This week, Mastercard received several new blockchain patents. The financial services giant continues its trend towards adopting blockchain technology, but at the same time it expresses open opposition against Bitcoin (BTC) and other cryptocurrencies. But this may change, thanks to a particular patent that has caught the company's attention.
What Did Mastercard Obtain?
One of his new patents granted on Thursday by the US Patent and Trademark Office (USPTO), outlines a system that facilitates anonymous transactions through a blockchain network. Mastercard applied as such for this patent for the first time in December 2016.
According to Mastercard, the transparent nature of ordinary blockchain transactions is an obstacle to the adoption of this technology in daily payments. This is true to some extent, both for businesses and consumers.
For example, suppose an individual wants to buy a gift for a loved one without the recipient being informed of the details of the transaction. As a result, most traditional companies would not be very willing to provide their competitors and other third parties with real-time data, such as transaction volumes. For these cases, a technical solution is required whereby an entity can participate in a transaction in which the details of the transaction are publicly disclosed to ensure accountability and trust in the data.
In the same way, anonymity and the inability of others to trace individual transactions or volume information on the part of the transaction are also required. This allows the information of both parties of a transaction to be safeguarded to meet the confidentiality needs of each of the entities involved.
Zcash already includes features that improve the privacy of blockchain transactions, but Mastercard now wants to implement anonymous transactions through a third-party processor.
A full class of cryptocurrencies has made anonymous transactions their main objective, with the most prominent privacy coins, such as Monero (XMR) and Zcash (ZEC). Bitcoin's Lightning Network (LN) also promises to improve privacy once it is more widely adopted.
Mastercard aims to achieve this without the use of a public cryptocurrency, and perhaps in a way that provides law enforcement with the ability to trace illicit transactions, even though this has not been specifically addressed in the patent.
While cryptocurrencies facilitate peer-to-peer transactions, the system proposed by Mastercard still relies on a third-party processing server which, in this case, maintains a database of unique entity profiles. Along with the identification information, each entity's profile includes a string of secret data.
After receiving the transaction details of a business, the processing server creates two hash values. The server first hash the details of the transaction, then creates a second hash value by combining the first hash with the secret value of the entity's profile. The hash value can be published in a blockchain or other type of distributed ledger to test the integrity of transactions without revealing their specific details.
Mastercard has won a variety of blockchain patents in the last semester. One of these patents, awarded in May 2018, uses blockchain to manage coupon authentication and reduce coupon fraud. Another patent, granted in June 2018, aims to lower prices and increase the efficiency of travel itinerary bidding.