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MasterCard to open up network to cryptocurrencies

reuters.com

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Re: MasterCard to open up network to cryptocurrencies

#71

Post by whatshisface »

PragmaticPulp wrote: post #2

These stories usually spur more enthusiasm for buying cryptocurrency, but ironically those buyers aren’t interested in spending cryptocurrency using their MasterCard. They’re hoping other people will buy cryptocurrency from these announcements, driving the price up. Or, more likely, they’re just hoping other people will buy cryptocurrency and not use it in these spending systems. Spending cryptocurrency would result…

>Spending cryptocurrency would result in selling that cryptocurrency, which would drive the price down. That’s not what cryptocurrency investors actually want.

That's a misunderstanding of how these things work. If selling drove the price down, then the price would never go up! Why? Because nobody can buy without a sale on the other side of the transaction. The common belief that selling lowers the price comes from the fact that if you put out a big sell-now order on a market, it will eat through the asks sitting there already. However in the slightly longer term others will put up new asks, up to the equilibrium where the price is close enough to the perceived value that there's no money to be made, after tax, by going in to move it closer. The phrase "Sell! Sell! Sell!" is based on the idea of selling at any price because you want to get rid of it so badly, but that's not a normal sale. That only happens when a party suddenly realizes that they have too much of something, not when they are doing everything as expected.

Re: MasterCard to open up network to cryptocurrencies

#72

Post by Jtsummers »

T0Bi wrote: post #26
PragmaticPulp wrote: post #17

Earlier quoted context omitted.

If it’s in your best interest to buy and never sell, why would anyone want to use it for exchange? Bitcoin’s deflationary nature discourages spending and selling, by definition. The high transaction costs discourage it even further.

How is bitcoin deflationary when it (currently) has a fixed inflation?

It's getting wider ownership over time so BTC supply is increasingly limited per person/entity interested in it, and the increase in supply is at a decreasing rate over time. This wider ownership and the (ultimately) fixed amount means that it will, even if not monotonically, be a deflationary currency (to the extent that it even is a currency). The rate of new BTC production has to overcome this deflationary pressure, and since there's always less coming out over time the potential inflationary pressure of minting new BTC will become increasingly insignificant.

Any currency with a limited supply will tend to be deflationary over time, though not necessarily experiencing a deflationary spiral depending on the overall economy around it. An active economy will see enough movement of the currency that deflation will, hopefully, be small. But an inactive economy (like bitcoin's) with people hoarding rather than spending will see higher-than-healthy (from an economic perspective, it's great for the hoarders if they can use it later) deflation rates.

Re: MasterCard to open up network to cryptocurrencies

#73

Post by BitwiseFool »

cbradford wrote: post #3

I thought the whole idea of Bitcoin was to get out of the financial system that Mastercard is a central piece of.

I see where you are coming from. I see bitcoin as a tool that can be used both inside and outside of the traditional financial system. It's ultimately up to you, the bitcoin holder, to decide if you want it transacted through the bitcoin client or if you want Mastercard to be a middleman.

Re: MasterCard to open up network to cryptocurrencies

#74

Post by PragmaticPulp »

runeks wrote: post #51
PragmaticPulp wrote: post #2

These stories usually spur more enthusiasm for buying cryptocurrency, but ironically those buyers aren’t interested in spending cryptocurrency using their MasterCard. They’re hoping other people will buy cryptocurrency from these announcements, driving the price up. Or, more likely, they’re just hoping other people will buy cryptocurrency and not use it in these spending systems. Spending cryptocurrency would result…

> Should also note that MasterCard crypto transactions almost certainly won’t be settled on the blockchain. Not with $8 Bitcoin transaction fees. They could easily settle merchant balances on the blockchain. An $8 fee is nothing compared to the revenue of a merchant. Assuming e.g. a 1.5% credit card fee, a merchant pays $8 in fees when receiving ~$500 in payments.

You’re ignoring the consumer’s transaction fee for making the purchase in the first place. Who pays that?

Even if you turn this into a credit card that a consumer pays off once a month, how many consumers want to pay $8 for the privilege of paying their credit card bill?

Also, $8 is just the current transaction fee, with virtually zero vendors accepting Bitcoin. If Bitcoin became popular, the transaction fees would become prohibitively expensive. The transaction fees have been in the $60 range before, and that’s still before any widespread vendor adoption.

Bitcoin isn’t usable for transactions at scale. It’s by design. Bitcoin has rejected proposals to increase the block size. Bitcoin holders don’t want anyone doing anything with Bitcoin other than holding it

Re: MasterCard to open up network to cryptocurrencies

#76

Post by qwerty456127 »

What if we could just attach a MasterCard to a bitcoin wallet rather than a bank account and then use it to pay at any ordinary POS terminal so the conversion would be done seamlessly and the store would get ordinary money? Is this what they are going to implement?

Re: MasterCard to open up network to cryptocurrencies

#77

Post by gruez »

sschueller wrote: post #10
ArtTimeInvestor wrote: post #4

The game Paypal currently plays with Crypto is the closest thing to printing money I have ever seen: Their users can "buy and sell Bitcoin" and pay "no fees". How does Paypal make money? "From the spread". The difference between bid and ask. And who sets the spread? Drumroll ... Paypal! Since you cannot transfer your bitcoins out, when you sell your bitcoins, Paypal pays you whatever they like. So far, Paypal only of…

That is outright scam in my view. They never have to hold bitcoin. They may as well sell paypal coin. Robinhood and Revolut do the same thing. If you can't transfer out your bitcoin, you don't have any bitcoin.

It's not any different than precious metal ETFs.

Re: MasterCard to open up network to cryptocurrencies

#78

Post by LegitShady »

ArtTimeInvestor wrote: post #4

The game Paypal currently plays with Crypto is the closest thing to printing money I have ever seen: Their users can "buy and sell Bitcoin" and pay "no fees". How does Paypal make money? "From the spread". The difference between bid and ask. And who sets the spread? Drumroll ... Paypal! Since you cannot transfer your bitcoins out, when you sell your bitcoins, Paypal pays you whatever they like. So far, Paypal only of…

crypto you can't move out of a particular broker is just company scrip

Re: MasterCard to open up network to cryptocurrencies

#79

Post by bouncycastle »

PragmaticPulp wrote: post #2

These stories usually spur more enthusiasm for buying cryptocurrency, but ironically those buyers aren’t interested in spending cryptocurrency using their MasterCard. They’re hoping other people will buy cryptocurrency from these announcements, driving the price up. Or, more likely, they’re just hoping other people will buy cryptocurrency and not use it in these spending systems. Spending cryptocurrency would result…

I think MasterCard will use a different type of cryptocurrency than you are familiar with, called "stablecoins", like the USDC and/or DAI. These are pegged to the USD and never go up or down.

Most likely, they will use things like a "state channels" for the actual transactions. State channels are like pre-paid cards, where the channel gets settled after the entire card is spent.

But why? Well, cryptocurrency makes sense over traditional currency, because it's programmable, auditable & composable with many other dapps that exist on the blockchain.

Re: MasterCard to open up network to cryptocurrencies

#80

Post by globular-toast »

ArtTimeInvestor wrote: post #4

The game Paypal currently plays with Crypto is the closest thing to printing money I have ever seen: Their users can "buy and sell Bitcoin" and pay "no fees". How does Paypal make money? "From the spread". The difference between bid and ask. And who sets the spread? Drumroll ... Paypal! Since you cannot transfer your bitcoins out, when you sell your bitcoins, Paypal pays you whatever they like. So far, Paypal only of…

That's how all currency trading works. Why do you think this is unique to Bitcoin or crypto?

More than 95% of "money" in circulation was created in the private banking sector. That's the closest thing to printing money because that's actually what it is.

Paypal is just taking a cut for providing a service. Don't like it? Don't use it.

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