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Mon 1 Oct 2018 02:13 PM

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Cryptocurrencies are like gambling, says Mastercard's MidEast boss

Mastercard Middle East and Africa president Raghu Malhotra says he is 'not a great believer' in cryptocurrencies

Cryptocurrencies are like gambling, says Mastercard's MidEast boss

Cryptocurrencies are “like gambling”, even if the underlying blockchain technology has a number of potential and promising applications, according to Mastercard’s president for the Middle East and Africa.

Speaking to Arabian Business on the sidelines of Mastercard's "Connecting Tomorrow" event in Barcelona, Raghu Malhotra – who formerly held a number of senior positions in Citicorp, American Express and ANZ Grindlays Bank – said that the company is “not a great believer in cryptocurrencies like Bitcoin.”

“They’re speculative. If that’s how you want to use that technology, you might as well gamble somewhere or do some commodities trading,” he said. “It doesn’t solve for real-world problems like that.”

Malhotra added that he believes that “blockchain is a solution looking for a problem.  It’s not the other way around.”

“I don’t think that people really understand how the blockchain is broken down and where it can be efficient,” he said. “Where you have better and more efficient solutions that already exist, trying to apply blockchain to it is a bad idea.”

Additionally, Malhotra said that he believes the cryptocurrencies would only actually work if they were “open and transparent, but regulated.”

“It’s used for all sorts of things it shouldn’t be used for,” he said. “How can you make monetary and fiscal policy when there is no control of the supply? It goes against the basics of economics.”

In July, Mastercard’s president and CEO, Ajay Banga, said he considers cryptocurrencies “junk” and that their anonymity and price fluctuations mean they don’t deserve to be considered as "a medium of exchange.”

However, Malhotra said that Mastercard does see potentially beneficial applications for the underlying blockchain technology that makes cryptocurrencies possible, and has filed a number of blockchain-related patents with the US Patent and Trademark Office.

“We do believe [blockchain] could have applicability in cross-border payments, because it drives an efficiency. If it drives efficiency, openness and is transparent, that’s fine,” he said. “It also [could be useful in providing] proof of provenance, like a car manufacturer who uses blockchain to make sure he has an authentic part. Our focus is on these kinds of use cases.”

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