Mastercard? Image by Braden Kowitz via License: Creative Commons

The major credit card provider is officially launching its alias system for exchanges and wallets. It will initially serve the corridor from Latin America to Europe. But what’s actually new about it?

The credit card provider Mastercard has been working with cryptocurrencies and the potential of crypto and blockchain for its business for some time. With the so-called Crypto Credential Aliases, the largest project to date is now officially going live.

Mastercard is introducing an alias system: Crypto Credentials are intended to replace addresses with names that are easier to remember. This means that you don’t have to exchange the long and complicated blockchain addresses that you know from Bitcoin and Ethereum, but you can initiate a payment just as easily as with PayPal.

However, such alias systems are anything but new. There are already countless of them, ENS, PayMail, OpenAlias, PayID, FIO and whatever they are called. The idea addresses an obvious weakness of cryptocurrencies and is therefore almost as old as Bitcoin itself. However, for reasons that are not entirely clear, no system has yet succeeded in taking off on the market.

A bonus and the big name

In themselves, Mastercard’s Crypto Credentials seem like another alias project that is neither particularly exciting nor promising. At least the credit card provider adds a bonus to the pure alias: “The exchange of metadata eliminates the complexity of a user having to know which assets or chains are supported by the recipient.”

In fact, the exchange of addresses and tokens has become somewhat confusing in a world of many blockchains. Through metadata, users of crypto credentials can now know whether the recipient accepts a certain asset, which could be a great relief.

The second advantage is of course Mastercard itself. Mastercard is a big name and thanks to this alone it is able to convince other players to join the project. When Mastercard knocks, the door is opened. So far, the exchanges Bit2Me, Lirium and Mercado Bitcoin have integrated the credentials. The wallets Foxbit and Lulubit are in the starting blocks.

Mastercard initially wants to cover the corridor between Latin America and Europe, more precisely: between almost all Latin American countries from Mexico to Chile and the European countries Portugal, Spain, Switzerland and France.

But it doesn’t work without a catch

Of course, the crypto credentials are not free. Everything has its price, especially when Mastercard is involved. The crypto credentials do work with non-fiduciary wallets where the user holds his own keys. But Mastercard also introduces a bit of regulation through them.

In order to receive the credentials, you apparently have to be verified by the exchange according to Mastercard’s standards. During the transfer, the credentials “support the exchange of ‘Travel Rule’ information for cross-border payments”. The press release does not say whether this is only optional or mandatory, i.e. whether Mastercard supports or enforces it.

Anyone who still agrees to do so will receive an alias with which they can receive money on the participating exchanges, regardless of the asset or blockchain. When a user sends money, Mastercard’s system checks whether the received wallet also supports coin and chain.

The system is practical and convenient for most users: instead of asking the other person every time which exchange has the crypto address for the corresponding asset, you simply send the easy-to-remember alias. This definitely simplifies a lot of things.

A select group of users will initially be able to benefit from the credentials. Over the coming months, they will be offered to all seven million users of the participating exchanges.

The transactions between Latin America and Europe are just one of many possible use cases for credentials. Mastercard also mentions NFTs, tickets and other payment solutions as possible, depending on the market and requirements.

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