Even as the genesis of blockchain came from a technology made as a revolution against banks, it has since become adopted by financial institutions all over the world. The latest to jump on the trend is Mastercard, with the global payments giant filing multiple patents to use blockchain technology for payments.
With over 80 patents at last count, Mastercard seems to be betting big on the future of blockchain technologies. Moreover, these filings have also been spread out across payments solutions, identity solutions and more.
Partitioned Blockchain For Multiple Currencies
One of the biggest patents Mastercard filed was for the existence of a partitioned blockchain. Called a ‘subnet’, it would be a way to store the data of multiple cryptocurrency ledgers.
Currently, interoperability is one of the biggest problems plaguing blockchain technology. It is not possible to simply transfer data or value from one blockchain to another, leading to the need for interoperability protocols.
Protocols such as the InterLedger Protocol or ILP are used today in order to conduct transactions between blockchains, usually owing to its properties as a layer between two networks.
According to Mastercard, multiple blockchains keeping multiple transaction histories consumers “significant computing resource”, along with a large amount of processing power. This led to the creation of the partitioned blockchain.
The presence of so-called subnets will allow for the storage of many different payments networks to function together. The partitioned blockchain will also allow the transfer of funds from one blockchain-powered system to another.
This is but one of their forays into the blockchain space.
Linking Fiat And Crypto Accounts On A Public Chain
Mastercard has also looked into linking traditional financial systems with blockchains. They believe could offer them great benefit, with a trickle down effect for the end user.
In this patent, Mastercard describes how the principles of managing fractional reserve banking corporations can be applied to “blockchain currency”. On the blockchain, the company aims to store account identifiers for personal user identification, along with fiat and blockchain currency amounts.
The company stated that the network “may provide consumers and merchants the benefits of the decentralized blockchain while still maintaining security of account information”.
Moreover, the presence of transactions on a blockchain not only allows for greater transparency while maintaining privacy, it is also better for law enforcement. Transactions can be much more easily seen, allowing for the stricter enforcements of fraud and risk prevention standards.
The network is also said to reduce the transaction time per usage of the chain, even though it is fast even today. Mastercard has also looked into methods to make blockchains even faster.
Quicker Node Verification Using Fast Track Flags
The process of adding a new node to an existing blockchian currently is a long and delayed one. Since the node has to synchronize with all the transactions conducted before it joined the network, this could mean that it will process billions of transactions before it began functioning.
However, one of Mastercard’s patents propose the creation of fast track flags which are embedded within the block headers. This means that new nodes can scan the flags and sync up with the blockchain at a much faster level.
Even though this might not seem as groundbreaking as the other patents the company has filed, it holds an important place in the way Mastercard operates. This patent is meant to make the adoption of their blockchain much more seamless, as any new node added will be able to synchronize faster.
This is also seen in the other specifics of the patent, wherein there is the proposal of software that is programmed to perform database specific tasks, but for blockchains. This includes functionalities such as querying the chain, hashing transactions and operations regarding the signing of transactions. This would allow them to continue backend operations without too much of a hitch.
Secure And Non-Fraudulent Card Transactions
One of Mastercard’s biggest assignments is to prevent credit fraud or identity theft, owing to their area of expertise. Moreover, cards today are also susceptible to having their information swiped, leading to a security risk.
Therefore, Mastercard has filed a patent that proposes the verification of payment cards by the customer. This system utilizes the blockchain as a secure method of verification that requires little to no participaton by the consumer.
The system encodes the information of the cards and stores it on the blockchain, which is then assigned a public and private key. Upon a payment request being processed, the verification system will verify the inromation.
Towards the same end, another patent filed by the company aims to redefine the way identity data is stored. One of the biggest use-cases proposed for blockchain, Mastercard threw its hat into the ring with a patent for a semi-private blockchain to be used for identity verification.
This system functions on a “subordinate” and “superior” node demarcation that allows it to perform its functions. The company will approve a certain number of sub-nodes that are verified by them. Then, after assigning a signature to each of these nodes, a hashing module from Mastercard’s servers will generate an “identity value” for every entity recorded on the chain.
This will create an irrefutable and permanent record of the identity of any individual who uploads their details on the network. It also cannot be spoofed in any way, owing to the verification of submitting nodes.
The move towards using blockchain shows that the technology is the next big step in Fintech. There are many more patents that the giant has filed, realizing its world blockchain dream one patent at a time.
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