Corporate coins are coming, and if you’re tired of the trend already, sorry, but there’s nothing you can do about it (except buy bitcoin, of course).
Perhaps spurred by Facebook’s jolting news that it’s developing its own digital currency, Walmart is following suit. The colossal retailer has filed a patent with the U.S. Patent and Trademark Office for a “digital currency unit [tied]... to a regular currency.” In other words, a stablecoin.
Industry leviathan that it is, several news reports have noted that Walmart’s efforts mirror Facebook’s own. Both are juggernauts in their respective markets, both are trying to build a stablecoin and both are marketing it as a solution for “low-income households that find banking expensive.” But barring these superficial similarities, there’s little to suggest that the two projects will actually look alike in structure.
Unlike libra, for example, Walmart’s coin could be bought (and potentially even backed) by bitcoin, according to the patent.
What Is Walmart Coin?
The majority of the patent is written in the conditional tense, leaving plenty up to interpretation and imagination. Walmart coin (or whatever they end of calling it) “may be pegged to the US dollar and available for use only at selected retailers or partners,” according to the patent filing. This last bit about selected partners is the only apparent potential structural similarity with Facebook’s libra, which consists right now of 27 partner companies dubbed the “Libra Association.”
“In other embodiments,” the patent continues, “the digital currency is available for use anywhere. The digital currency can provide a fee-free, or fee-minimal place to store wealth that can be spent, for example, at retailers and, if needed, easily converted to cash.”
These accounts mean that Walmart coin, unlike libra, even has the opportunity to accrue interest — and could be held at retailers on behalf of users.
“Customers without traditional bank accounts can create a microbank at an institution such as a retailer, which gains interest while their money is there,” per the filing. Customers would be able to top off this Walmart coin microbank account with fiat or even bitcoin, the patent states. Walmart coin, in addition, could also “in some embodiment, be tied to other digital currencies” to hold its value (so if you can pay in bitcoin, maybe Walmart’s currency could be backed partially by bitcoin, as well).
Like Facebook, Walmart really wants you (and your neighborhood regulators) to view this initiative as a force for good. The second line of the patent’s “detailed description” section says that Walmart coin will be beneficial to financially disenfranchised populations as “an alternative way to handle wealth at an institution that can supply the majority of their day-to-day financial and product needs.”
Walmart coin may also have something of a gig economy component. It “may provide an open-platform value exchange for purchases and for crowdsource work … for example, be a repair technician for a few hours, an associate for a few hours, a designated shopper … This digital currency ecosystem can be paired with a work board where customers, crowdsource prospects, and others can post requests and offers for work.” This could also include a rewards system for spending and earning.
But wait, there’s more! Walmart is also considering offering a futures-esque purchasing regime where “[c]ustomers can buy digital currency and be able to buy goods at the price that exists on that day, even if prices go up.” The company also wants to break into the lending market, potentially offering its users “short-term, emergency loans ... where the customer is charged no interest or a fair interest rate.”
If your bank account is managed by your retailer, this would entail it holding — and having access to — all of your financial information. Purchases at Walmart with Walmart coin, for instance, “can be logged as revenue or future revenue since it will (or would be highly likely) to be spent at a retailer versus elsewhere or exchanged,” according to the filing. This “analysis can result in more accurate forecasts, and less waste, making inventory and ordering computer systems run more efficiently.”
With KYC enabled, this type of surveillance could impose restrictions on what certain users can buy (e.g., people under 21 wouldn’t be allowed access to alcohol or under-age teenagers access to R-rated movies). Customers could also set self-imposed restrictions on themselves to rein in spending, such as only authorizing expenditures on food and necessities.
As Walmart coin “may be overlaid with customer purchase history,” this could enable AI and machine-learning programmers to help customers tailor a shopping list according to their budgets.
One of the key differences between Walmart’s and Libra’s digital currency efforts is the focus on retail, be it physical or virtual. Facebook’s Libra is seems more focused on global payments between a variety of services, its association featuring a motley of corporate powerhouses like Uber, Lyft, Visa, Mastercard, PayPal and Spotify, among others.
Walmart’s coin, however, appears to be tailored particularly toward the retail experience with its emphasis on retail savings accounts held by the retailers themselves and logging each customer's purchasing history. As the world’s largest retailer, which raked in half a trillion dollars last year, Walmart eats up 23 percent of the U.S. grocery market. If Walmart coin were to take off, this would mean capturing all of this market share in a circular economy that Walmart controls.
The retail giant has been wrestling with Amazon to catch up to the company’s dominance in e-commerce — and it's starting to gain leverage. The company’s e-commerce sales are up 37 percent in 2019, though Amazon still corners 50 percent of online retail market share.
With another monolithic company joining the digital currency bandwagon, this online competition has us wondering: When Amazon coin?