MasterCard has recently provided their perspective on bitcoin and digital currencies as a whole in a video above. The MasterCard representative in the video points out that bitcoin protocol cannot be trusted. The most unfavourable aspect of the video comes near the end when Matthew Driver, South East Asia president of Mastercard, shares MasterCard’s view on anonymous transactions:
“What a regulator wants to do is ensure that there is a fully compliant, I guess, root to the transaction. That they understand who is making the transaction, who that payment is being made to, and that they have a suitable record so they can ensure that there’s prudential control over the system. If it’s an anonymous transaction, that sounds like a suspicious transaction. Why does somebody need to be anonymous?”
Privacy is important because governments and centralized payment processors are often wrong. The comments from MasterCard are extremely discouraging, and there is no doubt that the company is making them to protect its own financial interests. Certainly it would be great if a third party could be trusted to block payments related to child pornography, terrorism, and other despicable activities but the problem is that one has to trust that third party to share moral views, as well as that of everyone else who is making payments over the Internet.
There is no doubt that people will use anonymous transactions to do bad things, but one cannot claim that everyone who uses bitcoin or other forms of anonymous payments is suspicious.
Bitcoin is similar to other encryption technologies, such as Tor and PGP, in that it establishes a clear borderline of beliefs. Either all communication and financial data should be digged out by a centralized entity and stored in a Utah data center, or people have the right for private communications and transactions.
James Duchenne, Australian attorney, founding member of Texas Coinitiative, and blogger for SatoshiLegal, has responded to the pleas by MasterCard to the Australian government against Bitcoin in the article.
“Huge opportunities exist in [the field of decentralized currency] globally, so it’s very important for us to look, understand, put in question and compare the real benefits of our current mainstream payment technologies to the disruptive technologies entering the marketplace. If you’re a consumer or a merchant, a government, even a financial services provider, what’s really critical is that your, your clients’ or your constituents’ productive value is not eroded or co-opted unnecessarily, that you’re given the choice to control, absolutely, your own wealth and that the system you use is secure, protected and unforgeable.”
The protests of MasterCard in Australia almost coincide with a bill in the US congress, HR 5777, which is specifically designed to protect cryptocurrencies and businesses using them.
“The challenge for fiat currencies in the world we live in, is that they’re centralized by design and puts the value of your productivity in the custody of others,” said Duchenne.
It is important to note that Duchenne does not believe Bitcoin, as it stands, is quite ready for mainstream adoption:
“To say bitcoin is a perfect solution is incorrect. It is nascent technology, not ready for mainstream adoption and much has to be improved to get there. However, when the smartest people on the planet are working towards that aim, furiously and progressing at tremendous speeds, fighting its inevitability is at odds with the teachings of history.”
Bitcoin is not perfect and the technology is not complete, but to say that it is not ready for mainstream adoption is going a bit far. There is nothing difficult in the use of Bitcoin for day to day transactions. A cab driver could accept payment in Bitcoin and then turn around to buy gas in Bitcoin if the conditions were set right. The technological barrier to do so would not be any more than accepting credit cards was decades ago.
Furthermore, Duchenne believes that MasterCard is being foolish because they could make use of it instead of railing against it:
“Bitcoin is a disruptive technology that can be used by MasterCard quickly to the benefit of all their consumers, so that they deliver the safest, simplest, smartest solutions.”
There is no doubt that MasterCard would benefit more by exploiting the power of digital currency and acquiring some benefit than it will by investing resources in opposition to it, but it is hard to imagine a situation in which MasterCard would ever be able to get quite the return they have been able to shark from consumers in existing conditions.
“Today we’re seeing a huge change in payment technology, whether it’s the convergence of fiat currencies in digital form or the advent of decentralized means of exchange, like bitcoin. Huge opportunities exist in this field globally, so it’s very important for us to look, understand, put in question and compare the real benefits of our current mainstream payment technologies to the disruptive technologies entering the marketplace. If you’re a consumer or a merchant, a government, even a financial services provider, what’s really critical is that your, your clients’ or your constituents’ productive value is not eroded or co-opted unnecessarily, that you’re given the choice to control, absolutely, your own wealth and that the system you use is secure, protected and unforgeable. Trust in any such system is earned, and by definition a by-product or a derivation of these features. It never stands alone.” Duchenne concluded.