Mastercard has won a patent for fractional cryptocurrency banking, which suggests the global payments multinational has plans for a management system of fractional reserves of blockchain currency.

Mastercard Blockchain Patent Integrates Existing Traditional Payment Networks with Blockchain Currencies

The patent, filed on 29 June 2018, refers to “the use of centralized accounts to manage fractional reserves of fiat and blockchain currency updated via transaction messages corresponding to fiat- and blockchain-based payment transactions”.

The inventor, Steven Charles Davis, senior consultant of research & development at Mastercard, explained the need for such a mechanism.

Blockchain-based transactions can be very time consuming due to the computer processing time and resources required to verify and update the blockchain. This creates a problem between consumers and merchants, particularly the payee who “must rely on the payer’s good faith that their transfer will be valid”.

“In such latter instances, the anonymity of the blockchain may leave the payee at a disadvantage, because the inability for the payee to identify the payer may prohibit the payee from utilizing various risk or fraud detection methods,” the document noted

Moreover, it can be difficult for consumers to adopt, or even understand, blockchain currencies, it said, adding that its anonymous nature may leave consumers “unable to prove their identity and ownership of a wallet”, thus with “little recourse if their wallet and/or associated currency is stolen”.

The fractional reserve system for blockchain aims to improve the storage and processing of transactions by using existing traditional payment networks and payment systems technologies in combination with blockchain currencies.

The inventor argues the integration is able to “provide consumers and merchants the benefits of the decentralized blockchain while still maintaining security of account information and provide a strong defense against fraud and theft”.

The method for managing fractional reserves of blockchain currency comprises of receiving a transaction message associated with a payment transaction; identifying a specific account profile stored in an account database that includes the specific address, a fiat currency amount and a blockchain currency amount; and updating the blockchain currency amount included in the identified specific account profile.

Ajay Banga, President and CEO of Mastercard, recently called cryptocurrencies “junk”. His speech also tackled the massive market volatility and the popularity among criminals. Banga also argued that digital assets don’t deserve to be considered as a medium of exchange. Meanwhile, in the company’s Ireland-based subsidiary, much R&D has been done in regard to blockchain to improve payments services.

*This post is credited to News BTC

Mastercard has gone all the way through the stages of the resistance proverb — “first they ignore you, then they laugh at you, then they fight you, then you win.”

Cryptocurrencies & Mastercard: A Turbulent History

Like most financial companies, Mastercard never expected the blockchain, and by the time they took note of it, they were unprepared for the changes it could and will bring. So their earliest reactions were, to say the least, not positive. A massive firm, however, they were at the same time studying the technology and looking for ways to utilize it, as well as looking for ways to legally make use of cryptocurrencies.

The company has been all over the place on the issue, eventually admitting that it could be “good.”

The Ultimate Irony: Fractional Reserve Blockchain

Now, some years after initially associating cryptocurrencies with crime, Mastercard is seeking a patent for fractional reserve management of blockchain assets. You read that right, and there are likely a number of cryptonaughts laughing their heads off as they digest this. Fractional reserve banking is one of the problems Bitcoin was designed to solve. It is a practice which most who gravitate toward cryptocurrencies would prefer to see eradicated.

In general, Bitcoiners are not fans of debt-based currency. Bitcoin and most other cryptocurrencies are therefore regarded as sound money.

A Step Beyond Not Owning Your Keys: Not Even Being Sure the Institution Has Your Funds

The patent Mastercard is seeking — application 20180308092 — describes a system which will simultaneously track crypto assets and fiat assets. Essentially, it’s a web wallet with a combination of cryptocurrency and fiat accounts.

Bitcoin banking institutions like Coinbase have had trouble gaining traction with cryptocurrency natives over the years for the simple reason that the user/owner of the funds does not then hold the keys. In the cryptonaught’s eyes, not holding the keys to your coin is the same as not holding your coin at all. It can disappear, and there is nothing you can do about it. Thus, the largest component of Coinbase’s customers has been newcomers looking for convenient ways to acquire Bitcoin.

The patent essentially describes a cryptocurrency credit card network.

“Thus, there is a need to improve on the storage and processing of transactions that utilize blockchain currencies. Existing payment networks and payment processing systems that utilize fiat currency are specially designed and configured to safely store and protect consumer and merchant information and credentials and to transmit sensitive data between computing systems. In addition, existing payment systems are often configured to perform complex calculations, risk assessments, and fraud algorithm applications extremely fast, as to ensure quick processing of fiat currency transactions. Accordingly, 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 security of account information and provide a strong defense against fraud and theft.”

They see a benefit to mixing traditional and cryptocurrency technologies, and the system described would likely include their existing products and payment networks.

“Transactions that may be performed via a payment network may include product or service purchases, credit purchases, debit transactions, fund transfers, account withdrawals, etc. Payment networks may be configured to perform transactions via cash-substitutes, which may include payment cards, letters of credit, checks, transaction accounts, etc.”

Mastercard seeks to do what it does best: process transactions. In the same way, funds can be moved around an exchange or a gambling site instantaneously once their deposits are cleared, Mastercard would like to make this possible for merchants. In this respect, despite the problems associated with fractional reserve anything, Mastercard could potentially make a massive contribution to the Bitcoin economy by enabling millions of existing clients to accept cryptocurrency payments.

Patents take time to process, so we will see how this develops.

*This post is credited to CCN

Cryptocurrencies Are Now A “High Risk” Asset According To MasterCard And VISA

The financial services giants MasterCard and VISA are reportedly branding cryptocurrencies and initial coin offerings (ICOs) in a “high-risk” category.

Sources with close knowledge of the matter confirmed to Finance Magnates that card providers MasterCard and VISA are proceeding with their actions against forex, binary, cryptos and ICOs.

Back in April, MasterCard classified the crypto industry as high risk. The move effectively meant that chargebacks could be executed up to 540 days after the date of the transaction. Now Visa supported the same idea and announced that starting December 2018, all the payments to the above companies are considered high risk.

EU-regulated brokers are suffering due to significant changes to their operations stemming from the new regulatory framework. Meanwhile, offshore and unregulated companies are now facing a challenge from the new policies implemented by VISA and MasterCard. The operations of some companies are set to get affected materially. That said, the eternal cat and mouse game between regulators and businesses is set to continue.

The changes are expected to primarily impact brokers and companies from unregulated or loosely regulated jurisdictions. In addition, certain brokers and exchanges have already stopped accepting credit card deposits. Moreover, payment processors suspend their alliance with some clients until a viable solution is established.

In May this year, Broker Complaint Registry said that Mastercard informed its payment processors regarding these changes via an email. The trader community added: “According to the letter any high-risk business that operates without a license in their given jurisdiction will fall into a new category.

Notably, CEO of MasterCard Ajay Banga is known to dislike the concept of cryptocurrencies. Earlier this year, he condemned the industry, calling the crypto projects “junk”. He stated: “I think cryptocurrency is junk. The idea of an anonymized currency produced by people who have to mine it, the value of which can fluctuate wildly – that to me is not the way that any medium of exchange deserves to be considered as a medium of exchange”.

VISA also had ceased supporting crypto debit cards via a partnership with debit card provider WaveCrest in January of this year, with affected cards including products from CryptoPay, Bitwala, TenX, Wirex, and others.

*This post is credited to BitcoinExchangeGuide

Mastercard is researching different use cases of blockchain technology to improve products and services. The company aims at increasing general efficiency in all of its operations. The investigation is being conducted by the research and development wing of the company. The Irish Times informed about the work that the company is currently doing.

Mastercard Innovates with Blockchain Technology

One of the largest payment processing companies in the world is testing blockchain technology. Blockchain provides security, transparency, traceability, and efficiency. With these features, it would be possible to create new services and products. Additionally, processes can be enhanced, reducing costs and increasing efficiency.

Mastercard Labs has been working not only with blockchain technology but also with artificial intelligence and machine learning.

Ken Moore, Mastercard’s head of research and development is in charge of the work being performed by the company. The innovations created by Mastercard allow it to remain influential in the market and competitive.

About the investments the company is doing, Moore commented:

“We build new products for Mastercard globally out of Dublin so we incur the costs for that in Ireland even though the services we provide are global.”

In the past, the research and development team created the QKR application. Some firms such as Wagamama and Identity Check are already using this app. The product that provides biometric identification has been relevant in the ID field.

At the moment, Mastercard Labs has over 400 individuals working. However, the company is searching to increase the number of employees in Ireland almost 45%. The main goal is to reach 575 workers at the company. Some of the key roles will be blockchain developers, data scientists and cloud computing specialists.

Nonetheless, this is not the first time that Mastercard uses blockchain technology. Earlier this month, we wrote at UseTheBitcoin that Mastercard was working with blockchain to track consumer payments. We informed that the U.S. Patent and Trademark Office published several patent applications filed by Mastercard.

American Express, for example, is also using different blockchain solutions. This firm might start to use Hyperledger technology and power its loyalty rewards program.

*This post is credited to UseTheBitcoin

Patents are complex legal documents that are used in modern business for protecting important pieces of intellectual property. While they are applied in pretty much all branches of today’s industry, they are especially popular when it comes to emerging technologies.

As such, many were in a rush to patent as many aspects of the blockchain technology as possible. The result is today’s situation, where all the largest financial services companies in the world are struggling with blockchain patents. Naturally, some are more successful than others, but all of them are in a rush to change and control the new tech.

Blockchain Patenting Game

Blockchain technology is still considered to be in its infancy, but even so, it holds a lot of potential to completely change the way business is done in modern times. It can safely store data, and protect it from being altered and manipulated. As such, it can seriously impact every branch of today’s industries, and at the same time, it continues to constantly grow and evolve.

Whenever a new breakthrough is made, or a new use case is found, large companies return to the struggle of getting a patent for it. Back in 2017, different companies in the United States alone managed to file over 190 blockchain-related patents.

So far, these patents have been split into two different types, or categories — blockchain specific and cryptocurrency specific patents. Cryptocurrency specific patents are mostly owned by crypto startups and individuals, while blockchain specific patents are usually owned by companies like the Bank of America, IBM, and others. Most of such patents are coming from China, which has filed around 600 of them in 2017 alone.

7 Largest Patent-Holding Companies Right Now

1. Nasdaq

There are numerous companies that hold blockchain specific patents in the world, but Nasdaq is currently the only stock exchange among them. It has a market cap of $6.8 trillion, which makes it the second-biggest stock exchange in the world. It also makes it one of the most important adopters of this technology on this list.

The company filed a patent for an exchange system based on blockchain technology back in 2016. They also filed one for a blockchain-based data matching system recently. The company is using this technology in order to create a new cloud platform based on the blockchain, called Linq. The platform would combine Nasdaq’s exchange with the financial network of Citi Group in order to allow investors to trade securities.

All of this is being done under the supervision of Chain, another blockchain firm which is based on the cloud technology.

2. Qualcomm

Officially, Qualcomm describes itself as a mobile tech firm. However, many have an alternative description for them, which is “patent trolls”. These are firms that are filing patents only so that they can license them and demand a payment from other companies that wish to use them. Apple is one of the firms that seemingly fell into this trap, and is currently suing Qualcomm because they demand a percentage of Apple’s iPhone sales.

PateSnap claims that Qualcomm has more than 46,000 patents at the moment, with 100,000 being still in form of an application. Most of them are in the area of digital information transmission, which also includes blockchain technology.

3. Coinbase

Next, we have Coinbase, the leading crypto exchange, which is also based in the US. Apart from being the largest exchange, Coinbase is also a leader among the exchanges in regards to the number of filed patents. Many would describe the Exchange’s relationship with patents as ‘complicated’. This is due to the fact that they even decided to sign a Patent Pledge, which forbids them to use patents against firms with fewer than 25 employees.

Additionally, the exchange’s CEO, Brian Armstrong, explained their decision to patent blockchain. He claims that the Bitcoin community was created on the idea of openness, as well as that of decentralization. Because of this, patenting this technology is not exactly the right way to go. Still, the creation of a tech business cannot be done without obtaining patents, which is why the exchange does it anyway.

Coinbase simply wants to protect itself from patent trolls such as Qualcomm.

4. Fidelity

Fidelity is also actively working on patenting as much of the blockchain as possible. Thanks to their efforts and careful calculations, the company is currently managing around $6.9 trillion in customer assets. This makes Fidelity the fourth largest company when it comes to managed capital.

They also recently partnered up with Coinbase, meaning that their users will likely have the ability to combine their Fidelity investments with their crypto investments.

5. Mastercard

Next, there is Mastercard. This is one credit card company that takes blockchain development extremely seriously. They offer two different services at the moment, which are Smart Contract API and Blockchain Core API. Smart Contract API allows users to write their own smart contracts, while the other one allows businesses to use Mastercard’s network for processing blockchain-based transactions.

These transactions are often much faster thanks to Mastercard’s own, specially developed new technology.

The company filed a patent back in July of this year, and it concerns a new way to process cryptos via the same framework that is being used for fiat currencies. This would speed up transactions even more, while it would simultaneously reduce the risks since this technology has had decades to properly develop and grow to perfection.

6. IBM

Nearing the end of the list, we have IBM. IBM has a long history of investing in the blockchain, and they share the second place regarding the number of patents with previously discussed Mastercard. In fact, IBM has filed around 9,043 patents in 2017 alone. They also cover the new method of safely accepting payments from untrusted parties via the blockchain.

The company’s Blockchain Platform has more than 400 customers at the moment, and it relies on special tools used for creating a business-specific blockchain. Their most recently accepted patent proposes a new system that would make database managing easier and more efficient. Of course, it would be done via the blockchain.

7. Bank Of America

While this list has had some firms with an impressive number of patents, none of them has filed more patents in 2017 than the Bank of America itself. The company’s CTO, Catherine Bessant, recently stated that they have just under 50 patents in the blockchain technology.

This is all a part of their plan to acquire as much intellectual property as possible. They understand that owning the right technology will give them the competitive edge in the world of finances. As such, the blockchain is likely at the top of their wish list.

Despite this, the Bank remains firmly against Bitcoin, and they even banned its purchase earlier this year. This will likely remain so until they can create their own crypto wallet and find a way to charge their own fees for using digital currencies. Obviously, despite the BTC ban, they are still working hard on entering this space, and they even filed a patent on a new crypto transformation system about a year ago.

Which Company Has Filed The Most Patents?

As mentioned before, firms that are the most interested in filing blockchain specific patents are usually those from the financial services industry. According to data from Envision IP, around 124 blockchain patents in the US are filed by only 5 firms. The biggest ones among them are Fidelity, Bank of America, and Mastercard — all of which are financial services companies.

While it might seem strange that companies like Facebook and Google have not entered the rush with the same enthusiasm, there is a reason for that too. The reason is that this technology is currently in a state that best suits banks and credit card companies. In its current form, it is perfect for keeping records and sending payments, which is exactly what firms like these need.

*This post is credited to BitcoinExchangeGuide

Now officially China has proved to be number one digital economy that moves along fostering the robust development of blockchain-related business environment. Yet the captured position was quite a goal.

Following hopeful claims and ambitious efforts paving a thorny path towards Chinese technology dominance over the innovative arena, the country made numerous attempts to ban cryptocurrency and, therefore, to outroot entire blockchain ecosystem out of the country. Nevertheless, these events took place before the government had finally realized the enormous potential behind the cutting-edge blockchains. Starting from then, Chinese authorities have struggle to fuel the blockchain expansion delivering both favorable regulatory frameworks and financial support for the companies operating within the industry.

Previously Coinspeaker reported that a digital currency research lab set up by the People’s Bank of China has submitted 41 patent applications during the first year since its launch, while the robust technology itself was approved as a “new generation” of technologies that are “reconstructing the global innovation map and reshaping the global economic structure.”

Those efforts bore fruit during the past year as the recent survey conducted by the global intellectual property information media outlet, iPR Daily ranked Chine as the world’s leading supplier of blockchain applications. According to the report, China-based companies took 57 spots in a newly compiled “Top-100 Blockchain Enterprise Patent Rankings” with Alibaba at top of the list covering a total of 90 patent applications focused on blockchain-related technologies.

China filed more patent applications than the U.S. last year, with technology companies such as Tencent Holdings and Baidu accounting for 56% of the worldwide total of 406. Applications from the U.S. came a distant second at 22%. The U.S. still has the largest number of cumulative applications, but on an annual basis, China is in the lead.

Indeed, right after Alibaba is going IBM, which falls just one short of that total with 89 filings, while Mastercard occupies third place with 80 filings. Bank of America made it to fourth place, with 53 blockchain patent applications.

Notably, the People’s Bank of China ends up fifth on the list being one of the few central banks in the world to have moved into the blockchain industry with a total of 44 patent applications focused on its planned central bank digital currency.

Based on the IPRdaily research, applications related to underlying technologies such as access control, public key decryption, block construction and data processing accounted for about 50% of the total. The other half of the applications are mainly related to the application of blockchain technologies in various industries, such as identity authentication, drug tagging, food tracking, audit registration, financial institution information coordination, personal credit reporting and tax filing, and some other industrial applications.

It is worth to mention that the Alibaba’s payment subsidiary Ant Financial and Alipay utilizes blockchain in an agricultural sector ensuring the authenticity of rice produced in the northeastern provinces of the country by the means of non-tampering digital ledger. Baidu, on the other hand, launched a blockchain-related photo storage service Totem aimed at protecting the copyright of individual photographers and photo agencies.

For its ranking, iPR Daily said it consolidated information from patent databases as of Aug. 10 from China, the U.S., Europe, Japan and South Korea, as well as the International Patent System from the World Intellectual Property Organization.

*This post is credited to Coinspeaker