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The Almighty Buck Bitcoin

Mastercard Will Use the USDC Stablecoin As a Bridge Asset For Cardholders Who Want To Pay For Goods Using Cryptocurrencies (coindesk.com) 60

Posted by BeauHD from the exchanging-made-easy dept.
An anonymous reader quotes a report from CoinDesk: Mastercard has named the first stablecoin and a handful of partner companies that will help cryptocurrency holders spend their digital assets at merchants that accept the payment giant's cards. In the pilot announced Tuesday, Circle's USDC will serve as a bridge between the cryptocurrency in consumers' digital wallets and the fiat currency paid to merchants. USDC is a digital token that almost always trades at $1 because the issuer promises to redeem it 1-for-1 with greenbacks at any time.

While it might sound like adding an extra step, swapping a cryptocurrency for a stablecoin and then exchanging the stablecoin for dollars can be quicker or simpler than going directly from crypto to fiat. For example, some cryptos cannot be easily traded on an exchange for dollars but can be for USDC. Adding this way station will assist cryptocurrency firms that want to offer Mastercard-branded products to their customers, the company said. "Today not all crypto companies have the foundational infrastructure to convert cryptocurrency to traditional fiat currency, and we're making it easier," said Raj Dhamodharan, Mastercard's executive vice president of digital asset and blockchain products, in a press release. The announcement, five months after Mastercard said it planned to bring select stablecoins into its network, was framed as a step toward that eventual goal.
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Mastercard Will Use the USDC Stablecoin As a Bridge Asset For Cardholders Who Want To Pay For Goods Using Cryptocurrencies More

Mastercard Will Use the USDC Stablecoin As a Bridge Asset For Cardholders Who Want To Pay For Goods Using Cryptocurrencies

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  • You can just speculate on frozen orange juice futures (FCOJ-A) and since they are already denominated in USD skip a step. Society has a bazillion ways to invest ones money for rapid gains (and equally rapid losses) no need to focus on just one asset class (aka crypto).

    • Merry New Year!

  • so if I understand this "bridge asset" thing... (Score:5, Funny)

    by mertzman ( 87638 ) on Wednesday July 21, 2021 @12:48AM (#61603279)

    It's money laundering, but, with a MasterCard?

    • Re: (Score:2, Interesting)

      by 93 Escort Wagon ( 326346 )

      Well, MasterCard’s been casting about for some new way to potentially grow their business ever since they lost Costco a few years ago.

    • Re: (Score:2)

      by rtb61 ( 674572 )

      No the crypto is backed, by $1 it's worth. The backers take the risk of a value plunge. It all sounds rather suss, perhaps a setup, to track crypto, whose hands it passes through and recording of it all. So mastercard is only accepting a backed crypto, backed by $1, so they are issuing credit to that company, so that company can gamble on crypto. They'll be quick trading pumping and dumping and pumping and dumping, they'll be an utterly ruthless high speed trader, watch out.

    • Honestly, I'm curious how MasterCard will come out on using stablecoin in their infrastructure. As far as I know, some banks have already started basing their IT systems and workflows on Blockchain. What will come out of this? We'll see in the future. Here is more information on this topic: https://globalcsgo.com/ [globalcsgo.com]

  • stable coins an unregulated bank. (Score:2, Interesting)

    by Anonymous Coward

    Stable coins are nothing more than an unregulated bank. Unless they have a reserve ratio of 100%, they are taking money in, probably only having a reserve of 10%, and using the other 90% to make "investments" whether sound or not sound. They need to be regulated like any other bank. Otherwise it's nothing more than shadow banking.

    • They need to be regulated like any other bank. Otherwise it's nothing more than shadow banking.

      I agree. But honestly I don't think it makes any difference now - regulation, especially of capital ratios, in the rest of the financial world is a joke anyway (e.g. Archegos). The main disadvantage these parallel systems have is that they do not have the power of the US govt and federal reserve ready and willing to bail them out should the rot be exposed.

      At this point all these people believing crypto or whatever will save us from the banking cartel are as naive as a small lot Avocado farmer in a Mexican v

      • It's just a product for people who earned money on crypto and wants to flash it when buying drinks. "Look I'm paying in crypto". Then the girl will likely thing he's one of those who earned a 100,000% profit and is worth millions. That's at least one purpose I see. The other one is more complicated. Over the past 5 years, a lot of techies and business folks have touted it in the big companies they work for, and (as a result) those companies have also made public statements about how wonderful it is. Since i

    • Re:stable coins an unregulated bank. (Score:4, Interesting)

      by cfalcon ( 779563 ) on Wednesday July 21, 2021 @09:12AM (#61604131)

      > Stable coins are nothing more than an unregulated bank

      I mean, technically they are regulated because they can't engage in fractional reserve banking. That is most of the desire to be a bank in the first place, as you get to lend out money that doesn't exist. The point of reserve-backed stablecoins (such as tether and USDC) is that every dollar is backed by a dollar's worth of assets.

      Now... is that true? That's the bigger question, and people are constantly writing articles predicting the implosion of these stablecoins. But the take that they are 'unregulated banks' is a bit of a short sell- if these guys are found to be lying about backing these things, they'll certainly be subject to legal actions.

      Why do you think they are engaging at 10:1 fractional reserve banking? I'll point out that it is interesting for you to choose that particular ratio, because historically that's been what US banks have been required to have- 10% cash on hand. In March of 2020, this was changed to 0%. I don't even think that counts as fractional reserve banking any more, because the fraction is now zero. It's zero reserve banking, and that's the REPUTABLE system these days lol

      • Re: (Score:2)

        by jvkjvk ( 102057 )

        >if these guys are found to be lying about backing these things, they'll certainly be subject to legal actions.

        In which the only people to get rich are the lawyers. If a stablecoin 'imploded' people would get back whatever the remaining assets could be sold for (minus certain fees of course!). Depending on the nature of the implosion there could be nothing left.

  • At last we are free from the greed and corruption of the centralised banks... oh wait, nevermind! Maybe next year.

  • Problem fixed: Market price swing.
    Problems not fixed: fraud, lack of regulation, hacking, general acceptance, power consumption, and the fact that the industry is run by criminals (and yes I am aware we're comparing that to typical banking, let that sink in for a moment).

    We have a name for what happens when you exchange currencies multiple times to close a single transaction in an unregulated way through the assistance of 3rd parties: Money laundering.

    • You're almost as bad as Pyrite Pete in your own way.

      • Thanks. I guess. Not sure who Pyrite Pete is, but if he's against the global display human stupidity that is "crypto currency" then I will take your comment as an absolute complement and validation that I am doing something very right.

        • No. He isn't. He's a shameless Bitcoin Maximalist who posts AC and mods himself up with sockpuppet accounts. He shows up in almost every crypto story spouting nonsense. You're like his opposite: intractably stubborn and misinformed on the subject of crypto. At least you don't post AC.

          • well more like you're the different side of the same coin. He likes BTC and hates all other crypto. You just hate all crypto/blockchain. Same difference.

  • Dubious (Score:4, Informative)

    by paradigm82 ( 959074 ) on Wednesday July 21, 2021 @05:17AM (#61603691)
    I don't really follow the Stablecoin angle. The motivation provided is: "For example, some cryptos cannot be easily traded on an exchange for dollars but can be for USDC. " Well, if that's the case, it should have been easy for everyone to make a general service for converting any currency into dollars, and then Mastercard could use that service. So seems like a strange gap in the market, and just a technical detail for the user that this middle conversion is taking place.
    But of course, the key takeaway is that the conversion to USD happens at all: The payment is in dollars. It's no more technologically advanced or crypto-related than if my bank allowed me to have an account denoted in rice or gold dust and then did the conversion on the fly when I used my card. Nothing crypto about it. But as with everything blockchain and crypto-related, it's not about the actual use case or purpose, it just has to sound cool.
    • It's weird. There is a problem which needs to be solved here, payment processors are taking something like 3% of every transaction that happens on the internet. That's a huge waste of money, and that could potentially be addressed by using a form of digital cash. I assume that's what stablecoins are about because that's what makes sense to me, Bitcoin et. al. certainly don't serve this purpose... but this is just Mastercard. What's the point?

      There's also maybe ease of transactions between individuals, an

    • Stablecoins are useful now for crypto speculators who want to sell, hold a stable position, and then buy back in later. They'll be very useful for using blockchain as an actual system of payments once txn rates finally go up on a stable, fully-supported chain. Looking at you Ethereum. Hurry up! Any day now.

      • Solana works with USDC, don't have to wait for Ethereum.

        Dunno how secure it is, but FTX build a DEX on it so there's big money involved at least. FTX provide custodial wrappers for coins from other blockchains, Circle does businuess directly on chain for USDC.

    • ... and it'll probably be the biggest one in history.

  • I guess the nk won is not a currency or asset

  • How can this little shit company promise to redeem every single coin for a dollar when the market cap of this coin is over 26 billion? How does that work? Do they only guarantee this for a tiny fraction of it? I mean, I imagine banks sorta work the same.

    • They can promise anything they like. I could promise to give you a billion dollars. But when you try to collect, I'll declare bankruptcy and you'll get a few dollars if you're lucky. A guarantee is only worth as much as the people backing it.

      Banks are backed by FDIC (in the US) which is sort-of backed by the US Government. And most people would have bigger things to worry about if the government went bust.

    • Re: (Score:2)

      by clovis ( 4684 )

      How can this little shit company promise to redeem every single coin for a dollar when the market cap of this coin is over 26 billion? How does that work? Do they only guarantee this for a tiny fraction of it? I mean, I imagine banks sorta work the same.

      They don't really make that promise. Probably their user agreement says something like what the other stablecoins say.
      It is something like: "If we run out of dollars or our investments have a liquidity problem, you'll have to wait for us to get some".

    • They are the only ones who can issue USDC and over time they got 26 Billion worth of assets for those USDC, unless they just gave them away.

  • It's always amusing when bitcoin-related articles call real world currencies "fiat currencies," since crypto is pretty much the ultimate in fiat currency.

    • Re: (Score:3, Informative)

      by Reiyuki ( 5800436 )
      It's fiat, but with mathematical scarcity built-in.
      • Manually putting in scarcity does not effect value. The proof here is that Doge has "value" but has no scarcity and people keep buying it. Manufactured scarcity is manipulation as best.

        • Manually putting in scarcity does not effect value..

          Scarcity is what drives the supply side of supply+demand curves.

          The proof here is that Doge has "value" but has no scarcity and people keep buying it.

          Doge has scarcity because the only possible way to acquire it is via trading or mining. You cannot copy+paste a doge in the same way that you can copy a computer document or adjust a fundamental monetary lending rate.

  • What could this mean?

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