Visa vs Cryptocurrency: a Brief History from the "Bubble" to the Introduction
The cryptocurrency industry is still too young, for this reason, the attitude towards it has been rather biased recently. Now, when the digital economy begins to slowly but surely enter into many spheres of human life, the rhetoric of statements about it also changes. Of course, there are still many people who consider Bitcoin and other cryptocurrencies as a bubble or a financial pyramid, but their percentage is constantly decreasing.
Large-scale failure in the Visa network in the summer of 2018
The first day of the summer of 2018 was well remembered by European users of Visa bank cards. That day, many people faced problems in conducting transactions. This fact was confirmed by the corporation itself. The difficulties lasted for almost a day, and the very next day, on June 2, company representatives explained that there was no outside interference in the work of the payment system. It was just a hardware failure. However, that reason has further strengthened the opinion of representatives of the crypto-world that the global financial system is on the verge of serious changes.
As many crypto enthusiasts have noted, there was not a single failure over the entire period of Bitcoin cryptocurrency work (since January 2009). Of course, this does not mean that Bitcoin or any other digital coin is the best and real alternative to the organization of monetary transactions at the moment. Nevertheless, both Visa employees and representatives of the cryptocurrency world should think about the future of finance now.
The introduction of cryptocurrency in the banking sector (prospects and problems)
If the implementation of technological solutions from the cryptocurrency world into the banking sector will be successful, then this will entail a rapid growth in the capitalization of the digital coin market. Already now, there are quite good working products that can contribute to this. Ripple (cryptocurrency, which is in third place in the global ranking of CoinMarkepCap) succeeded in the issue of integration into the banking sector most of all. Its technology solutions Xcurrent and Xrapid have been actively used by credit organizations all over the world for several years, and are also being tested by money transfer providers.
However, at the moment cryptocurrency solutions have a number of problems that prevent their widespread implementation and moreover the crowding out of traditional payment systems like Visa or Mastercard.
One of the main problems is the attack 51%, it potentially affects the majority of coins. In the case of such actions, hackers can gain control over the emission of network tokens. This means that attackers are able to produce them in large quantities in a rather short period of time. If coins, which are mined in such a dishonest way, enter the market, then it will lead to a rate’s collapse. A similar scenario occurred with Bitcoin Gold in May 2018. Potentially, this can be done with almost all the coins, the main question is only the amount of money that hackers are initially willing to spend in order to organize such an attack. Accordingly, the larger the cryptocurrency is, the more expensive and technically more difficult it will be to crack.
Another problem that stands in the way of large-scale integration of cryptocurrencies in the everyday financial life of people is scalability. For comparison, the Bitcoin network can process only 7 transactions per second, Ethereum - 15, and Visa, potentially - 24,000, but in fact, it often processes not more than 1,700. This means that if there are a huge number of users in the Bitcoin network, then they will have to wait for confirmation of their transactions for several days, or even weeks. It is worth noting that the developers are working actively to solve this problem, but this requires a sufficient amount of time.
What did Visa representatives say about cryptocurrency?
It is worth noting that the number of negative statements about cryptocurrency decreased in direct proportion to the growing popularity of them. If several years ago, almost all large traditional financial institutions did not take Bitcoin and other coins seriously, now we can observe a completely different picture.
For example, let`s recall what representatives of the corporation Visa said about cryptocurrency.
Just recently, namely in March last year, Visa CFO Vasant Prabhu said that Bitcoin is nothing but a bubble, and the main active users of this coin are "fraudsters and dirty politicians." His statements were explained by the rapid rollback of the rate of Bitcoin and other cryptocurrencies. He said that people who invest their own money in cryptocurrencies "have no idea what they are doing."
After just half a year, namely, on October 25, 2018, Visa CEO Alfred Kelly said in an interview with CNBC that they would be ready to work with cryptocurrencies, but only when they become “mainstream”. He believes that cryptocurrency can make real competition to fiat only in the long term. To achieve this, digital coins must stop being a commodity and go to the payment instrument class. According to him, the Visa company seeks to be in the center of any payment flow. For this reason, when cryptocurrencies become really popular among the masses, then the corporation will start working in this direction.
Finally, on March 18, 2019, it became known that the company is assembling a team of blockchain-specialists. At the moment, the corporation published the vacancy of the general manager of the future Visa Crypto Team.
We want to remind you:
His main responsibilities will be to implement a strategy for introducing blockchain technologies into the company's products and supervising the work of a specialists team.
In any case, it can be concluded that the interest of banks and classical exchanges in cryptocurrency is connected not only with the desire to earn on user commissions. Many large market players understand that blockchain and digital coins are already successfully changing the global financial landscape today. And today's article is an excellent confirmation of this.
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