Mastercard CEO: “Bitcoin a Bubble, Junk”; So What’s up With the Branded Bitcoin Card?

Mastercard's Banga sees Bitcoin as junk, but his company is dabbling in the space, including allowing for purchases with Mastercard branded bitcoin debit cards.

Corporate heavy weights are going to learn, sooner than later, that it’s not such a good idea to attack Bitcoin. This is especially the case for those who are in head positions at companies that are already benefiting, or trying to find ways to benefit, from the space.

The latest to join the Bitcoin-bashing bandwagon is Mastercard’s CEO Ajay Banga. He recently called the cryptocurrency junk, while completely ignoring the many ways his credit card company is capitalizing on the space.

His holier-than-thou take on Bitcoin is line with other commenters who’ve weighed in on why they detest Bitcoin. The problem is that these naysayers are already dabbling in the space in some capacity.

Banga used the same, go-to logic as others like JP Morgan’s Jamie Dimon in trying to discredit Bitcoin. That includes Bitcoin not being regulated by a centralized government authority. And of course, volatility was also behind his lamenting of Bitcoin as junk.

But there are a host of issues with Banga’s stance. This includes the fact that Mastercard is already making moves in the crypto world, which if successful, will serve to help it further line its own financial coffers.

So what to make of Banga’s statements? Let’s explore.

Already in the space

We told you about Banga weighing in on all the trending topics related to Bitcoin. He didn’t miss a mark in trying to make his case, touching on the increasingly becoming tired subjects that crypto naysayers always broach.

Banga did mix it up a bit by making a much-left-to-be desired statement about buying bottled water with Bitcoin. Here’s what he had to say:

“If I pay for a bottle of water in bitcoin, one day it is two bottles for a bitcoin the other day it is 9,000 bottles. This does not work. Any currency needs stability and transparency, otherwise you will get all the illegal activities in the world. Why was the ransom for the (Wannacry) virus collected in bitcoin? Why has China cracked down on bitcoin?”

When Banga uttered these words, he left out an interesting tidbit about how Mastercard is already playing in the space.

In circulation are many Bitcoin prepaid debit cards brandishing the Mastercard logo. There’s even an “anonymous” Bitcoin-related Mastercard. It seems designed specifically for those who appreciate being able to make purchases without their identities being unveiled. The fact that there’s no government entity at bay to butt in on what they’re buying is the icing on the cake for crypto enthusiasts.

Banga’s Mastercard allowing for use of its services to process such transactions shows that it recognizes the opportunities to peddle its service in the space and make money.

So, on one hand, Banga wants transparency to prevent illegal activities, but then on the other hand his company offers an anonymous Bitcoin card.

Is this an example of the left hand not knowing what the right hand is doing? Is it an example of someone talking out of both sides of their mouth? Or is this an example of both and everything in between as the threat of cryptocurrencies mounts for those in the industry who see cryptos encroaching on their space?

One company brags about its MasterCard-logoed by stating, “instead of carrying around cash, the PLATINUM Prepaid MasterCard offers you the highest level of prestige, security and comfortability of a Prepaid MasterCard card.”

See Steemit for a list of the Mastercard-related Bitcoin cards.

Not his first rodeo

This is not the first time Banga and other Mastercard executives have come out against Bitcoin. This is also not the first time their words ran afoul of their actions.

In 2015, Banga said he was worried about Bitcoin because there was no government backing it. However, he said he was interested in Blockchain, the technology that underpins the crypto. What’s more, his Mastercard was signing up to help fund a Bitcoin-related startup!

When Banga made those comments in 2015, Mastercard was signing up to be part of the fundraising efforts for the Bitcoin-related Digital Currency Group. At that time, Fortune referred to Mastercard’s move as seeming to be “its first formal foray into the bitcoin space.”

Legitimizing crypto-relate product

At the beginning of the year, Mastercard filed a patent application related to a cryptocurrency project it has in the works.

Specifically, it is seeking a patent from the U.S. Patent and Trademark Office for a project called Information Transaction Infrastructure. The thought is Mastercard wants to build a system that facilitates the refund of monies for purchases made with cryptocurrency.

Mastercard states in its application that the basic principle of the arrangement is that a user of the shared wallet service has two types of wallet. Firstly, they have a "public" wallet on-the-chain publicly visible and verified transactions. The user will make and receive cryptocurrency payments external to the shared wallet service using a public wallet.

Using this approach, the refund problem can be addressed--a payment received from the public wallet can be refunded by an equal payment back to the public wallet. 

What to make of this?

Mastercard is making moves that clearly position it to benefit from the current, and projected growth with cryptocurrencies. Still, Banga continues to come out against one of the biggest cryptos – Bitcoin – by calling it junk and a bubble.

People are starting to wake up and see what’s behind the logic of these gurus, especially those in finance. These traditional finance folks stand to lose a lot of money as cryptocurrencies continue to grow, and take away their market share.

As the tide continues to turn so that Bitcoin, and the many offshoots of it are more accepted, the beefs these naysayers have will be scrutinized even more. Perhaps then they’ll treat this new-fangled way to buy and sell things as more than junk and bubble, and instead look at them as what they really are – a finance force to be reckoned with, and not ridiculed.

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