Recent reports have suggested that the U.S. retail conglomerate, Walmart, has made tentative steps towards developing its own US dollar-backed cryptocurrency. Walmart is said to have applied to patent a cryptocurrency that’s tied to a traditional fiat currency, such as the US dollar. Walmart filed the application to the US Patent and Trademark Office with a view to offering potentially safer, quicker and cheaper transactions at its stores.
This kind of cryptocurrency, known in the crypto space as a “stablecoin”, is not only pegged to fiat currencies but government bonds too, giving countries a vested interest in their success. When questioned about the patent application, a spokesman for Walmart responded by saying that the conglomerate does not have “any plans for this patent at this time”. This time being the operative words. The most observant readers will have already put two-and-two together and realised that Walmart’s proposals sound spookily similar to that of Facebook’s very own Libra coin, which has been the subject of a lot of interest in recent months.
Walmart’s application was filed back in January, with the company outlining their ambition to patent a method for developing a “stablecoin” that operates on a blockchain, whilst overlaying consumer data such as transaction history and savings made. Its application also suggests the use of blockchain to operate a customer loyalty scheme, applying savings to future purchases made by regular customers. As a company, Walmart is already some way down the line with its adoption of crypto-related technologies. It’s already utilising blockchain to transform and future-proof its nationwide supply chain.
Walmart aiming to create an alternative to traditional banking
Within its patent application for a new “stablecoin”, Walmart says that such an option would be attractive to “low-income households that find [traditional] banking expensive”. It believes a “stablecoin” would offer an “alternative way to handle wealth” via an organisation that “can supply the majority of their day-to-day financial and product needs”. The patent application even suggests Walmart consumers could use a so-called “Walmart Coin” to “earn interest”. In fact, Walmart believes its very own digital coin could be used as a low-fee place to store wealth, whilst providing plenty of opportunities to use that wealth and convert it into Walmart store cash or for payment with selected retail partners.
Walmart Coin and the similarities with Libra
Facebook’s Libra coin is predicted to create a platform for its social media channels to utilise Libra coin for payments, while Facebook advertisers would have to pay to advertise in Libra coin. Unlike “Walmart Coin”, Libra will use the interest generated from its scheme to repay its partners that have backed the first social cryptocurrency to the tune of $10 million.
Nevertheless, Walmart will be watching intently at the various hurdles Libra looks set to have to overcome to prevail in the coming months. The most substantial hurdle of all is the lack of support for Libra coin at a political level. US President, Donald Trump, and the head of the Bank of England, Mark Carney, have both voiced concerns about the use of Facebook’s proposed digital currency.
The main reason why these figureheads are concerned about the development of Libra is that it differs significantly to other household cryptocurrencies such as Bitcoin. That’s because Libra is proposed to be centralised rather than decentralised. Plans are afoot to use a host of existing assets and currencies to set the value of Libra coin, maintaining a more centralised, stable currency than Bitcoin. Financial leaders are concerned that Libra could be built directly into Facebook’s leading social platforms, allowing them to set their very own monetary policy. In the event Libra was to become popular, it could put traditional currencies and even national economies at risk.
The upshot is that Libra is almost certain to face some form of global regulation to prevent it from becoming an all-powerful, all-consuming digital currency. The negativity surrounding Libra is surely one of the main reasons that Walmart is attempting to keep its powder dry, at least for the time being. A so-called “Walmart Coin” could then learn from the mistakes of the Libra Foundation and create a digital currency that could garner the confidence of consumers and financial leaders alike.