MasterCard wants to introduce a cryptocurrency reserve system!

MasterCard, one of the largest credit card companies besides VISA, wants to build a reserve bank for cryptocurrencies. If she succeeds, she leads the principle Bitcoin into absurdity.

The minimum reserve system

The minimum reserve system, also known as the fractional reserve system, provides that a bank has only a portion of its customers’ bank account. So if all customers wanted to cash their bank accounts at the same time, the institutions would be in serious trouble. So it is possible to extend the money supply over the existing reserve. This ultimately leads to the fact that you can transfer the ownership rights to the respective money quickly. So you can pay relatively quickly.

The principle Bitcoin

Bitcoin and other cryptocurrencies work so they do not support this system. When Bitcoin changes ownership, they leave Person A’s Bitcoin wallet and are credited to Person B’s Bitcoin wallet.

The absurd

A minimum reserve system for cryptocurrencies would sweep the whole idea behind Bitcoin & Co. into the absurd. For a decentralized monetary system without a central depositary, which is also deflationary, should just counteract the uncontrolled increase in the money supply.

The approach of MasterCard

But as can be seen from a patent application by MasterCard on October 25th, the credit card company wants to do just that. In this context, MasterCard states:

“While blockchain currencies can often provide security [in questions of anonymity] to the payer’s information, this security may be limited for the payees, especially due to blockchain limitations. For example, it often takes a very long time, about ten minutes, to process a blockchain-based transaction, since the computer processing time is […] significant. Conversely, traditional Fiat payment transactions handled through payment networks often have processing times measured in nanoseconds. “

In this case, the solution from MasterCard would be to switch between people and cryptocurrencies as an intermediary and – to increase the speed of transactions – to take over the transfer.

Now it may well be true that the average transaction duration of Bitcoin does not (yet) come close to Fiat currencies. But solutions like the Lightning Network are currently working on this problem – and doing without an intermediary.

The advance of MasterCard may seem surprising, but the company had recently warned of the dangers of crypto currencies and ICOs.

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Categories: Crypto Currency

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