Just days after Mastercard filed a patent to link fiat and cryptocurrency transactions, the payment giant’s CEO lashes out at cryptocurrency — once again describing the asset class as “junk” that should not serve as a medium of value-transfer.
As a board member of the US-India Strategic Partnership Forum, President and CEO Ajay Banga argued during the 6th New India lecture in New York, that the volatility and anonymity of “cryptocurrency” debase its worth as a “medium of exchange”.
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,
According to CNBC, the Indian executive went on to claim that cryptocurrency is used for 95% of all nefarious purchases made on the dark web — including narcotics sales and credit card fraud.
While the comments would offer much-needed vindication to crypto-naysayers, they may highlight some of the common misconceptions surrounding cryptocurrency — held even by industry heavyweights such as Banga.
Like any other emerging asset, cryptocurrencies tend to be prone to volatility as Banga claims. To discredit their usage on account of this quality, however, would ignore the solutions offered by stable coins — which nullify price fluctuation and remain constant in value, and perhaps the more organic, long-term solution — stabilization of price as the industry matures.
Where cryptocurrencies such as Bitcoin provide more anonymity than third-party payment systems, they are not in fact anonymous. As they link all transactions to an individual’s public key, they are arguably less anonymous than (physical) cash transfers. Several privacy coins that use various cryptographic techniques to mask identity and transactional data — such as Dash, Monero, or Zcash — may indeed be anonymous, however.
In describing a cryptocurrency that must be mined, Banga is presumably referring to Bitcoin, the largest and well-known cryptocurrency. Defining the exact number of Bitcoin transactions involved in criminal activity may be an impossible task. However, a January 2018 report filed at the University of Sydney puts the number at 44% — less than half of Banga’s figure of 95% — and a figure that should invariably shrink under the weight of worldwide regulation.
A number of corporate executives may feel an affinity for Banga’s claims, namely, JP Morgan’s Jamie Dimon, and BlackRock’s Larry Fink — both of whom have slandered cryptocurrency in spite of the positions of the corporations they represent.
Cover Photo by Jilbert Ebrahimi on Unsplash
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