On Tuesday, it was announced that Mastercard had just secured a patent that will allow for the financial services firm to link crypto assets and fiat bank accounts.
Mastercard Wins Crypto-Related Patent
Firstly, Mastercard brought attention to the fact that there has been an increase in cases where consumers, who “value anonymity and security,” use cryptocurrencies instead of government-issued fiat.
However, the patent expressed worries about how blockchain systems can be relatively inefficient and questionable, with companies/processors accepting crypto payments not knowing who is at the other end of the transaction.
Additionally, the patent called out the inefficiency of the Bitcoin blockchain, pointing out that Bitcoin transactions take ten plus minutes for a block confirmation, while centralized digital payments are nearly instantaneous.
Drawing attention to the Bitcoin block time, the patent document noted:
It often takes a significant amount of time, around ten minutes, for a blockchain-based transaction to be processed, due to the computer processing time and resources required to verify and update the blockchain. Conversely, traditional fiat payment transactions that are processed using payment networks often have processing times that are measured in nanoseconds.
Details on the solution to this problem were rather scant, with the patent not outlining the exact method in which Mastercard could address the aforementioned issues.
However, the patent did mention the management of “fractional reserves of blockchain currency,” indicating that the financial service firm is looking to allow Mastercard consumers to pay for items with their credit card backed by a fraction of a consumer’s crypto holdings.
CNBC also pointed out that this new system would help to secure crypto payments, and would “use evaluating risk algorithms (used in credit cards) to evaluate the potential for fraud.”
Writing to CNBC, Seth Eisen, Mastercard’s senior vice president of communications, noted:
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.
Eisen later added that just because a patent was filed and subsequently accepted, doesn’t guarantee that Mastercard will be bringing a fiat-crypto product to market any time soon.
Tom Lee Sees Mastercard News As A Bullish Signal
Nonetheless, Tom Lee, the co-founder and head of research at Fundstrat Global Advisors, has called this patent a bullish sign.
This should come to no surprise, as Lee has long been held as one of the most prominent Bitcoin bulls, calling for Bitcoin to hit $25,000 by the end of the year at least once every few months.
Speaking on the CNBC ‘Fast Money’ segment, the Fundstrat analyst stated:
Something like the Mastercard news is postive becuase it’s really validating the idea that digital money, or blockchain-based money, is a valid form of transaction.
It isn’t currently clear what will result of this patent, but many cryptocurrency proponents are hopeful that a gargantuan firm like Mastercard will finally release a product related to cryptocurrencies or blockchain-related technologies.