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According to Jorn Lambert, the Chief Digital Officer at Mastercard, "the genuine inherent worth of blockchain remains untapped." Lambert refers to the programmable nature of transactions, the unchangeable nature of transactions, and the capacity to execute delivery versus payment and continuous forms of payments.
Lambert states that "until the capacity to genuinely develop financially-regulated applications on the blockchain emerges, the advantages will never reach the mainstream." Consequently, "regulated financial institutions play a critical role in enabling [tokenized blockchain money transfers] to achieve widespread adoption."
The foundational systems that facilitate global connectivity, interaction, and transactions for individuals, businesses, and organizations are transforming due to innovation. The global economy is shifting from an information-based system to one where the transfer of value takes precedence.
Despite blockchain acquiring a negative connotation after the cryptocurrency sector's disastrous performance in 2022, numerous experts maintain that the technology underlying digital assets and blockchain is headed toward becoming indispensable for storing and transferring money.
We are still hoping to permanently alter the flow of capital by enhancing the system's overall efficiency, programmability, and immutability.
According to Lambert, the global economy presently relies on commercial bank money and banks' balance sheets. He asserts that "commercial bank money," also known as "tokenized deposits," must be securely, reliably, and expansively migrated to the blockchain for blockchain-based money transfers to exert substantial influence.
The Future of the Payments Landscape
When Apple introduced the App Store, no one foresaw the emergence of Uber or the gig economy. Lambert emphasizes the need to "actually create an environment that facilitates such developments."
To offer a set of foundational capabilities to ensure secure, scalable, and interoperable transactions within the digital asset and blockchain ecosystems, Mastercard is actively developing a Multi-Token Network (MTN), which can be likened to a digital asset "app store" ecosystem.
It is crucial that "[any digital asset solution] can interact with the real world and different blockchains…" and in case of any issues, there should be guidelines on how to address them," states Lambert.
Furthermore, he believes that easily achievable use cases for blockchain-based benefits and tokenization value additions, such as programmability, encompass cross-border payments, trade finance, supply trade finance insurance, and capital markets.
Digital Currency will Revolutionize Payments
To achieve scalability, it is essential to migrate current regulated money, including central bank-backed money, onto the blockchain. In response, Lambert remarks, "That objective has not been accomplished yet."
The ability to transact and fulfil people's desires with a trustworthy and understandable currency is pivotal for the scalable success of any ecosystem.
Therefore, Lambert believes bridging the gap between the established financial industry and the emerging FinTech sector is the missing piece of the blockchain puzzle.
"They are presently unable to collaborate because there is no framework enabling them to operate in a secure environment," states Lambert.
Lambert expresses, "It will be exceptionally intriguing to observe the outcome because not only are we seeking engagement with financial institutions, FinTech developers, and academia, but we are also requesting that central banks participate as observers to ensure complete transparency and the development of real-world solutions."
While Lambert acknowledges the potential of central bank digital currencies (CBDCs), he also acknowledges their regional applicability limitations and the need for more consumer awareness. He believes new approaches are necessary to enable scalability and the transfer of regulated money onto the blockchain.
As Lambert emphasizes, "If it cannot scale, then it becomes irrelevant."
Tokenization and programmability in money transfers are two of the most groundbreaking concepts facilitated by blockchain technology. Consequently, the inclusion of conditions within transactions enables the implementation of if-then logic in financial dealings.
Lambert finds the programmability of tokenized deposits intriguing as it offers a glimpse into the future landscapes of currency and monetary transactions.
"Embedding this kind of if-then logic in a payment instruction holds immense value for nearly every industry," he explains.
A "significant trust deficit" exists within the cryptocurrency realm, but Lambert believes that blockchain has the potential to resemble the Internet in terms of its widespread use.
Preserving people's lives and financial security is paramount. He concludes that we must restore confidence in the system and reestablish appropriate institutional structures for the participation of the financial sector.