Mastercard wants to patent a process of centralization of cryptocurrency transactions

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Mastercard wants to patent a process of centralization of cryptocurrency transactions

Mastercard filed a patent for the concept of fractional reserve banking cryptocurrency payments, writes Crypto Slate.

The text of the application was published on 25 October, the United States Office of patents and trademarks. We are talking about the new payment processing method that will allow you to work with digital and Fiat currencies in both wholesale and retailers, as well as provide them the ability to store funds in Fiat and crypto.

The authors use the phrase “blockchain currency.” With the help of this tool they intend to manage “partial reserves”. The term refers to an ancient banking practice, when only a small part of the funds is kept as “real cash”, and the lion’s share is used for lending and investment. The company intends to implement a system designed to protect information and credentials of sellers and buyers, providing them the benefits of the decentralized blockchain, and protecting against fraud and theft.

In particular, Mastercard intends to tie each blockchain transaction with the corresponding digital data block that stores data of each sending and receiving transaction. Moreover, before the implementation of the transaction is estimated the degree of risk in terms of creditworthiness of the two parties.

By and large, described in the application system based on the blockchain copies the operating mechanism of the cryptocurrency. However, the inventors emphasize the possibility of using the same computational mechanism for Fiat and cryptocurrency transaction that gives users the ability to unsubscribe from individual solutions for the digital currency.

It is noteworthy that the company critically assesses the system of private keys, offering an alternative in the form of the concept of centralized institutions that store user keys:

This model can reduce the risk of theft, “blockchain currency” users, because the data trust financial institutions and payment networks that are already spetsializiruyutsya for the storage of confidential financial information.

In the proposal also referred to the infamous “ten minute wait” in the process of processing bitcoin transactions and States that the process can be accelerated if pre-assess the risk by checking the creditworthiness of the parties.

The company model is unlikely to find support from the cryptocurrency community. One of the main reasons for the creation of bitcoin was just the desire to avoid fractional reserve banking, and Mastercard intends to implement this model in growing cryptovirology sector.

A departure from the model where the transaction is processed centralized structure, another — based cryptocurrency Mastercard, however, sees it as a fundamental problem and offers an alternative in the form of their own decisions.

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