Payments processor Mastercard was recently awarded a patent by the US Patent and Trademark Office for technology that would link together financial accounts holding fiat currency with those holding cryptocurrency. While linking together fiat and cryptocurrency accounts could have many benefits both for investors in and users of cryptocurrency, Mastercard’s specific filing points to some potential drawbacks that could be worrisome to some cryptocurrency users.
The major advantage to linking together fiat and cryptocurrency accounts would be ease of use for the user. Think about the average investor today who might have a bank account, a brokerage mutual fund account, a 401(k) account, an IRA account, a precious metals IRA or ETF account, and a Bitcoin IRA account. That’s multiple accounts, each held at a different institution, with different logins, contracts, and paperwork to file and keep track of.
Now imagine that you could begin to combine those accounts so that many or all of them were accessible under a single account profile. That’s what Mastercard’s patent will attempt to do, at least with respect to fiat and cryptocurrencies. That would make it far easier for people to purchase and use cryptocurrencies, potentially even allowing them to use debit or credit cards to make purchases using cryptocurrencies.
The drawback to the patent is that it mentions that it assists in the “management of fractional reserves of blockchain currency.” That right there sends alarm bells ringing in the heads of enthusiastic cryptocurrency investors. The whole point of developing Bitcoin was to enable investors and consumers to bypass the fractional reserve banking system and to overcome the trust problem that is inherent with the modern financial system. Referring to fractional reserve cryptocurrency accounts (if such a thing could even be created) is a discouraging sign that mainstream financial services companies still see Bitcoin and cryptocurrencies as just another currency to be worked into the current system, rather than the transformational and disruptive technology that it really is.