Mastercard takes first step in Bitcoin investment

     MasterCard has finally chosen to enter the virtual currency field. The company has confirmed that it will co-invest in the Bitcoin incubator company Digital Currency Group (DCG) with several other large investment institutions.

     Other investors participating in the round include Canadian Imperial Bank of Commerce (CIBC), New York Life, TransAmerica Ventures and Bain Capital Ventures.

     A Mastercard spokesperson said: “This is Mastercard’s first investment in Digital Currency Group. We believe Digital Currency Group has done a good job evaluating the field of virtual currency and blockchain technology.”

     The investment marks a change in strategy for Mastercard, which also insisted in a November 2014 report to the UK Treasury that virtual currencies do more harm than good, and was skeptical of claims that they offer lower transaction costs.

     "Compared to the MasterCard network, the speed and security of virtual currencies are questionable. For example, it takes an average of 10 minutes to confirm a transaction using blockchain technology, and there are concerns about the ability of virtual currencies to resist cyber attacks."

     Barry Silbert, founder and CEO of Digital Currency Group, whose first company, SecondMarket, was recently acquired by Nasdaq Private Market, said that Digital Currency Group has now invested in 57 companies in 18 countries, making it one of the largest investors in the digital currency sector.

     Although Silbert warmly welcomed new investors to join the company and affirmed their investment vision, he also emphasized that investments in the virtual currency field will take a long time to pay off.

     “We still have a long way to go before Bitcoin becomes a functional currency, and I don’t think we’re close,” Silbert said. “First, it will continue to be a speculative investment, driving up the price and creating a larger monetary base, which will attract Wall Street to trade it. Then, more merchants will get on board. When it becomes more liquid, as a “payment” rail, it will become a real alternative to the existing money transfer system in the world today.”