Retail giant Walmart (NYSE:WMT) is developing its own digital currency. The big box retailer announced on Aug. 1 that it had applied to the U.S. Patent and Trademark Office for a patent, for a blockchain-based coin tied to a traditional currency, commonly referred to as a stablecoin.
On the surface, the filing appears to indicate that the retailer's proposed coin will be similar in nature to Facebook's (NASDAQ:FB) Libra digital currency. Along with the fiat currency peg, something that's integral Libra as well, "the filing suggests that the proposed coin could help provide finance for those with limited access to banking services—one of the major claims Facebook has made for Libra, most likely in an effort to appeal to the public (and regulators) over the token," reports CoinDesk.
A deeper drilldown, however, paints a different picture. Unlike Libra, which essentially aims to disrupt entire segments of global banking by enabling cheap international money transfers—and is backed by the social media giant along with a consortium of leading international companies including Mastercard (NYSE:MA), Visa (NYSE:V), Uber (NYSE:UBER) and eBay (NASDAQ:EBAY)—Walmart's cryptocurrency is a far less ambitious project.
At its core it's just a loyalty coin for regular Walmart shoppers. The information on each of its digital currency units will be stored on a blockchain block, with the coin itself used to purchase Walmart goods. There will be an overlay of the customer's purchase history on the platform, which will calculate any savings or credits and apply them toward current and future Walmart customer purchases.
This, along with the retail behemoth's solid, even stolid, repution, should work in its favor, making the Walmart coin far more agreeable to regulators. In contrast, Facebook's more ambitious plans for Libra have raised regulatory red flags on a global scale. The company’s questionable corporate ethics probably don't help either. A report released earlier this week noted that the European Commission is investigating the Libra coin for "potential anti-competitive behavior."
"Unlike Facebook, Walmart's foray into the digital currency space has been met with notably less skepticism," says Lilin Sun, CEO of of PlatON, the global privacy-preserving computing network. Looking to leverage blockchain via a patent filing can be viewed as a reasonable step forward in Walmart’s ongoing business development activities, he notes.
"There are critical distinctions to be made between Libra and Walmart’s stablecoin––firstly, it has no intentions of becoming a 'world currency.' Its backing is limited to the U.S. dollar and its use to certain retailers and partners. As such, Walmart’s token could be best compared to a prepaid card that lowers the cost of payments across its retail ecosystem in order to improve its competitiveness and profit rates.”
"Walmart is a far more traditional business than Facebook," says Alex Lam, CEO of RockX, a new digital asset services platform. "It's based in brick and mortar, and not solely on the internet. This removes a certain ‘global-scale’ from Walmart and its intended cryptocurrency, limiting its ability to threaten the current financial system and global central banks.” Adds Lam:
“Walmart may stress that the Walmart Coin will center around the effective application of blockchain technology, with the possibility of banking the unbanked and creating a sort of ecosystem currency for customers and partners. Libra, meanwhile has emphasised that it intends to roll out a global currency idea. For Walmart, pushing the idea of tech innovation will provide much less regulatory resistance.”
The Bentonville AK-based company has also alluded to the fact that its coin could go a long way in providing financial services to those outside of the traditional financial system. If this is the case, Lam warns, Walmart will need to be careful while spearheading its cryptocurrency application, that it does not experience the same fate as Facebook’s Libra, which has drawn the company and its executives into the firing line of regulators and governments worldwide.
Says Lam:
“Learning from Libra’s mistakes, Walmart would be wise to avoid equating its planned crypto with fiat currency, or suggesting that it could serve as a successor to current monetary systems. Libra’s challenge to the power of central banks has no small part to play in its icy reception from governments.”
New Phase for Blockchain?
Benjamin Simatos, the CFO of OV believes this filing shows we are entering a phase where blockchain reaches mass adoption.
“Traditional business have moved onto e-commerce and are now starting to see the value of launching their own coins for use by their large customer base and adding new digital features that are possible by implementing blockchain technology. The two approaches—Facebook's Libra and Walmart Coin—are therefore similar in nature and can definitely co-exist.”
