MasterCard Goes Full Retard on Bitcoin
MasterCard recently put out this little piece of propaganda, and to put it lightly, have gone full retard. Give it a watch and after you have pried your face out of your palms, come back for a little analysis.
By way of background, let’s just establish that Bitcoin is a competitor to MasterCard’s payment platform. Each year, MasterCard processes over $4 Trillion ($4,000,000,000,000) in more than 38 billion transactions each year. On each of those 38 billion transactions, MasterCard assesses fees to the merchant, accepting the payment. These range from .11% to .80% of the total, plus various fixed amount fees for each transaction. All told, it averages out to about 2% of every transaction. No matter how you do the math, MasterCard is making a lot of money for the service of just moving money.
Bitcoin, on the other hand charges little to no fees, and as such poses a direct threat to MasterCard’s business. Just this week, someone moved $80 million on the Bitcoin network for a fee of $.04 (4 cents).
So it is no surprise that MasterCard has come out swinging at Bitcoin in this “Perspectives” piece targeted at Asia. But it is surprising how totally inept their attack against Bitcoin is. Let’s run through the arguments (if you can call them that) presented by MasterCard. And honestly, some of these I had to clean up to make them coherent, because the way they are presented is pretty terrible. Here are the problems that MasterCard sees with Bitcoin:
- Bitcoin is unstable in terms of “intrinsic” value
- Bitcoin doesn’t offer the “recourse” that consumers are “naturally” expecting day to day from using…. cash?
- Bitcoin serves a purpose that is not necessarily, completely clear
- Bitcoin guarantees anonymity, like electronic cash
- Bitcoin is not transparent, like MasterCard wants to be
- Bitcoin goes against the whole principle of moving to a world beyond cash with greater transparency, security and simplicity
- Bitcoin is created on an anonymous computer in an anonymous location
- Bitcoin is outside the control of MasterCard and the government.
Several of these arguments are so self-evidently wrong that I don’t need to address them. Others are not problems, but rather benefits of Bitcoin. But before I address these, a couple observations from watching.
First, I couldn’t help but get the impression that this is what I would have heard in the late 1800’s by a representative of the horse drawn carriage industry. “Let’s talk about these auto-mo-biles. We are, of course looking for ways to make our buggies quicker. Everybody wants that. But good heavens, these monstrous internal combustion contraptions are not the answer! Do you know how dangerous an explosion can be?? We are finding new ways to add 2, 4 even 8 horses to our new carriages. That is what people want, not some machine made in some factory somewhere. You don’t even know who works in those places, unlike your friendly neighborhood blacksmith and feed salesmen.” It reeks of desperation. Bitcoin is out in front on security, transparency and increasingly simplicity. MasterCard and other credit card processors are quickly falling behind in these areas, and people know it.
Next, if you going to have someone go on camera and flat out lie, misrepresent and propagandize, at least find someone who is good at it. Matthew Driver can’t seem to suppress the guilty grin one gets when they are being this bald faced in their lies. It’s the look the belies the thought process between “I can’t believe people are going to buy this!” and “If I just look convincing, people will buy this!” A little career advice for Mr. Driver: get better at lying or get out of the financial services industry.
Now, let’s address these arguments against Bitcoin:
Bitcoin is unstable in terms of “intrinsic” value
*sigh* This is such an economically ignorant argument that I actually feel bad for MasterCard’s SouthEast Asia division. It has been well nearly 150 years since the concept of intrinsic value was thoroughly debunked by Carl Menger and the subjective theory of value that has driven every economic advancement of the 20th and 21st Century. To claim Bitcoin is unstable in intrinsic value is the argument of crackpots, cranks and the economically illiterate. As Menger wrote in his 1871 work, Principles of Economics:
Value is thus nothing inherent in goods, no property of them, nor an independent thing existing only by itself. It is a judgement economizing men make about the importance of goods at their disposal for the maintenance of their lives and well-being. Hence value does not exist outside the consciousness of men.
So for someone in the financial services industry to make an argument for intrinsic value in 2014 is pure snake oil hucksterism.
Bitcoin doesn’t offer the “recourse” that consumers are “naturally” expecting day to day from using…. cash?
I’m completely at a loss as to why Mr. Driver thinks that consumers naturally expect some sort of recourse from cash. Sure, there are chargebacks available with credit cards, but what sort of recourse is tied to cash? Especially, considering that the contention will be made over and over in this presentation about how inefficient, insecure and anonymous cash is. Cash is the system MasterCard is contending they want to move beyond. But it seems to offer some great recourse that consumers are just naturally expecting from their payment systems? Maybe Mr. Driver is just misspeaking because he’s such a bad liar. Or maybe they just threw this thing together and used the marketing team from Sony to help build their case. In any case, this argument makes no sense.
Bitcoin serves a purpose that is not necessarily, completely clear
This is MasterCard’s veiled aspersion that Bitcoin is only for buying drugs. Of course, non-Bitcoin financial services would never be used for anything illicit. Except for the evidence to the contrary here, here, here and…. here. While MasterCard may not be used to swipe at the local Hookers & Blow Emporium, their relationship with these banks gives them no credibility to ta
lk about unclear purposes of competing systems.
But this misses the point entirely: Bitcoin clearly serves a purpose as thousands of merchants have started accepting it. Millions of people hold and use Bitcoin. For these people, the purpose is clear. If this intrinsic-value seeking moron isn’t clear on the purpose, I can’t say I’m surprised.
Bitcoin guarantees anonymity, like electronic cash
No. Bitcoin doesn’t guarantee anything. And certainly not anonymity. This has been gone over in depth by several sites. Bitcoin is pseudonymous, unlike cash. The Secret Service even testified that before Congress that criminals aren’t interested in open peer to peer currencies, precisely because they aren’t anonymous. This is an argument that someone ignorant about Bitcoin would make way back in 2011. In 2014 this just reveals a persistence ignorance or deliberate misrepresentation.
Bitcoin is not transparent, like MasterCard wants to be
The blockchain is the most transparent ledger of transactions the world has ever seen. I defy MasterCard to publicly publish their transactions, both on their network and their internal company records… in real time.
Bitcoin goes against the whole principle of moving to a world beyond cash with greater transparency, security and simplicity
Bitcoin is founded on the principle of moving to a world beyond cash with the greatest transparency, the greatest security and simplicity. It’s at this point that you can really see MasterCard going full retard. This argument is akin to saying that SpaceX goes against the whole principle of space exploration. Amazon goes against the principle of online retail. The iPhone goes against the principle of portable computing. It’s such a desperate statement. While MasterCard continues providing the same old, status quo services, it tries to pretend that it is on the vanguard of innovation. Desperate, Matthew. Totally desperate.
Bitcoin is created on an anonymous computer in an anonymous location
Find a MasterCard credit card. Locate where it was manufactured. Oh wait, you have no idea. But what about the currency under it? Find the particular Federal Reserve computer that issued the currency unit you spend when you drive through Starbuck’s tonight. Oh wait, that’s impossible. Now, install the core bitcoin client on your computer and select mine. The bitcoin creation is now not anonymous. How easy was that?
Bitcoin is outside the control of MasterCard and the government.
Now here is the actual heart of the matter. MasterCard can’t control Bitcoin. And neither can the governments that MasterCard is so eager to service. In the current system, MasterCard is a crony for state governments and helps them to enforce their taxation scams by capturing, tracking and reporting all data. Bitcoin is the exit door for the financial system that is used by states like the US Government to finance wars, cages and oppression. MasterCard is complicit in these activities and profits from them. The real danger of Bitcoin is that it will not just topple the existing financial system, but the entire state apparatus.
Free (as in speech), open source, decentralized, peer-to-peer systems are replacing the old centralized systems of the past. Those old systems will have to adapt to provide better service to their customers or die. MasterCard knows this and it is worried. So worried that they put a bad liar out to try to convince people that Bitcoin is bad. In the end, I don’t think anybody is buying it.