Blockchain technology is more than just a ‘flash in the pan’

“Bitcoin is a valuable blockchain, and today it’s the foundational blockchain.”

Jason Gardner, CEO of payment service provider Marqeta, believes that the direction of development of the payment industry is in the field of distributed financial technology.

The startup, which raised $25 million in October, was one of the early players in the payments business to work with digital currencies, having partnered with Ripple on a now-defunct debit card product that allowed users to spend cryptocurrencies at traditional points of sale.

For online and offline payment types, Marqeta strongly recommends a processing platform based on cloud services and APIs. The attributes of this platform have attracted companies such as Facebook and Oink to become users.

However, the CEO is keenly aware that blockchain will be part of a larger trend, as he sees payments companies, including the likes of MasterCard and Visa, opening up previously proprietary platforms to open source technology.

Gardner told CoinDesk:

“When you see companies like JPMorgan Chase, IBM and Microsoft all creating new technologies using blockchain, I don’t think this is just a flash in the pan. I think people are realizing the efficiencies that can be achieved with this open source technology.”

As for the industry he supports, Gardner said he does not believe that the iteration of this technology, whether it is Ripple's consensus ledger or Bitcoin's blockchain or other alternatives, will win out in the end. He also mentioned that the greater goal is to have a faster money flow, which will benefit his peers.

“That’s the goal,” Gardner said. “It will help us run the business more efficiently.”

However, Gardner reported that Marqeta’s strategy toward emerging technologies has changed over the years, even if his team remains “strong supporters” of Bitcoin and blockchain.

However, Gardner said his company would prefer to let large financial institutions develop products before becoming an early adopter, which would allow Marqeta to enter an area he sees as having great growth opportunities.

“Two years ago, it was very, very novel to create a card product that could be authorized to compete against alternative currency bills and that also integrates with the banks and the card networks … it was very difficult to get that product approved,” Gardner said.

Marqeta team members have started Shift, a company that will launch its own bitcoin credit card product in partnership with Coinbase this year that will be accepted at traditional points of sale.

Blockchain Observation

Gardner admitted that “Bitcoin took a backseat” to the company in 2016. Over the next four quarters, the startup will emphasize on-demand services, expense management, alternative lending and virtual card products.

That’s not to say Marqeta won’t be actively working on blockchain. Gardner said the company still intends to be “front and center” in applying the technology to work with the internet and banks.

Gardner said Marqeta is interested in how banks can integrate with distributed ledger service providers such as Ripple and how businesses can build new ledgers to increase the speed and efficiency of money movement.

The reason, according to Gardner, is that Marqeta believes the inefficiencies in how companies currently conduct payments transactions will one day become a thing of the past.

“We can see the transaction in real time when the card is swiped. We can see $40 worth of groceries, we can see it happen,” Gardner explained. “But sometimes we don’t know when the money is going to arrive through the network. The money doesn’t move immediately, it moves in batches to the bank.”

This also results in an accounting burden for Marqeta and its services, which would be much simpler in a shared classification system.

Ten years

While he is optimistic about blockchain technology, Gardner does not expect large-scale demonstrations of blockchain or distributed ledger systems for public transactions to occur anytime soon.

“Now you need to wait for market timing, which is a slow process. Given the size of the financial system and the number of banks involved, it will take a long time,” he said.

Gardner predicts it will be at least 10 to 15 years before banks are ready to take the leap, given the complexity of the situation, the way current trading systems are still functioning and banks' risk aversion to other systems.

Even so, he said it was "positive."

“You can have a card issued by the Bank of Japan with a Visa logo on it, but if you swipe it at different terminals, the money goes to different places. If you want to have a network that is interconnected like that, you have to embrace blockchain,” he continued.

However, he believes that if blockchain technology is to become the key to accelerating the global flow of money, then the transition phase should be ushered in as soon as possible. He also concluded:

"This needs to happen, if it takes too long to resolve the issue then nothing will change."