In October 2017, MasterCard began offering access to their blockchain technology as an alternative to conventional methods of transactions. The announcement came following the surge in cryptocurrency popularity this year. Digital currencies, such as Bitcoin, have been using the same technology as their framework since 2009.
Mastercard and IBM
MasterCard has been reportedly working on implementing blockchain into their existing infrastructure for a number of years. However, they are not the only major company adopting the technology.
IBM was the first Fortune 500 company to announce that it had begun facilitating payments between banks over its proprietary blockchain in the South Pacific region.
The company is currently limiting its blockchain access to merchants and banks as part of their pilot program. As with all companies hedging their bets on the technology, it is clear that they ultimately wish to expand its availability to the general public. But for now, only B2B companies can have a taste of MasterCard’s blockchain.
Advantages of Blockchain Technology
The use of blockchain, especially for transactions, comes with a host of advantages for both, the B2B world and financial institutions. Owing to its immutable and transparent nature, manipulating data on a blockchain is close to impossible.
If data is changed on one of the nodes hosting the blockchain, every other node would have to reflect the same data for the change to take effect. Consequently, the protocol is hack resistant, which has been a growing problem for the systems currently in place.
Since all transactions are logged on the blockchain itself, companies will have immediate access to this data in a simplified format. From there, audits and checks can be performed by companies effortlessly to ensure that they are complying with all relevant regulations.
Boost B2B Exchanges
Most of this technology is automated, so companies can benefit from reduced operating expenditures when transacting with other businesses or banks. Automation also brings speed along with it, which is also key for time sensitive B2B transactions.
International transactions that are currently mired in long wait times and high fees, can be processed quickly, if not instantaneously. Instead of each B2B transaction passing through several hoops and verifying authorities, the blockchain can handle many of these at once.
The implementation of this technology by finance behemoth’s has been notably different in the past. Each cryptocurrency has maintained its own blockchain ledger, that is, a record of all transactions since the currency came into existence. MasterCard doesn’t aim to create a competing currency that works the same way. Instead, they hope to integrate their blockchain with conventional fiat systems. By going down this route, they avoid the legal ramifications that come with cryptocurrencies while still keeping the ever-growing list of advantages.
As more B2B companies embrace the blockchain, it won’t be long before it becomes the de facto method of transactions. Like most technologies, with progressively better adoption, it only stands to become better over time. Eventually, the platform will mature sufficiently for mass usage, but there’s still a long way to go.