MasterCard to open up network to cryptocurrencies

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

Should also note that MasterCard crypto transactions almost certainly won’t be settled on the blockchain. Not with $8 Bitcoin transaction fees. They’ll just be denominated in cryptocurrency and people can deposit/withdraw in certain cryptocurrencies. MasterCard only needs to buy and sell on the blockchain as needed to provide an FX window. The actual transactions would be stored in traditional database systems (aside from customer deposits/withdrawals, just like Coinbase)

Why? Because MasterCard would get to act as an exchange and collect exchange fees. Exchange fees are a great way to charge consumers for spending their own money in 2021, when normal credit cards actually pay people 1-2% to use them. Cryptocurrency’s inefficiency is their financial upside.

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 offers this in the United States. And do the Americans take this offer? Yes! They buy over a billion dollars worth of Bitcoin per month on Paypal. If this continues, it means that every American from toddler to senior buys $50 worth of Bitcoin per year.

Other companies in the finance industry will want the same free lunch. Run on crypto in 3..2..1..

This will continue until the first companies will start to offer you to transfer your crypto out. Then slowly the market will normalize. Now everyone has crypto. In their paypal/mastercard/bank/whatever account and/or in their own wallet.

Looks like chances for broader crypto adoption are pretty good.

1. The card handles also selling some off for taxes every transaction and put that in an interest-accruing account.

2. The card tracked my capital gains for each transaction for easy reporting on taxes.

3. The card provider will help manage fees - I’d rather bulk deposit funds to a layer2 and have fee-less payments over having to wonder what the current network fee is.

I’d prefer if it wasn’t MasterCard since I use Visa cards, but I can’t complain too much.

The reason I want this is that I have a lot of money in cryptocurrencies and I’d rather not sell them into other assets at the moment.