On October 25, the US Patent & Trademark Office published the Mastercard patent application. An American financial giant, Mastercard, developed a system “for linkage of Blockchain-based assets to fiat currency accounts”. SIMEX explains what does it mean for the crypto community and the idea of the alternative financial system.
Earlier this year, Ajaypal Banga, the Mastercard CEO, called cryptocurrencies as “junk”. Now the transnational financial company pays a special attention to crypto assets and develops the new system to simplify crypto-fiat transactions.
Mastercard's analysts argue that customers are “forced to wait a significant amount of time for a blockchain transaction to be conducted”. The patent application contains measures to increase the speed of crypto-related transactions by developing a “system for managing fractional reserves of blockchain currency”. Basically, Mastercard aims to introduce traditional fractional-reserve banking practices which form a basis of the modern banking institutions.
Ironically, cryptocurrencies were created as a decentralized alternative to the traditional financial system. Currently, Bitcoins are sent from one owner to another without third parties involved. Mastercard wants to become an effective financial intermediary which speeds up the transactions with a help of fractional reserves of Bitcoins.
Time and cost-effective transactions of both crypto and fiat assets can open a window of opportunities for crypto traders and investors. Probable integration of Blockchain-based currencies to the Mastercard online and offline services can boost further adoption of cryptocurrencies as a reliable mean of payment.
On the other hand, Blockchain might be at risk of losing the original idea of the creation of the decentralised financial system as an alternative to the debt-based banking.