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Issue #1325: Mastercard is falling prey to the innovator's dilemma

Issue #1325: Mastercard is falling prey to the innovator's dilemma

Mar 1, 2023
Marty's Ƀent

Issue #1325: Mastercard is falling prey to the innovator's dilemma

via Reuters
via Reuters

Reuters reported earlier this morning that Visa and Mastercard are pausing their respective "crypto pushes" due to fears about the regulatory uncertainty that looms over the industry after the year of epic grift collapses in 2022. Their source for Visa was someone who preferred to remain anonymous, but it seems that they were able to get a Mastercard spokesperson on record to comment on the rumors, which they seemed to confirm. Not only did the Mastercard spokesperson confirm that they have decided to hit the brakes on any foray into "crypto", they rolled out a trope from 2015 that any corporation should be embarrassed to utter in 2023, "We're bullish on the underlying blockchain technology."

This one-liner proves to me that Mastercard is an incumbent payments company that has fallen prey to the innovator's dilemma. The ~$340B behemoth seems poised to stand by and watch its business get gobbled up by those building on the bitcoin stack. The problem that Mastercard solves is payments and settlements between counterparties in a transaction. The bitcoin network has provided the world with a closed loop payments and settlement network that can do what Mastercard does in a peer-to-peer fashion. And the lightning network is allowing individuals and businesses to pay and settle instantly. There is no "blockchain technology" that Mastercard could build, acquire, or leverage that will solve the problems they exist to solve better than bitcoin and the lightning network.

If Mastercard was keen on not becoming a future case study that gets added to the long list of companies who fell prey to the innovator's dilemma, but instead proving to be a legacy institution with the vision and wherewithal to adapt with the market they would be working as aggressively as possible to integrate the LNP/BP stack into their business. Something, something, old dog, new tricks.

Mastercard's reluctance to adopt the best technology at their fingertips is an open door for focused bitcoin companies. There haven't been many opportunities to dethrone the payment processing kings over the last fifty years, but there is a golden opportunity laying in the middle of an open field right now. And even though Visa's head of crypto came out to deny the claims in the Reuters report, it seems like they may be too focused on the world of stablecoins.

Here's to hoping they have a bitcoin and lightning strategy to go along with the stablecoin strategy. If they focus too much on stablecoins they will be building sunk costs around a product that is sure to be phased out within the next couple of decades while potential disruptors are using that time to build for the next dominant monetary and payments network.

Final thought...

The norovirus storm is finally passing. That was a hellish four days.

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