“I think cryptocurrency is junk. The idea of an anonymized currency produced by people who have to mine it, the value of which can fluctuate wildly – that to me is not the way that any medium of exchange deserves to be considered as a medium of exchange,” says Mastercard CEO Ajay Banga.
This statement, made during the 6th New India lecture in New York, comes just days after Mastercard filed a patent to link fiat and cryptocurrency transactions.
Banga argues that cryptocurrency should not serve as a medium of value-transfer, citing the volatility and anonymity of cryptocurrency as dangerous since it is cryptocurrency that is currently being used for 95% of illegal activities on the dark web, including credit card fraud and drug trafficking.
The stance is popular among the big banks – but is it really based in fact, or is it just part of the misconceptions surrounding cryptocurrency?
Yes, cryptocurrencies are currently fairly volatile but that is to be expected of any emerging asset. Banga’s statement intended to discredit the usage of cryptocurrencies as a medium of exchange does nothing but ignore the solutions that are offered by stable cryptocurrencies; and as the industry matures, price fluctuations and volatility are expected to subside significantly.
Yes, cryptocurrencies provide more anonymity than third-party payment systems. However, they are not anonymous. As all transactions are linked to an individual’s public key, it can be argued that they are actually less anonymous than physical cash transfers that occur daily between private individuals. With that said, several privacy coins are designed around privacy (using various cryptographic techniques to mask individual identity and transactional data).
Yes, cryptocurrencies may be favored among those who engage in illegal activities. However, a January 2018 report by the University of Sydney claims that the percentage of illegal transactions conducted via cryptocurrency is at around 44% – nowhere near Banga’s claims of 95%. This figure will shrink even more, once worldwide regulation is in place.
JP Morgan’s Jamie Dimon and BlackRock’s Larry Fink are two CEOs in the financial sector who support Banga’s position despite the official positions of the corporations they represent.