In a recent MasterCard patent filed to the U.S. Patent & Trademark Office (USPTO), the United State multinational financial service giant revealed its intention to introduce the principles of fractional reserve banking to virtual currency.
The U.S. Patent & Trademark Office released document revealed that the payment processor has intents of enabling merchants to interact with digital currencies through a new method of storage that multitasks between the crypto and fiat currencies. There were references to “methods for managing fractional reserves of blockchain currency” as well.
In recent years, the position of MasterCard as regards Bitcoin (BTC) and other cryptocurrencies has been unclear as the company chose to sit on the fence. But this month, having recorded more blockchain-based patent to his name, Master Card has signalled along with Visa that dealing with virtual currencies and ICOs might be classified as “high risk.”
Blockchain; a Suitable Financial Technology
It can be inferred in this new patent filed that the company wished to apply principles of the traditional banking system as the company describes that it was specially designed and configured to store and protect consumer and merchant information and credentials safely. The patent further expatiated, stating that;
“The use of traditional payment networks and payment systems technologies in combination with blockchain currencies may provide consumers and merchants the benefits of the decentralized blockchain while still maintaining [the] security of account information and provide a strong defense against fraud and theft.”
Quite alright, this concept might come as a shocker to analysts and blockchain experts as the fractional reserve banking system which allows for no proof that a lender has the funds which correspond to a customer’s promised holdings. However, there is already an existing transparent solution for this in Bitcoin.
Similarly, the former main reserve bank for crypto stablecoin Tether (USDT), Noble Bank has stated that it did not use fractional reserve and could establish this fact, explaining that it had a dollar for each USDT token. The stablecoin initiative has however avoided a public audit.
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