Purchase, New York, USA: Mastercard has won a patent for a payment system linking Blockchain-based assets to fiat currency accounts. The US patent is a new method to speed up digital currency payments and could reportedly allow bitcoin transactions on credit cards.
It goes on to explain:
“It often takes a significant amount of time, around ten minutes, for a blockchain-based transaction to be processed … Conversely, traditional fiat payment transactions that are processed using payment networks often have processing times that are measured in nanoseconds … Therefore, many entities, particularly merchants, retailers, service providers, and other purveyors of goods and services, may be wary of accepting blockchain currency for products and participating in blockchain transactions.”
To reduce these transaction times, the company would be offering a new type of user account able to transact in cryptocurrencies through existing systems for fiat currencies. This account would link a series of profiles able to identify a user’s “fiat currency amount, a blockchain currency amount, an account identifier and an address.”
The transactions themselves would use the fiat currency’s payment rails and security features, but each transaction would represent a cryptocurrency.
The document explained that it is a method for managing fractional reserves of blockchain currency.
It noted that cryptocurrencies have seen increased usage over traditional fiat currencies by consumers who value anonymity and security, but they are at a disadvantage mainly due to the significant amount of time for a blockchain transaction to be conducted.
Blockchain transactions take about 10 minutes in comparison to nanoseconds for traditional payments.
Many entities, particularly merchants, retailers, service providers, and other purveyors of goods and services, who are accustomed to fast transaction times, may be wary of accepting blockchain currency for products and participating in blockchain transactions.
The patent document pointed that there is a need to improve on the storage and processing of transactions that utilize blockchain currencies.
Seth Eisen, Mastercard’s senior vice president for communications, said that Mastercard holders currently can only pay for things using currency that the government has declared as legal tender.
Eisen said, “We’re consistently looking at ways to bring new thinking and new innovations to market to create value for us and our customers and cardholders. Patent applications are part of that process, taking steps to protect the company’s intellectual property, whether or not the idea ever comes to market.”