As the world becomes increasingly digitalized and interconnected, the rise of cryptocurrencies is no surprise. Mastercard, PayPal and Robinhood, three major players in their respective industries, have recently made headlines for their involvement in the crypto space.
Mastercard, one of the world’s largest payment processors, has announced plans to support cryptocurrencies on its network later this year. In a blog post, the company cited the growing demand for digital assets and the importance of providing customers with choice and flexibility in payments. Customers will be able to convert cryptocurrencies to fiat currencies, with support for stablecoins also being considered.
Mastercard’s move into crypto follows the launch of its proprietary digital currency, the Mastercard Digital Enablement Service, which facilitates secure payments across multiple channels. The company has also filed for several patents related to blockchain technology, indicating a deeper interest in the crypto space.
Similarly, PayPal, a popular online payment platform, announced last year that it would allow users to buy, hold and sell cryptocurrencies through its platform. The move was seen as a major endorsement for the legitimacy of crypto assets. PayPal has also partnered with various digital asset firms to further its involvement in the space, including BitPay and Paxos. Additionally, the company is exploring the possibility of creating its own digital currency.
Robinhood, a commission-free trading app that has become wildly popular with younger investors, has also made strides in the crypto market. The company launched its cryptocurrency trading platform in 2018, allowing users to buy and sell Bitcoin, Ethereum and other digital assets. Since then, Robinhood has continued to expand its offerings in the space, even adding support for Dogecoin earlier this year.
The interest from these major companies in the crypto space is not surprising given the industry’s growth and potential. The total market capitalization of all cryptocurrencies has increased from around US$19 billion in early 2017 to over US$2 trillion as of April 2021 according to CoinGecko. Increased adoption by institutional investors as well as the acceptance of major companies like Tesla and Visa has also brought attention to the potential of digital assets.
Despite the hype, there are still concerns around the stability and legitimacy of cryptocurrencies. The high volatility of the market, as well as the lack of regulatory oversight, continues to cause hesitation for some investors and businesses. However, proponents argue that these issues are gradually being addressed and will eventually lead to increased adoption and acceptance.
In addition to the potential for increased adoption of cryptocurrencies for payments and transactions, there are also opportunities for innovation in the financial industry. Decentralized finance (DeFi) and non-fungible tokens (NFTs) are two examples of new applications for blockchain technology that could transform traditional financial systems.
DeFi refers to decentralized applications that aim to provide traditional financial services, such as lending and trading, without intermediaries or central authorities. This has the potential to increase financial inclusion and accessibility for individuals around the world. Similarly, NFTs are unique digital assets that can represent anything from a piece of art to a tweet, and can be traded on blockchain platforms. The growing interest in NFTs has led to the rise of digital art markets and even the possibility of using NFTs to verify ownership of physical assets.
Overall, the rise of cryptocurrencies and blockchain technology represents a significant shift in the financial industry. Mastercard, PayPal and Robinhood are just a few examples of major players recognizing the potential of digital assets and the need to adapt to changing trends in consumer behavior. As the industry continues to evolve, the future of finance is likely to look very different than it does today.
For many outsiders, the world of cryptocurrency is a mysterious and intimidating one. The concept of digital currency, coupled with technical jargon such as gas fees and wallets, can make it feel like an exclusive club reserved for tech experts and financial gurus. This perception is why crypto needs more accessible on-ramps to bring in new users and investment.
Recognizing this, many established mainstream financial institutions have started exploring and investing in the crypto space. In recent weeks, big names such as Mastercard, PayPal and Robinhood have rolled out new crypto products and services to make the space more accessible, presenting an opportunity to open cryptocurrency up to a wider audience.
Despite the crypto market’s current downturn, these trusted providers believe that they can offer a more streamlined entry into the space. They understand that the industry is in a “transitionary period,” as it tries to figure out the technology’s potential and important use cases.
According to Raj Dhamodharan, EVP of blockchain and digital currencies at Mastercard, the energy is focused on figuring out what else can be extracted from the technology, identifying the next use cases beyond cryptocurrency. Public blockchains, with the ability to store and move value over time, can function as a utility. However, regulatory compliance is essential and must be demonstrated to encourage wider adoption by the public and financial service providers.
Offering crypto options through banks and trusted financial institutions, perceived as reliable and trustworthy, could encourage adoption by those new to the world of digital assets. Cryptocurrency needs to move away from being perceived as niche by the mainstream; these big names are opening doors to the ecosystem, providing the catalyst to accelerate mainstream adoption.
Jose Fernandez da Ponte, Senior Vice President, and General Manager of Blockchain, Crypto, and Digital Currencies at PayPal, sees this as an opportunity for a faster, more inclusive financial environment. The existing infrastructure of these traditional institutions lends itself to a broader customer base, moving beyond the current dedicated, niche crypto environment.
On April 28, Mastercard launched “Crypto Credential,” a set of standards and infrastructure to certify interactions between consumers and businesses using blockchain. In identifying the need for regulatory compliance, Mastercard has created some of the necessary infrastructure to further streamline the entry to crypto, enabling smoother interactions and providing a more secure environment to buy and sell digital assets.
In conclusion, while the crypto market weathers a downturn, significant mainstream institutions providing greater access into the crypto ecosystem can only be a good thing for the sector’s future. Trust and reliability go hand-in-hand with accessibility, allowing institutions to move from niche to mainstream and dissolving some of the perceived complexity in the world of crypto. A new transitional period for cryptocurrency and its expanding use-cases encourages wider adoption, moving the space from niche to more significant mainstream importance.
