Mastercard Pilots Crypto Credentials Program to Simplify Transactions, Amid Centralization Concerns
Summary:
Mastercard has initiated a peer-to-peer pilot program for crypto credentials to simplify cryptocurrency transactions and minimize user errors. The program provides users with 'aliases' verified by Mastercard, eliminating the need for traditional long alphanumeric wallet addresses. However, this centralized system, which relies upon Mastercard for identity verification and transaction screening, raises concerns about security, given Mastercard's history of high-profile data breaches. Critically, the complexity of crypto transactions has been identified as a major obstacle to more widespread adoption of digital currencies.
In a bid to improve cryptocurrency transactions and reduce user errors, Mastercard has rolled out a peer-to-peer (P2P) experimental program for crypto credentials. Bit2Me, FoxBit, Lirium, and Mercado, all partners with Mastercard, are part of this trial. Walter Pimenta, who heads product and engineering in Latin America for Mastercard, underlined the urgency of providing safe and verifiable interactions in view of the increasing global and regional interest in digital assets and blockchain technology.
Mastercard's crypto credential solution allows people to use easy-to-understand 'aliases', certified by Mastercard, instead of the traditional long alphanumeric wallet addresses. This reduces the dependency on cross-checking these addresses. Additionally, the system checks transactions before they are completed to prevent users from sending incompatible digital currencies to the recipient.
However, handling digital assets has been a challenge for many due to complicated user interfaces, technical terminology, and the risk of irreversible loss if assets are sent to an incorrect chain. Consequently, users familiar with Venmo, PayPal, and internet banking apps tend to steer away from cryptocurrencies. Miles Deutscher, a noted crypto analyst and influencer, pointed out in 2022 that these issues were a significant barrier to widespread adoption of digital currencies.
Even as Mastercard seeks to simplify transactions involving cryptocurrencies, concerns about centralization remain. The company's crypto credentials setup is not a decentralized system and hinges on Mastercard to confirm user identities and screen transactions to prevent the loss of funds. The need for additional "Know Your Customer" verification and storing vital data with Mastercard is a worry for those focussed on security.
Mastercard's security record has been blemished by numerous high-profile data breaches through cyber-attacks on its retail clients and payment processing partners. Since 2005, there have been instances where over 40 million Mastercard accounts were compromised by hackers focusing on centralized vulnerabilities in the broad network of payment processors, retail customers, and IT partners of Mastercard.
Published At
5/29/2024 10:06:45 PM
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