MasterCard Promises to Offer Cryptocurrency Payments in 2021

There has been an incredible global response to blockchain-based cryptocurrencies over the past 24 months, mostly thanks to the rise, fall and rise again of Bitcoin.

Bitcoin led the charge in normalising digital currencies by grabbing the mainstream media’s attention with its meteoric rise to an all-time high of $44,000 BTC earlier this year. However, there is an unanswered question which MasterCard may soon resolve for us: “Which virtual currency will be the one to transcend investment status and become the leading daily transactional token?”

 The Future is Digital

Looking back in the months and years ahead February 10th, 2021, could very well become the day where we begin to see the world move away from fiat currencies and into a true global virtual economy.

This is thanks to the groundbreaking announcement by Raj Dhamodharan, Executive Vice President of Digital Asset & Blockchain Products & Partnerships, that MasterCard will begin supporting a select number of cryptocurrencies on their network.

Raj Dhamodharan noted:

“Our change to supporting digital assets directly will allow many more merchants to accept crypto. This change will also cut out inefficiencies, letting both consumers and merchants avoid having to convert back and forth between crypto and traditional to make purchases.”

This is the type of announcement that crypto-pundits have been waiting for, mainstream acceptance and support from a major player in the global economy. With MasterCard onboard, it is only a matter of time before VISA and other major banking institutions follow suite – which means that shopping on Amazon or even at your local supermarket using an approved cryptocurrency is a very real possibility in 2021.

MasterCard took the first steps towards a fully integrated crypto-fiat transactional ecosystem in 2020 when they partnered with Wirex and BitPay to launch crypto cards to facilitate limited transactions.

 Bitcoin Not A Likely Candidate

Despite most fans of cryptocurrencies being focused on the legend of Bitcoin, it is not likely to be one of the coins supported by the MasterCard network in its initial launch. This is due to MasterCard looking to support virtual currencies which can be used for daily transactions, with its limited supply and volatile valuations Bitcoin remains more an investment vehicle thank a transactional one.

Supporting this thought process Dhamodharan said:

“To reach our network, crypto assets will need to offer the stability people need in a vehicle for spending, not investment.”

To this end the digital currencies which MasterCard will begin to support on their network will have to meet the following four key criteria:

• The coinage must offer the consumer the same level of privacy and protection they’re used with their credit cards.
• They must adhere to strict compliance protocols such as Know Your Customer (KYC) to protect against illegal activities and fraud.
• They must follow all relevant local financial laws in the regions they will be made available.
• The coins on offer must be stable so that consumers can transact with them safely and with peace of mind on a daily basis.

While Bitcoin is fantastic when it comes to the security aspect of these requirements it fails to meet even the most basic requirements of stability, KYC and stability. The reality is that the coins that will make the cut for inclusion in Mastercard’s network will be stable coins where their value is based on existing assets and currencies, making them less “true cryptocurrencies” and more mere digital reflections of our current fiat currencies.

The Taming of the Wild West?

While mainstream financial gurus are cheering at the news there is a more cynical side of the industry warning that what we are seeing is not the growth of a true cryptocurrency financial system but rather a virtual skin of our existing fiat currency marketplace.

One of the core tenants of Bitcoin and its peers is the creation of a user-controlled crypto coin which lives on decentralised servers and is free from government oversight and control. While MasterCard is using blockchain technology their coins will comply with local government restrictions and be tied to “stable” commodities such as the US Dollar or even precious metals like gold.

This means that the digital currencies we transact with will not be the history-making cryptocurrencies who are looking to subvert the status quo. Those will remain the realm of investors, free thinkers, and dreamers, for now.