Mastercard ready to authorize cryptocurrency payments
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In the biggest sign yet that crypto-currencies are here to stay, global credit card The giant Mastercard has announced that it will allow people to send and receive payments using these digital coins by integrating them into its network this year.
Here’s the truth about this revolutionary announcement and what it means for the future of payments.
The cryptocurrency market is growing rapidly
The past year has been very good for cryptocurrencies. Interest in these digital tokens has grown and increased their value by huge margins.
The price of Bitcoin has risen from $ 4,800 (£ 3,500) in March 2020 to a record high of over $ 49,000 (£ 35,500). Other crypto assets have also seen big gains over the past 12 months.
Forecasts for the future of the crypto market remain bullish, with many analysts expecting it to rise even further in 2021.
Mastercard to start supporting cryptocurrency payments
Mastercard already allows customers to use their cryptocurrency holdings for transactions. However, these transactions are not done on the company’s network but through intermediaries who convert cryptocurrencies into traditional currency at the end of each transaction.
Mastercard is now going further by integrating certain crypto-currencies into its network.
This means that customers will now be able to receive and make direct payments with cryptocurrencies through the Mastercard network, which should make transactions both faster and cheaper.
Strict criteria for cryptocurrencies
It is not yet clear which cryptocurrencies Mastercard will support. The company says it is looking at “crypto assets that offer reliability and security.”
He says crypto assets must meet these four criteria to be considered:
- Stability as a means of payment
- Rigorous customer identification processes
- Full compliance with local laws and regulations
- Effective customer protection and confidentiality
Unfortunately, few existing assets meet these requirements.
Bitcoin, for example, is unlikely to make the cut because it violates a few of Mastercard’s criteria. The company said, “To reach our network, crypto assets will need to provide the stability people need in a vehicle to spend, not to invest.”
Bitcoin’s extreme volatility makes it impractical as a daily currency. Most people see it more as an investment or store of value than a medium of exchange. This is also the case with other major cryptocurrencies like Ethereum and Litecoin.
With that in mind, Mastercard is likely to focus on stablecoins like Tether (USDT) and USDC Coin (USDC), which are crypto assets whose value is tied to that of traditional currencies like the US dollar.
Many other companies are embracing crypto as well
Mastercard joins several other large companies that have already embraced cryptocurrency.
Elon Musk’s Tesla Inc recently revealed that it has invested around $ 1.5 billion (£ 1.1 billion) in Bitcoin. The company will also soon start accepting cryptocurrency payments for its cars.
And before that, PayPal launched a service that allows users to buy, hold, and sell cryptocurrencies.
Mastercard’s main rival, Visa, has also said it could add crypto payments in the future.
What Mastercard’s Cryptocurrency Support Means for the Future of Payments
If Mastercard follows through with its plan, it will give cryptocurrency more credibility as a legitimate payment method.
We can expect to see the use of digital assets grow and cryptocurrency payments become even more mainstream.
That said, there are still a lot of unknowns, not the least of which is the reaction of the market. After all, a lot of people are still beware of cryptocurrencies.
The big question now is whether Mastercard’s support for cryptocurrency payments can help remove some of the skepticism plaguing digital assets and pave the way for mass adoption. We will have to wait and see.
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