Crypto Credit Card? MasterCard Wins Blockchain Payments Patent
MasterCard has moved one step closer to developing a cryptocurrency-backed credit card after one of its patents was approved by U.S. regulators.
According to the filing with the U.S. Patent and Trademark Office, MasterCard has received the green light to develop a proprietary method for “managing fractional reserves of blockchain currency.” The new system will link blockchain-based assets such as bitcoin and Ethereum to fiat currency accounts, which virtually enables users to pay for goods and services in cryptocurrencies using their credit cards.
The approval was granted on Tuesday, more than three years after it was originally filed.
The document details MasterCard’s intent to create a system that could theoretically speed up cryptocurrency transactions and encourage more people to adopt digital assets for everyday usage. Until now, crypto assets have made excellent stores of value but payment options remain limited as blockchains address scalability issues on their networks.
MasterCard identified all the way back in 2015 how users were beginning to favor cryptocurrencies over traditional payment methods due to anonymity and fraud prevention. That being said, the patent also highlights limitations in using cryptocurrencies for everyday life, including the time it takes to process transactions.
Merging Crypto and Traditional Payments
While no products have been brought to market as a result of the patent, MasterCard believes that the proposed system could enable users to retain the benefits of distributed ledgers without sacrificing the convenience of traditional payment systems. For merchants themselves, such a system would enable them to accept cryptocurrency payments without the risk.
Nevertheless, bitcoin adoption among businesses has grown significantly since the bull market began in early 2017. Hundreds of thousands of merchants worldwide already accept BTC as a form of payment, including Overstock, Microsoft and Expedia.
Japan – a country that recently recognized digital currency as a form of payment – has also witnessed an upsurge in merchant adoption and acceptance of bitcoin.
Behind the scenes, blockchain companies are looking to bring new scalability to their networks. Back in March, a newer version of the Lightning Network went live following a yearlong consultation. The upgrade is said to enable faster blockchain payments without confirmation bottlenecks.
With respect to MasterCard, it is unclear whether the company will move forward with its new patent. In an email conversation with CNBC, senior vice president Seth Eisen that the application is a way for the company to safeguard intellectual property in pursuit of new innovations:
“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.”
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.