It is impossible to ignore the impact of cryptocurrencies in nowadays financial scenario. Currently, many financial giants are adopting blockchain-based solutions from their own perspective, seizing advantages such as privacy, high processing speed, low costs, and immutability.
This much-welcome tendency was consolidated even more after a recent announcement made by financial juggernaut Mastercard, which decided to integrate cryptocurrencies onto its network.
Is this a signal to purchase Bitcoin or just more noise? Let’s find out!
Blockchain vs Centralization
The decentralized structure of blockchain-based assets allows users to make transactions without the need for any sort of middlemen, including banks and other traditional entities of the sector.
In the beginning, most companies in the traditional segment of finance were doubtful about cryptocurrencies.
The main viewpoint at that time was that an alternative system based solely on P2P (peer-to-peer) transactions was somewhat disruptive or unfeasible to supply the segment’s huge demand. Fortunately, the scenario is changing rapidly.
What Led Mastercard to Make this Decision?
In early February, Mastercard announced its intention to offer support for some options of cryptocurrency on its network.
It is clear that Mastercard’s intentions are not based on an enthusiastic approach. The move is the result of an ever-growing demand for payments in crypto- a demand too huge to be ignored.
The network saw exponential growth in the number of users utilizing their cards to buy cryptocurrencies, a trend that increased even more with Bitcoin’s bullish tendency.
Plus, there is also a huge demand both to access and convert crypto assets into fiat currency, which is something Mastercard cannot ignore as well.
Hence, the finance giant announced that it is preparing its network to conceive and deliver new solutions based on cryptocurrency.
Which Cryptocurrencies Will Be Supported by the Network?
Right now, it is not clear what cryptocurrencies will be supported directly on Mastercard’s network. However, the official announcement was clear to state that the company will be very thoughtful about which crypto assets will be incorporated onto its network.
Plus, they stated that not all cryptocurrencies available in the market will be supported on the Mastercard network.
The reason is that many of the hundreds of cryptocurrencies circulating nowadays do not meet the rigorous requirements of the company in terms of reliability and security.
According to the company, stablecoins are more regulated and can be considered more reliable, which indicates that digital assets like Tether may be strong candidates to get adopted in the first place.
Despite the innovative viewpoint that led Mastercard to adopt blockchain-based assets, their philosophy on cryptocurrencies is all about the customer’s choice.
Their goal is not to incentivize or recommend anyone to adopt cryptocurrencies. Instead, their approach is to enable users to move digital value as they please – either in the form of crypto or fiat currency.
What Are Mastercard’s Principles for Blockchain Partnerships?
Currently, the company is committed to bringing security, scalability, and effectiveness in terms of crypto payments using the same standard it has operated throughout the years.
Consequently, they have strict guidelines for adopting a cryptocurrency onto their network, including:
Strong consumer protection (focus on privacy and security for both sensitive data and transactions)
A level playing field for all stakeholders (network participants must be affected positively by these innovations, which includes financial entities, merchants, mobile network operators, etc.)
Full compliance with laws and regulations of countries in which the network operates (especially regarding anti-money laundering mechanisms)
Innovation Requires Partnerships
The giant is already working to provide its customers the option to utilize cryptocurrencies onto its network. The challenge now is to overcome the boundaries of proprietary methods unique to each digital asset.
According to Mastercard, adopting cryptocurrencies will also help the network to cut out inefficiencies and increase processing speed, as it will save merchants and consumers from having to constantly convert between cryptocurrency and fiat currency.
Although this innovative mechanism is not ready yet, Mastercard has teamed up with Wirex and BitPay to create crypto-based cards that permit users to transact using their cryptocurrencies.
In addition, the company is actively interacting with several central banks worldwide, as many of them have plans to launch their new digital currencies.
Using a solid experience in payment technology and advanced fintech, Mastercard created a test platform where banks can test their currencies in a simulated scenario.
Crypto enthusiasts all over the world are excited about the possibilities brought by Mastercard’s decision of adopting cryptocurrencies onto its network.
The reunion between Mastercard’s huge infrastructure and scalability with the disruptive advantages and decentralized nature of cryptocurrency will surely impact the world, opening a massive gateway for the mass adoption of blockchain technology.
Mastercard understands that an individual has the right to choose how its money will be moved in transactions, so the company wants to create more possibilities for buyers, shoppers, and merchants to buy/sell products and/or services using cryptocurrency.