Mastercard announced that it plans to support select cryptocurrencies this year. The move comes after an uptick in support for wider acceptance of cryptocurrency, and signals in a new era for the finance system that has, up until recently, been met with skepticism by large financial institutions.
“We are preparing right now for the future of crypto and payments, announcing that this year Mastercard will start supporting select cryptocurrencies directly on our network,” wrote Raj Dhamodharan, Mastercard’s Executive Vice President of Digital Asset and Blockchain Partnerships in a statement. “This is a big change that will require a lot of work. We will be very thoughtful about which assets we support based on our principles for digital currencies, which focus on consumer protections and compliance,” the statement read.
Tesla CEO Elon Musk recently began promoting cryptocurrencies on apps like Twitter and Clubhouse, where he uses his platform to discuss why he supports cryptocurrencies like Bitcoin. In an interview on Clubhouse recently, Musk noted that the only thing stopping Bitcoin and other cryptocurrencies from becoming a major global financial system is the lack of acceptance from current institutions. Support from Mastercard changes that, and ushers in a new demand for financial institutions to accept the currency as both legitimate and trustworthy.
Concerns around cryptocurrency are still valid, though. Experts warn that the volatility of cryptocurrencies like Bitcoin or, more recently, the joke cryptocurrency Dogecoin are a cause for concern—particularly among younger investors that may not understand the risks they’re taking on when they invest their entire savings. Dogecoin, which has skyrocketed in value in recent weeks thanks to its popularity as a meme on social media sites like Twitter and Reddit, is particularly volatile in that its value will likely not hold once the online buzz dies down.
There are also risks and limitations with cryptocurrencies in that they are not insured or backed by a regulated financial system. One of the risks involved with investing in cryptocurrency is that it could be stolen with no way to get your lost investment back. Despite so many risks, investors are drawn to the idea of a decentralized financial system and the ability to invest in something that has the possibility to grow exponentially in a short period of time. Early investors in Bitcoin, for example, ushered in a new generation of wealth when the cryptocurrency skyrocketed in the late 2010’s
The ability to support cryptocurrencies would allow Mastercard to increase consumer trust in the both the product and the currency as it moves through the network. By allowing transactions, the currency must be first exchanged for traditional currencies like the US Dollar first before being spent or sold. Allowing cryptocurrencies to move through their system would change that, enabling more merchants to accept the digital assets.