The U.S. Patent and Trademark Office recently granted a patent to Mastercard that marked the credit card issuer’s move into the world of cryptocurrencies. The patent is centered on the idea of linking blockchain-based assets, like bitcoin and litecoin, to fiat currency accounts. The patent suggests that the credit card company may one day offer an ability to pay cryptocurrency-denominated transactions with a card.
The move would allow for cryptocurrency transactions—including buying in bitcoin—via a credit card. Merging the two technologies would give blockchain-based transactions the convenience of modern-day credit card speeds to those already in possession of cryptocurrencies. One of the biggest hurdles for blockchain transactions has been processing speed. The new patent obtained by Mastercard may change all that, giving the near-instantaneous ability to process a traditional transaction to blockchain purchases.
Transaction time has been one of the major roadblocks in bringing cryptocurrencies into the mainstream. Currently, users can expect an average transaction time of 78 minutes when using bitcoin. Mastercard’s entry—and subsequent patent—into the cryptocurrency world could suggest that it’s working on technology that will eliminate this problem.
Although the patent information is available, it’s not yet clear how the ultimate technology will be unveiled or when. The patent suggests that Mastercard’s current plan would tie cryptocurrencies to an existing currency—like the U.S. dollar—to make the faster transactions possible. This may suggest that cryptocurrencies would then not be fully “independent” of other currencies when it comes to credit card transactions.
Currently, Mastercard users can only use government-denominated currencies for purchases. A move by Mastercard to not only enable blockchain purchases with credit cards, but to use the patent to speed up the process of these transactions, would be a landscape-shifting moment in the development of cryptocurrencies as a viable payment alternative.
Mastercard’s patent represents an investment of time, money and energy by one of the world’s largest credit card companies. Its interest in cryptocurrencies suggests not only that credit card companies believe that cryptocurrencies have a strong future, but that they need to make inroads into blockchain technology to facilitate expanding consumer demands. While cryptocurrencies are regarded as volatile, many cryptocurrency advocates still enjoy the convenience and privacy that come with the use of blockchain-based currencies.
The move also points to a growing mainstream acceptance of cryptocurrencies. This has not always been the case. In fact, just last month, Wells Fargo announced that it would ban the purchase of cryptocurrencies with its credit cards. Citing cryptocurrency as a “volatile investment,” the company believed the decision to be in line with company policies. This echoes top investor Warren Buffett’s sentiment that cryptocurrencies aren’t a valid investment, but more of a speculative venture.
Depending on what Mastercard chooses to do with its newly granted patent, cryptocurrency proponents may find themselves walking back some opinions, including one that contends cryptocurrencies could bring on the end of credit cards. With news of the Mastercard patent, the next several months could change that perception. Depending on how the credit card company rolls out its new technology, cryptocurrency bulls may find that they have an unlikely ally in Mastercard.