5 Aug

Walmart Coin: A Bigger Deal than FB’s Libra and Bitcoin?

WRITTEN BY Mike Sonnenberg

On Friday, Bloomberg reported that retail giant Walmart (WMT) had applied for a digital coin patent. Although the patent was filed on January 29, the news about it broke just last week. The news comes just as Facebook (FB) is pushing for its own cryptocurrency, Libra. Bitcoin (BTC-USD) and Ethereum (ETH-USD) gained on the news. As of 6:20 AM ET today, Bitcoin and Ethereum had risen 9.9% and 5.4% in the last day, respectively. Walmart stock was down 0.57% in premarket trading as of 5:22 AM ET.

How Libra and Walmart Coin compare

Based on the patent filing, Walmart Coin looks a lot like Facebook’s Libra. Both are set to be a stable coin. While Walmart Coin is to be pegged to the US dollar, Libra is to be backed by a reserve of high-quality, low-volatility assets denominated in major stable currencies around the world. Both coins target low-income households with little or no access to banking.

Why regulators may not be as tough on Walmart

Since it was announced, Facebook’s Libra coin has been criticized by regulators and lawmakers. Fed chair Jerome Powell has said that Libra raises “serious concerns,” and Donald Trump has been unwelcoming toward Libra. Some democrat lawmakers have even asked Facebook to stop developing Libra. Most of this resistance is based on negative views on cryptocurrencies and concerns about Facebook’s consumer and data protection. The fact that the Libra is to be based in Switzerland and the coin will be backed by assets in various currencies also raised eyebrows.

Walmart Coin may face fewer hurdles than Facebook in launching its coin. First, Walmart’s proposed coin is to be backed solely by the US dollar, appeasing the Fed. Second, it’s easier for Walmart to prove that it wouldn’t create a monopoly like Facebook could, especially with the looming threat from e-commerce companies such as Amazon (AMZN) and Alibaba (BABA). Interestingly, Amazon (AMZN) filed a cryptocurrency-related patent in May. Alibaba (BABA), which is affiliated with Ant Financial, has launched a cryptocurrency mining platform.

A potential hurdle

This attempt is not Walmart’s first at entering financial services. From 1998 until 2007, Walmart tried hard to get into banking, but the ICBA (Independent Community Bankers of America) repeatedly blocked its attempts. ICBA has raised concerns about Facebook’s Libra in a letter to lawmakers, and Walmart Coin is expected to see a similar backlash.

Why Walmart Coin could be a bigger deal than Libra or Bitcoin

Walmart Coin could have the edge over Facebook’s Libra and Bitcoin. Each week, over 265 million customers visit Walmart’s more than 11,500 stores and allied stores in 27 countries. While Facebook has a bigger member base, Walmart has a massive network of buyers and sellers that can be instantly tapped to drive real-world adoption of its cryptocurrency. In contrast, Facebook may have to invent a few things from scratch. Traditional cryptocurrencies haven’t lived up to their promise in terms of daily usage.

Walmart has said that it doesn’t currently have plans to launch a cryptocurrency. However, it may just be staying low and watching what happens to Libra. Meanwhile, Apple (AAPL) said that its upcoming Apple Card cannot be used to purchase cryptocurrencies. Apple Card backer Goldman Sachs (GS) may also be gearing up to launch its own cryptocurrency.

Latest articles

CrowdStrike (CRWD) fell 9.5% today to close at $54.52. Analyst Walter Pritchard initiated coverage on CRWD with a “sell” rating and a target price of $43.

Micron (MU) stock was up 4.21% on Friday and closed at $45.10. MU was trading 12.2% below its 52-week high of $51.39 for a market cap of $49.9 billion.

Top utility stocks trended lower and lost 1.3% last week. Broader markets were positive but cautious on trade talk optimism, gaining 0.7% last week.

Analyst Ming-Chi Kuo expects Apple to launch the iPhone SE2 in Q1 2020. Priced at $399, it could help Apple gain traction in India and Southeast Asia.

Disney-owned Hulu plans to introduce video downloads, which Netflix has offered for three years. Disney hopes to narrow Netflix’s competitive advantage.

Ireland’s privacy watchdog has concluded its investigation into Facebook over its compliance with the European Union’s data protection law.