One thing cryptocurrency enthusiasts usually forget to mention is the fact that blockchain-based currencies such as Bitcoin are disadvantaged when it comes to payment processing times. This is the real reason why even though Bitcoin (and other cryptos) made in-roads into the payments services they are still miles from being the go-to payment methods for instant purchases. Mastercard, however, seems to have some intention of solving this problem.
The payments technology company won a patent (in the U.S) which contains a method for speeding up payments facilitated. This is a sharp u-turn on MasterCard’s part as just two months ago Mastercard had banned the use of their networks to pay for cryptocurrencies.
How do they plan to turbocharge blockchain transactions?
Nothing new under the sun…
According to Coindesk, Mastercard believes they can achieve faster transaction times by using a new account type. These special accounts would be able to perform cryptocurrency transfers using existing systems that are powering fiat (‘normal’ currency) transfers. Each of these accounts will be linked to a set of profiles and these profiles would be linked to three things for each user;
- fiat currency
- a blockchain currency amount
- an account identifier and address
The outlook on Cryptos is shifting…
It’s quite interesting how traditional finance giants are warming up to cryptos. When the Bitcoin craze was in full force during the tail-end of 2017 many banking types were unsettled and I’m sure you heard that Bitcoin is a bubble that will burst.
Though Bitcoin has indeed lowered in price drastically since then, I don’t think the bubble has burst. I would say people are finally taking a more objective look at the benefits and demerits of cryptos. Considering the stance taken by most very few people thought major US Federal Reserves would start tracking cryptos, but that’s exactly what is happening. If Mastercard can successfully pull this off cryptocurrencies will have overcome what most consider to be their biggest hurdle.
Another one of these hurdles that is constantly brought up is risk. Mastercard is trying to have that sorted out as well as they think this system will help cut down on the risk of fraud. As mentioned earlier, the system would link a user’s crypto account to a fiat account and this would take away anonymity and all together end the ‘criminals love cryptocurrencies because they can’t be tracked’ debate.
In relation to security MasterCard’s patent states:
payment networks may be able to evaluate the likelihood of fraud and assess risk for blockchain transactions using existing fraud and risk algorithms and information that is available to payment networks, such as historical fiat and blockchain transaction data, credit bureau data, demographic information, etc., that is unavailable for use in blockchain networks
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