Crypto Pundits Laud Bitcoin As Visa & Mastercard Aim To Hike Fees

Crypto Pundits Laud Bitcoin As Visa & Mastercard Aim To Hike Fees

Nick Chong
02/16/19 11:52 PM 2019-05-16 08:14:59
Since Bitcoin (BTC) was thrust into this world, its crusaders understood that it was created to be an alternative to the incumbent financial system. Case in point, Satoshi Nakamoto, the pseudonymous c

Since Bitcoin (BTC) was thrust into this world, its crusaders understood that it was created to be an alternative to the incumbent financial system. Case in point, Satoshi Nakamoto, the pseudonymous coder behind the cryptocurrency, embedded an outline discussing 2008’s Great Recession into the coinbase of Bitcoin’s first block.

While this underlying raison d’etre has been misconstrued by onlookers, this industry’s fervent believers have kept anti-establishment sentiment sequestered away for when the time is right.

With both Visa and Mastercard purportedly looking to hike transactions fees across the board, some crypto commentators have argued that this makes decentralized money’s value proposition more apparent than ever.

Get Ready For A Credit Card Fee Bump

Although plastic — credit/debit cards — are convenient, they aren’t without their costs. Visa and Mastercard, the two powerhouses in this 21st-century game, take small slices of the retail pie at every corner possible. The two firms’ enamorment with taking fees has purportedly led retailers to increase the price of goods and services by upwards of 1%, just to maintain their bottom line amid a plastic-rife economy.

Per an exclusive report from the Wall Street Journal, credit card companies are preparing to hike fees, putting pressure on retailers, and consumers by extension. Citing “people familiar with the matter,” the respected outlet claimed that by April, the two heavyweights will have increased interchange fees, which consumers pay to banks, along with processing fees that pertain to institutions in Visa’s and Mastercard’s networks.

While no exact specifics were cited, CMSPI, a merchants-payments consulting group, estimated that from April 2019 to April 2020, Visa’s newfangled fees will cost American consumers an additional $570 million.

This news comes just weeks after Mastercard was slapped with a massive fine. The European Commission, a regulatory facet of the E.U., hit Mastercard with a hefty €570.6 million fine, which equates to about $648 million U.S. dollars. Europe’s antitrust entity claimed that the New York-headquartered payment giant, valued at $206 billion on the public stock market, “artificially” raised credit and debit card fees in the Union.

Mastercard purportedly accomplished this feat by preventing European retailers from accessing bargain bank offerings outside of their home country, leading to higher prices overall for merchants and consumers alike. The Commission thus added that this act limited competition across borders, stunting economic growth in the bloc.

Bitcoin Community Roars

In response to this news, Garry Tan, the co-founder of Initialized Capital and Coinbase’s earliest angel investor, poked fun at the Wall Street darlings’ audacity to embark on such a shift in business. Taking this debacle in jest, he wrote:

“Credit card companies doubling down on fees is like Blockbuster Video raising prices at the dawn of Netflix.”

But, in true Silicon Valley fashion, the preeminent venture capitalist subsequently remarked that these “plain sight” problems can be solved through financial technologies, especially those enabled by cryptocurrencies and digital assets.

Alec Ziupsnys, better known as “RhythmTrader” on Twitter, issued a similar quip on Twitter. Centering his comment on this industry’s flagship, Bitcoin, Ziupsnys noted that the advent of the Lightning Network will force them, Mastercard, Visa, and the like, “to bend the knee.”

Some have even gone as far as to say that eventually, the aggregate value of all BTC in existence will surpass the market capitalization of Visa’s shares. Anthony “Pomp” Pompliano, the founder of Morgan Creek Digital Assets, took to his personal publication to outline why such an occurrence could come to fruition.

Pomp remarked that from a revenue multiple perspectives, Bitcoin is undervalued when compared to Visa and Mastercard. The cryptocurrency investor, known for his incessant touting of anti-establishment rhetoric on Twitter subsequently noted that this figure accentuates the network’s performance and growth potential.

In fact, he claimed that “given the fast growth rate and historical premiums” of promising upstarts and networks, the cryptocurrency could begin to make a move on Visa’s and Mastercard’s valuations. Pomp wrote:

“Today, it is 1/4th the market cap of Mastercard and 1/6th of Visa, but it wouldn’t surprise me if Bitcoin surpasses both within the next 36 months. The legacy networks were built for a world that we no longer live in and the decentralized network is built for the future.”

Title Image Courtesy of Ales Nesetril on Unsplash
Nick Chong
Nick is an avid crypto-native investor and analyst working for ParaFi Capital, a Digital Asset Management Company. Armed with all the latest crypto mumbo jumbo, Nick will navigate your crypto investments like his own. He knows the crypto market and has been actively supporting the best founders in the crypto space since 2017 - through his researched articles & his data-driven expertise. Nick is a proud contributor for Forbes, OKCoin, HTC, Binance, LongHash Research, and CryptoSlate. It's something he’s really proud of, besides his pecan pie. Oh yes, Nick loves his pecan pie and knows exactly how to bake it to perfection. You can connect with Nick on Twitter.

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