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A major technical problem of current blockchain technology is that current platforms do not permit different transaction formats in the same blockchain. But now MasterCard, the US-based plastic card transaction provider, has announced that it has registered a new type of blockchain technology with the US Patent and Trademark Office that fixes this problem.
The new technology, according to the filing, resolves the formatting issues that have dogged generation-one blockchain products. Instead of requiring that the format be the same, the new MasterCard product permits blockchains to be broken up into different subnets, each with the capability to carry out a different type of transaction. MasterCard hopes that this will add flexibility to blockchain systems and prevent a scenario in which they are only suitable for a few niche transaction types.
MasterCard’s main interest is in increasing the functionality of permissioned blockchains. Anybody can change a record on the public blockchain, but permissioned blockchains require some condition to be met before changes can be made. Naturally, these kinds of blockchain are the most useful, so they also need to have a level of functionality to match.
Reduced Computing Costs
But why develop the technology in the first place? MasterCard says that one of the main reasons was to reduce computing costs. Operating many different blockchains at onc, the company says, requires significant computing resources which themselves require large expenses on energy and capital. They say that the systems that they will be able to build based on partitioned blockchain technology will reduce the overall costs of cryptocurrencies, especially when users require multiple transaction formats.
MasterCard’s incentive for entering this emerging payment space is clear. The company wants to remain at the centre of the world’s payment infrastructure, especially if it moves over to the blockchain. Having its own patents in the area gives the company a competitive advantage over its peers, and may help it to claw back market share from rival Visa.
The Wider Impact Of MasterCard’s Decision To Enter Blockchain
For years, blockchain was seen as a fringe technology, and it was not particularly well understood. Like the early internet, its use cases are still emerging. The fact that MasterCard is now entering the space is an indication to many that blockchain technology is being taken seriously. The company is right at the heart of the global payments system and is critically positioned to offer support to companies and financial institutions wanting to take advantage of blockchain technologies.
This is not the first time that MasterCard has shown a direct interest in blockchain technology. Last year, the card payment provider drew up plans to allow users to link their blockchain accounts to fiat currency accounts. The purpose of this was to create a more liquid and accessible exchange between regular fiat government money and crypto assets.
Mastercard also made a significant investment in combating identity fraud on blockchain networks, looking for ways to make the platform safer and easier to use. The firm wants to find out whether it can engage in the crypto space profitably and get an early lead, as it did in the card payments sector in the 1970s.