MasterCard, the US-based financial services giant based has forged new ways to bring in the fiat-currency banking principles into cryptocurrency dimension and has even applied for a patent with respect to this use. Earlier this month, the credit card giant had won another patent for the blockchain technology vertical.
The new exploration by MasterCard could well begin the process of cross-financial services being provided by the giant financial services players.
Crypto and Fiat storage for Merchants
As per the patent application details, the core principle of the patent developed by MasterCard is to allow merchants to store crypto and fiat simultaneously and use blockchain currencies seamlessly.
The exact financial method to arrive at this process is called the “managing fractional reserves of blockchain currency.”
Theoretically, this principle within the traditional banking system is a fallback principle and has come to surprise experts in this field. This method essentially means that there is no proof of the lender owning or having funds to correspond with the holdings the customer holds in promise, and this is what bitcoin has all along been using.
The application for this patent reads as follows: ”The use of traditional payment networks and payment systems technologies in combination with blockchain currencies may provide consumers and merchants the benefits of the decentralized blockchain while still maintaining the security of account information and provide a strong defense against fraud and theft.”
Likely to end exile of FIIs from cryptocurrency markets
MasterCard and its ilk have thus far remained away from mainstream cryptocurrency markets allegedly on the lack of stable processes which allow institutions of their stature to operate.
But in the past two days, VISA’s CEO has admitted that the days are not too far before organizations of their caliber begin to offer crypto services, albeit with red-flags of high risk. It is expected that MasterCard too could offer similar flagged services ensuring their investor clienteles are aware of the risks associated with trading in cryptocurrencies.
For years the traditional banking system has developed structures for operations ensuring there is optimized security and safety in all aspects for the institutional organizations.
Apparently, the crypto industry does have some of the banks which peg to the US Dollar notionally, as in the case of Noble Bank. In the latter’s case, which was the reserve bank for the stablecoin Tether (USDT) it notionally pegged to the US Dollar. The Bank had claimed that it had not relied on this banking principle of – fractional reserve – during the tenure of its services. The Bank had stated repeatedly that for every one dollar it held an equal number of USDT token. However, the reports by Noble Bank have not been publicly audited thus far.
It has to be said that MasterCard’s patent-spree has triggered an unusual excitement among crypto netizens; simply because it could well be a harbinger of ‘financial systems’ legitimization of the virtual assets and the long-term adoption of these decentralized ledger currencies in mainstream economics!