Bitcoin and credit cards are not a happy marriage. Various banks prevent clients from buying cryptocurrency with a credit card. Mastercard is taking a very different approach. Its new patent allows the company to manage fractional reserves of virtual currencies.
What Is Mastercard up To?
Although Mastercard can’t force banks to let consumers buy Bitcoin with a credit card, the company can explore other options. A new patent has been granted to do exactly that. This new patent lets the card issuer manage reserves of blockchain currencies. As such, cryptocurrencies can be used to fund payment card balances. That is, assuming this patent is ever turned into a working commercialized product.
Potential ramifications of this patent are subject to speculation. In theory, Mastercard holders can use cryptocurrencies as legal tender through this new technology. This would be made possible regardless of the legal status associated with cryptocurrencies. For consumers who value security and anonymity, these options can be well worth exploring.
Using digital currencies is not without problems and potential issues. Without sufficient transaction processing capability, this venture will never become a big success. Bitcoin and Ethereum are bound to get some major scaling improvements soon. Those should help address the processing scalability concerns once and for all.
Commercialization Won’t Be Easy
Mastercard is heading down an interesting path with this new patent. Allowing users to pay instantly for goods with a credit card by spending cryptocurrency is a peculiar decision. Given Visa’s somewhat negative stance toward Bitcoin, one would expect the same from competitors. Clearly, that is not the case. It remains to be seen if and when Mastercard aims to put this technology to good use. Mastercard Senior VP for communication Seth Eisen adds:
We’re consistently looking at ways to bring new thinking and new innovations to market to create value for us and our customers and cardholders. Patent applications are part of that process, taking steps to protect the company’s intellectual property, whether or not the idea ever comes to market.
It is another sign of how financial firms view cryptocurrency. Whereas there was lots of opposition a while ago, things are improving in favor of Bitcoin. A positive view on digital money and blockchain assets will pave the way for broader adoption. This news comes at a crucial time for the industry. Yesterday’s bullish trend shows there is lots of positive momentum waiting to materialize.
What do you think about Mastercard’s new patent? Let us know in the comments below.
Images courtesy of Shutterstock.