlier on Tuesday, with coin prices up 10% or more across the board.
MasterCard’s proposal sounds similar to a stablecoin: the cryptocurrency in your account would be pegged to a fiat currency value, allowing you to spend crypto at a stable rate while still enjoying the benefits of a crypto transaction. MasterCard is guaranteeing that the payment is made instantly using the credit in the user’s account.
It’s an interesting concept from a surprising company. Is MasterCard positioning itself to be the biggest crypto payment processor in the world today? If the proposal is implemented, it would vastly enhance the usability and accessibility of cryptocurrencies overnight – which is why this MasterCard news is so exciting.