Mastercard has launched an innovative solution that allows for seamless interaction between central bank digital currencies (CBDCs) and various blockchain networks. Developed in collaboration with Cuscal and Mintable, this groundbreaking solution opens up new possibilities in the world of digital finance.
The key advancement of Mastercard’s solution is the ability to “wrap” CBDCs onto different blockchains, including Ethereum, while still maintaining control and oversight by central banks. This means that consumers can now use CBDCs for a variety of purposes, such as purchasing non-fungible tokens (NFTs) and accessing decentralized applications (DApps). Mastercard’s solution removes barriers, allowing users to effortlessly engage in commerce across multiple blockchains.
One of the essential features of Mastercard’s solution is its robust security measures. Authorized parties must undergo rigorous Know Your Customer (KYC) verification and risk assessment by licensed service providers to hold, use, and redeem CBDCs. This dual-layered security approach not only protects the interests of central banks but also instills trust among CBDC users.
Richard Wormald, Division President, Australasia at Mastercard, emphasized the importance of this development. He highlighted the growing consumer demand for engagement in commerce across various blockchains, including public ones. Wormald mentioned the potential of this technology to enhance consumer choices and foster collaboration between public and private networks, leading to a significant impact on the digital currency arena.
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This innovative solution by Mastercard leverages the power of the Multi Token Network introduced in June 2023. The Multi Token Network consists of two essential components that strengthen payment and commerce applications using blockchain technology.
The Mastercard Crypto Credential establishes universal verification standards and infrastructure to facilitate secure interactions within blockchain networks. It ensures seamless interoperability, allowing frictionless transactions across supported payment tokens and networks on a large scale.
Mastercard’s Multi Token Network, currently in the beta testing phase, plays a pivotal role in expanding blockchain technology across diverse payment use cases. By enabling the swift transfer of digital currencies across Mastercard’s trusted network, it paves the way for broader participation in crypto ecosystems using reliable forms of currency. These digital currencies offer programmability, transparency, and compliance, further boosting their adoption.
Mastercard’s groundbreaking solution bridges the gap between central bank digital currencies and blockchain networks, representing a significant step toward the future of digital finance. It enhances security, facilitates cross-blockchain transactions, and empowers innovation within the digital currency space.
In a live environment, Mastercard demonstrated how the solution enables the holder of a pilot CBDC to purchase an NFT listed on the Ethereum public blockchain. The process involves “locking” the required amount of the pilot CBDC on the RBA’s pilot CBDC platform and minting an equivalent amount of wrapped pilot CBDC tokens on Ethereum.
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