- Blockchain technology had a rough 2018 and in 2019, its application is still an issue
- Mastercard’s Vice Chairperson said that blockchain can be applied in other sectors but that cryptocurrencies are not suitable as a currency
- Western Union is reportedly learning more about blockchain technology
Several fintech leaders revealed their feelings about cryptocurrencies and blockchain technology while in Davos.
The blockchain world has been dealing with issues about security and its overall performance in 2018. Despite being marketed as a hot new technology, it has become a metaphor for everything that is wrong with Silicon Valley. While fintechs who support the technology stand by its usefulness in making overseas transfer rates more affordable, others have shunned crypto because it is unstable. Western Union, one of the bigwigs in the remittance industry, told the media last year that the company will only start using tokens once the cryptocurrency market becomes stable.
It is not surprising for the technology to be a topic of conversation in Davos as fintech leaders are there this week for the annual World Economic Forum. The tone, according to reports, is less enthusiastic than last year but the tech still has supporters. PayU CEO Laurent Le Moal, for example, said that blockchain can make payments easier. He pointed out that banks use blockchain to process transactions. Blockchain technology has made it easier for consumers to transfer money internationally as the funds that are sent through blockchain-based platforms appear in the recipient’s account within seconds.
According to experts, blockchain and crypto got a bad reputation from ICO scams and it snowballed from there. Le Moal said that nine out of 10 ICO operations “may have been fraudulent” but one of the 10 is honest and is “doing something right”.
It is also noted that tokens can provide a more stable economic backbone for emerging economies. The only problem is, not everyone agrees with Le Moal. Hikmet Ersek, the CEO and President of Western Union said: “It’s nothing as a value - it has no value as an economy”. Ersek’s view, according to observers, may have been influenced by Western Union’s experience with Ripple. The idea of the partnership was to see if Ripple’s technology is more efficient than what WU currently has. Unfortunately, the partnership was not fruitful and Ersek told reporters later on that they didn’t see any savings while using the technology. It is noted by Ersek, however, that the remittance brand is learning about the technology.
Anne Cairns, the Vice Chairperson of Mastercard shares the same sentiments. “Bitcoin behaves like a commodity”, she said. “It is unsuited right now to be a currency”, she added.
However, Ms Cairns is not dismissing the usefulness of the technology in its entirety since Mastercard has been working on building its own blockchain-based system. “We are testing it with some of the biggest banks in the world”, she said. She later explained that blockchain technology has other applications. Cairns also noted that blockchain is not a silver bullet and it won’t be in the future but it will be “an incredibly useful technology”.
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