Tuesday, May 28, 2024
HomeCryptoMastercard acts as a link between cryptocurrencies and banks.

Mastercard acts as a link between cryptocurrencies and banks.

The new Mastercard program enables banks to offer crypto trading.
I see people with credentials.

This week, Mastercard announced a program to assist financial institutions in offering cryptocurrency trading. It is the latest effort by payment processors to bring traditional, “centralized” finance giants into the crypto space, and they are unwelcome visitors for blockchain purists.

Visa partnered with cryptocurrency exchange FTX to launch crypto debit cards in 40 countries last week.

This massive bank invasion is a morale-killer for crypto enthusiasts who wish to keep the industry as “decentralized” as possible. Many definitions of both “cryptocurrency” and “blockchain” include the literal phrase “independent of centralized institutions,” including banks that process transactions. And an entire subsector, decentralized finance, has emerged to defend this ideal vision (DeFi).

Bitcoin, the first cryptocurrency, was created in response to the widespread bank failures that occurred during the 2008 financial crisis. Its original intent was to facilitate online transactions without banks or other intermediaries.

Using a crypto-loaded Visa to shop the online Reformation sale is equivalent to eating soup with a lollipop. It functions, but it’s a bit odd.

The ice cream soup of arguments follows.

Skeptics argue that the fully decentralized dream is about as realistic as good-tasting candy corn (don’t @ me) and that the involvement of major financial institutions is essential for crypto to become as mainstream as Ed Sheeran.

In the past year, these TradFi (traditional finance) proponents have become increasingly vocal as “crypto winter,” the cryptocurrency equivalent of a recession, has set in. The prices of major cryptocurrencies have plummeted since their peaks in 2021, and prominent crypto companies have laid off employees, filed for bankruptcy, and completely failed. Melody Brue, a fintech analyst at Moor Insights & Strategy, told Protocol, “This volatility is what will cause consumers to feel safer with established financial institutions.”

Looking ahead…

If banks utilize Mastercard’s crypto integrations, they will compete with cryptocurrency exchanges such as Coinbase.

LATEST

EXPLORE