Mastercard Catching AMEX With Similar Blockchain Patent & IMF on Central Bank Digital Currency

A positive night in the world of cryptocurrency sees the global cryptocurrency market cap at $335 billion up $4 billion, Bitcoin up $13 to $7553 and Ethereum also up, rising by $18 to $583.

Mastercard have gained themselves another blockchain related patent for a system to combat coupon fraud and improve customer targeting for merchants promoting offers and discounts. The concept essentially ties coupons to a blockchain so when a coupon is redeemed by a customer, the coupon can be authenticated and the customer can also be verified as being entitled to the discount. After a successful transaction the coupon address is re-categorized as “burned” to prevent multiple redemption. The improved security will give confidence to merchants wanting to issue higher value coupons – currently a sticking point for many in the industry. Just last week American Express announced a pilot of a very similar system based on a Hyperledger blockchain with the online merchant Boxed. It would appear there is now little doubt in the minds of most of the major payment processors that blockchain technology can not only reduce fraud substantially, but it really is the future of transaction processing at speed whilst also adding significantly more potential revenue channels. One has to wonder if the soon-to-be dinosaurs over at VISA are going to realise the need embrace the rapidly changing world of banking and payment processing technology or just fade away into the past whilst they continue to rest on their laurels.

The concept of a “Central Bank Digital Currency” or CBDC is in the headlines again today – so far this week we’ve seen the Bank of England release a working paper in which the realization dawns on them that cryptocurrency service providers could pose a threat to the profitability of traditional commercial banks, Hong Kong announced yesterday they won’t be implementing a CBDC for the time being at least citing their efficiency and transaction processing abilities are sufficient for the moment. The Deputy Director of the International Monetary Fund (IMF), Dong He has released an article covering 3 of the major points on the subject. In the first instance he suggests Central Banks should be striving to make FIAT currencies better (something central banks worldwide should have been doing anyway). He then goes on to state regulation over cryptocurrencies should be in line with traditional FIAT currencies with respect to anti-money laundering etc. (KYC and AML is spreading quickly across the world of crypto as we all know). Lastly, He suggests central banks could consider issuing CBDCs to “make their [FIAT] money more attractive for use as a settlement vehicle” citing the potential reduction in transaction costs and processing time. Unfortunately Mr He does not provide any detail as to how that could or should be done, something that needs considerable planning given that despite several different attempts to produce a pegged currency of any kind have not worked out very well to date, and many in the pipeline are just ridiculous to say the least.

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Peer Mountain (PMTN)

 

Created: Friday, June 1, 2018

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