Why the VISA blackout should signal a new crypto-driven dawn
The serious disruption to VISA payments across Europe seems to have been resolved — In an operational sense at least, things appear to be back to normal. However, the impact of last weekend’s havoc will continue to be felt for some time. The implications of such a widespread outage cannot simply be swept aside as a simple “hardware failure,” as advertised by VISA. A payment system which services untold millions must be impervious to error. The fact is that in an age of unprecedented technological change, if such a systemic failure occurred once, there is every chance something similar will happen again. In other words the time has come for a serious re-think to global payment systems, which too often are vulnerable to a single point of failure.
The potential for chaos due to such a breakdown was laid bare. Most obviously, many consumers reported having been debited for goods and services they had yet to receive. Some had been charged multiple times, as merchants attempted to facilitate payments in vain. Money had effectively been left in limbo. In a ripple effect, the confusion caused a rush on some ATMs. Meanwhile, some commuters found themselves stranded, unable to pay for a ticket. And key infrastructure which relies on VISA payments, such as toll bridges, found themselves grinding to a halt.
VISA and similar credit card payment systems have been a key fixture of Western economy since the 1950s. They have attempted to keep pace with technological change by altering the payment method at point of sale — From swiping, to PIN numbers to the contactless tap. However, the underlying infrastructure remains the same. They rely upon a centralized system, which if compromised, can have wide-reaching consequences and implications.
This centralization makes them especially attractive targets for the cyber criminals who are becoming ever more advanced and ambitious. Hackers know that one blow to a centralized credit card system can be disastrous. And even if the likes of VISA are able to stay one step ahead of the cyber warriors, a single botched upgrade or fix to their system could have similar consequences.
At the same time, VISA and others find that they must answer the popular demand for increased non-cash payments. In some countries such as Sweden, cash has become little more than a museum piece. The public appetite for non-cash payment simply won’t tolerate too many breakdowns like the one suffered by VISA. Customers are already paying a premium to spend their own money — They do not want to discover that it may not be secure or instantly usable.
The time has come for alternatives to be made available. Cryptocurrencies are perfectly positioned to help fill this void. For a start, they operate on an entirely decentralized infrastructure, which cannot be compromised by one, single action. In the blockchain system which cryptocurrencies operate on, each transaction is an integral component of its structure. The blockchain is guaranteed by each and every user, not a central administrator or authority. This makes it far more secure, much more difficult to compromise. Blockchains have already proven to be resilient to attack. The absence of central control also eliminates the need to pay the kind of big fees associated with credit cards.
But blockchain-based cryptocurrencies also perform another important function. By incentivizing many individuals to guarantee the system’s smooth operation, users are not ‘indebted’ to a single entity such as a credit card company, and consequently have far greater ownership over their money. Cryptocurrency is even being used to fuel local economies in a way which will benefit everyone — consumers, merchants, city authorities, utilities and beyond. This is a far cry from the multi-national credit card giants, fuelling little more than their own pockets.
Clearly cryptocurrencies are still some way off becoming the go-to method of everyday payment. However, in the wake of the VISA chaos, the time has come to reassess the assumptions of how we pay for things. As credit card systems creak into the future, cryptocurrencies offer a far safer, cheaper and more personal option. Integrating them into the payment landscape may be the ideal way of heading off future turmoil.
