On February 10, Mastercard announced that it would start supporting some selected cryptocurrencies in its payment network. According to the payments giant, the inclusion of cryptocurrencies will allow customers to “save, store and send money in new ways”, while opening up new opportunities for merchants.
The announcement came after a presentation on January 30, in which Visa reaffirmed its plans to continue pushing for cryptocurrency payments and access ramps, showing that the company has long-term plans for the sector. With the two credit card giants on board, it’s safe to say that Bitcoin (BTC) is no longer just an experimental form of “money on the Internet”, but a new class of assets of its own – one that is here to stay.
Mastercard and Visa’s foray into the cryptosphere is just one example of the growing flood of conventional technologies and payment companies that probe Bitcoin as an investment, form of payment or investment vehicle, but these two companies represent billions of payments made every year.
So what does this mean specifically for Bitcoin and for cryptocurrencies in general? Some are saying that the industry may not be there yet, but that this latest development could be the beginning of conventional adoption. Tone Vays, Bitcoin analyst and organizer of the Bitcoin conference “Unconfiscatable”, told Cointelegraph:
“Bitcoin has not yet entered the early adoption phase, it is still in the speculation / investment phase. The biggest news around, Elon Musk & Tesla buying Bitcoin as a strategic reserve instead of keeping money. Mastercard and Visa are interested in the first step towards real adoption by users, but once users really feel comfortable using / spending / receiving Bitcoin via Lightning, they slowly begin to eliminate Visa and Mastercard from their lives . “
The “Gatekeeper” effect: let the bulls in
When Mastercard’s announcement was made, Bitcoin was trading at around $ 46,400. Since then, the cryptocurrency has continued to grow to reach a new historical record above $ 58,000, with the news undoubtedly influencing.
In addition, in the week following the announcement, the first exchange-traded Bitcoin fund in North America was approved by the Ontario Securities Commission. In your first hours of trading, he approached $ 100 million in trading volume.
A second Bitcoin ETF was then approved by the Ontario regulator and is expected to reach $ 1 billion in assets under management until the end of February. In addition, the world’s largest custodian bank, Bank of New York Mellon, has revealed that it will launch a cryptocurrency custody service. And then, the largest asset manager in the world, BlackRock, confirmed that it has started to “tinker” with Bitcoin.
In addition, all eyes are now on Bitcoin, both among traditional finance titans and Reddit retail investors. Ben Zhou, CEO of Bybit, told Cointelegraph that “Twitter Crypto seems to be the happiest corner of the social platform, with laser eyes and whatnot catching everyone, from lush crypto accounts to the world’s richest man and two members of the US Congress, “adding more:
“This set of positive signs is fueling retail demand and creating a virtuous cycle. And we are seeing the increase in interest reflected in Bybit’s trading and fiat-to-crypto volumes. “
Mastercard’s announcement came at a time when the number of confirmed payments per day on the Bitcoin network has been steadily growing. The number of payments on the network is defined as the number of recipients who receive funds in a transaction.
The metric highlights the value of the Bitcoin network as a safe way to transfer funds without third parties. In the past 12 months, confirmed payments per day have gone from an average of around 500,000 to a peak of 869,000.
What this means for cryptocurrencies
So what do Mastercard’s and Visa’s efforts mean for the crypto world? In the fourth quarter of 2020, there were 246 million Mastercard credit cards in the United States and 966 million worldwide, while Visa informs which has 3.5 billion cards in use worldwide and that its network processes more than 140 billion transactions per year.
Both companies have different plans on how they will take cryptocurrency payments into the world of credit card transactions, and several questions have not been answered by their ads, including how exactly the integration will work.
While Mastercard’s announcement made it clear that cryptocurrency is hitting the net this year, it does not specify exactly when and what currencies will be available. The payments giant hinted in its announcement that stablecoins may be the first in line with its network, but that other currencies may follow.
In a blog post, Executive Vice President of Digital Assets and Blockchain Products and Partnerships at Mastercard, Raj Dhamodharan, suggested that the company will evaluate potential cryptocurrencies to include the use of its “principles for blockchain partnership” structure, which launched after leaving the Libra Association He emphasizes consumer protection, stability and regulatory compliance.
The integration of Visa and Mastercard into the crypto world is expected to facilitate the use of cryptocurrencies for daily payments, which can be considered a step forward in the search for cryptocurrency for mass adoption.
While it is unclear whether merchants will have to choose to accept cryptocurrency payments or whether those payments will be accepted by default, cryptocurrencies will essentially be available as a payment method to more than 60 million merchants worldwide. But the road to conventional adoption still has many bricks to lay. Arbel Arif, founder and CEO of Shopping.io – an online shopping aggregator that offers cryptocurrency payment methods to retail buyers – told Cointelegraph:
“It will be a long process with a lot of development and quality assurance. Especially with cryptocurrencies, which can seem to miss the target by being friendly. As for initial adoption at a mainstream level, it is a journey and a marathon. It is not a sprint. We will probably see more and more companies emerging in the coming months and years, announcing adoptions on a small level with cryptocurrencies before bigger plans are put into action. ”
An increase in demand may increase the tightening of supply that we have witnessed in the cryptocurrency markets and further help prices to rise. So far, however, Mastercard is working only with the Bahamas Sand Dollar, the world’s first central bank digital currency.
In an ad, the payments giant revealed a prepaid Mastercard that allows users to pay for goods and services with Sand Dollar wherever Mastercard is accepted worldwide. He hinted, however, that cryptocurrencies like Bitcoin will be used on his network in the future.
Crypto debit cards are out there
Visa and Mastercard have already worked with several cryptocurrency companies to issue cryptocurrency debit cards that allow users to pay for goods and services with their possessions to millions of merchants worldwide.
Coinbase, BlockFi, Binance, Nexo, Crypto.com and others have issued cryptocurrency debit cards, which generally include refund rewards in the form of cryptocurrency. Last year, Coinbase became a permanent member of Visa, and could even issue its own cards. Eric Stone, head of data science at data analytics firm Flipside Crypto, told Cointelegraph that many of these announcements will occur shortly, adding:
“I see this as part of the broader and inevitable influx of institutional interest and adoption of blockchain technology. Many other attentive space observers and I saw this type of news as a matter of “when”, not “if”. “
Crypto debit cards differ from regular Visa and Mastercard cards due to the exciting benefits offered to users, and cryptocurrencies themselves can act as a bridge between fiat currency exchange rates when traveling.
Most crypto debit cards are already compatible with mobile payment solutions, such as Apple Pay, Google Pay and Samsung Pay. You can manage which cryptocurrencies are used to pay through a mobile app, making it easier to choose what to spend.
These existing crypto debit cards, however, often have relatively high fees associated with processing payments and converting cryptocurrency assets to the fiat currency that merchants receive. In addition, some crypto debit card providers require users to wager large amounts of their own tokens to unlock the best rewards, but there are some advantages that crypto projects bring to the table. Finally, only citizens of a select group of countries have access to the most popular cards.
How much more popular can Bitcoin become?
While there are still many unanswered questions about Visa and Mastercard’s approaches to processing cryptocurrency payments through their networks, it is clear that these companies moving into the crypto space reinforce the legitimacy of the industry.
Since PayPal began allowing users to buy, sell and hold cryptocurrencies on its platform, Bitcoin and other assets have been further legitimated as its own asset class, which is now being accepted by traditional financial firms.
A few years ago, in the minds of the average consumer, cryptocurrencies were mainly associated with darknet markets that sold illegal goods and speculation out of control. Now, BTC is being recognized as a store of value, so much so that publicly traded companies have invested in it. So, has Bitcoin finally arrived? Is conventional adoption here? On Yavin, managing partner of the Cointelligence Fund, told the Cointelegraph that the crypto-sphere is in fact “gaining more momentum than ever”, adding:
“But we still have a lot of work to do to make cryptocurrency markets prevalent. Although some regulators and financial institutions are still fighting the cryptocurrency revolution, many have begun to understand the value of blockchain technology and crypto assets. The future is bright and it is up to our industry to continue to educate and innovate to overcome the regulatory obstacles that lie ahead. “
MicroStrategy invested $ 1.145 billion to buy 71,079 BTC, now worth about $ 3.8 billion at the time of writing. Tesla announced a $ 1.5 billion investment with the electric car maker believing which purchased 48,000 BTC at an average price of $ 31,250 a unit. At today’s prices, the company would have about $ 2.5 billion. MassMutual, Square, Ruffer Investment and others also invested in the cryptocurrency, helping their market capitalization to exceed $ 1 trillion.
Although Bitcoin now appears to be as popular as it ever was, the data shows otherwise. According Dice from Google Trends, search interest in “Bitcoin” is still below the levels seen in 2017, despite significant price increases and growing corporate adoption.
What this probably means is that large investors and corporations are driving the market, while retail investors are largely marginalized. However, when it comes to the view of the general public, acceptance by these giants can change the way retail buyers view cryptocurrencies. According to Arif, large companies acting as “a bridge that connects the common consumer to cryptocurrencies like this is fundamental for the entire industry, as cryptocurrency is being taken seriously worldwide as a form of payment”.