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October 5, 2022
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Mastercard Vice President: Bitcoin is very volatile for payments

Bitcoin’s volatility prevents it from becoming a good payment instrument, said Executive Vice President of Mastercard, Ann Cairns.

Bitcoin’s volatility makes it a bad instrument for making payments, said Mastercard executive vice president, Ann Cairns, during the Future of Money conference, by MarketWatch.

“Bitcoin does not behave like a form of payment. It is very volatile and takes a long time to process, ”said Cairns.

She explained that while Mastercard is in fact working with several central banks to add stablecoins to its network, it is more appropriate to think of Bitcoin as a store of value, similar to gold.

“So, if you and I were to have a coffee and, you know, I decided to pay with Bitcoin, our coffee could cost me, I don’t know, 40% more when it was served. And it takes 10 minutes to actually settle the transaction, ”noted Cairns.

Stablecoins, on the other hand, are a type of cryptocurrency with little or no volatility. Tokens, such as Tether’s USDT or Binance’s BUSD, are pegged to the price of other assets – usually the US dollar and are designed to constantly maintain their parity.

This means that a USDT, for example, must always be worth the same as $ 1. To achieve this, stable currency issuers maintain reserves that are at least equal to the total amount of coins in circulation. That way, users can spend stablecoins as the equivalent of fiat money – or exchange them for cash.

Mastercard announced that “will start supporting selected cryptocurrencies directly”In its network in 2021. But that will focus on stablecoins.

“Our crypto partners convert digital assets into traditional currencies and then transmit them to the Mastercard network. Our move to support digital assets directly will allow many more merchants to accept cryptocurrencies – a capability that is currently limited by proprietary methods unique to each digital asset, ”explained the company’s blog at the time.

Mastercard noted that adding support for cryptocurrencies should allow the company to “eliminate inefficiencies” and allow consumers and merchants “to avoid having to make conversions between cryptography and traditional to make purchases”.

Source: Decrypt

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