Do you hear that? The ringing bells? See the flashing lights? Feel the Earth shake just a little? Is your “Spidey Sense” tingling? If your name were Mastercard, the answer would be “Oh, hell yeah!”, because they are in the path of a train that is barreling down upon them. That train is Bitcoin, and the track this week is located in the Australian Senate, where Mastercard made a plea derail this train before it’s too late (for Mastercard).
MasterCard has used a submission to a Senate inquiry to argue for Australian regulators to move against the pseudonymity of digital currencies such as Bitcoin.
“Any regulation adopted in Australia should address the anonymity that digital currency provides to each party in a transaction,” the company’s submission (PDF) states. “Contrary to transactions made with a MasterCard product, the anonymity of digital currency transactions enables any party to facilitate the purchase of illegal goods or services; to launder money or finance terrorism; and to pursue other activity that introduces consumer and social harm without detection by regulatory or police authority.”
Mastercard’s fear of Bitcoin is well-founded as they would like to create a global payment service, and use Bitcoin within that umbrella, rather than be cut out by Bitcoin’s overall superior costs. Mastercard makes billions of dollars in charging people worldwide much higher fees for service than Bitcoin ever would. Mastercard certainly couldn’t compete with Bitcoin on costs (average transaction cost for using Bitcoin is 0.0004 Bitcoin or about $0.15 USD), so they have two options. Co-opt them into their business model, a la PayPal, or get them centralized and rerouted from their current course of drastically lower costs and simple peer-to-peer transactions for all. The chances of them getting much traction with Plan A are not very strong, so try to overpower leaderless Bitcoin through the legal system is a safe bet.
Coinmetrics has done a daily transaction measure of all the global payment services, and Bitcoin is moving at over $70M USD daily, based on a 7-day average. Obviously, Bitcoin is growing rapidly, given Bitcoin was not invented until January 3rd of 2009, and the other services have noticed. Bitcoins volume is almost one-third of Western Union’s volume of $216M daily. Western Union has only been in business since the invention of the Mule Train. PayPal and Discover are also within reach in the short-term. Mastercard generates almost $10 Billion in daily transactions, so their fear of Bitcoin is noteworthy, since they stand at the top of payment services pyramid, only eclipsed by Visa (over $16 Billion daily)
Mastercard even had the audacity to imply that Bitcoin’s innovative peer-to-peer system is not better or much less expensive, but just unfair to Mastercard:
“All participants in the payments system that provide similar services to consumers should be regulated in the same way to achieve a level playing field for all.”
Mastercard only cares about Mastercard, not what is best for consumers. Not getting hustled for up to 30% interest rates would be what is best for consumers, but Mastercard is not writing missives about that. They look to hide behind alleged criminal use to tarnish Bitcoin’s reputation. When you are guilty of global fraud and theft of billions of dollars from consumers worldwide, plus subject to massive identity theft issues yourself, all, you can do is try to bring others down to your level. Misery loves company. People buy illegal goods and services with funds sourced through Mastercard every day, just as they do with any currency or payments system since the dawn of time. Mastercard is by no means as clean as a virgin’s sheets when it comes to fraud, identity theft, or gaming the system against consumers. When Mastercard addresses and corrects its myriad of inherent flaws and deliberate mis-dealings and security issues, then Bitcoin is fair game. Their hypocrisy is as startling as their tacit admission of inferiority to Bitcoin.
Bitcoin was not invented to conform to flawed economic paradigms such as the the rather ancient debit card payment system. It was created to replace it. And it is an option for people who don’t want to be taken advantage of by established multi-nationals like Mastercard. Bitcoin is not perfect, but it has many advantages over Mastercard, and that is what bothers them. The innovation and savings are their real problem. Mastercard is a 20th-century design fighting to survive the 21st century. Mastercard sees the handwriting on the wall, and it scares them. Thus, they pen a desperate plea for help from little Bitcoin. Like a mouse scaring the elephant.
This reminds me of a century-old quote that is applicable to any battle between innovation and progress, and the establishment’s need to maintain their control of the status quo:
“First, they ignore you. Then, they laugh at you. Then, they fight you. Then you win!” – Mahatma Gandhi
The fight has begun.
What do you think of Mastercard? Should Bitcoin play Mastercard’s game, or stay peer-to-peer? Share above and comment below.
Images from Wikimedia Commons, Credit About, Ti_ser and Shutterstock.