In a press statement released in early August, Walmart indicated that it had filed a cryptocurrency patent. Walmart has over 2 million employees working in more than 11,000 stores in 27 countries. In addition to the daily ups-and-downs of the bitcoin price, this comes as huge news for the cryptocurrency industry, though many have questioned why the retailer feels the need to create its own cryptocurrency. However, the retail behemoth has cited a number of benefits:
Following in the footsteps of Facebook, Walmart claims that it wants to bank the unbanked, an increasingly popular media story among large corporate enterprises in recent times.
Walmart plans to pay its employees in crypto. Of course, the real reason they are introducing the cryptocurrency is quite obvious: it will reduce costs and improve their bottom line.
About 50% of payments at Walmart are made using debit cards. Walmart pays interchange fees on these debit card transactions, which add up to a huge expense. According to Cryptoslate, a Walmart coin could potentially save the retail giant $2.3 billion a year, representative of a 23% increase in profit margins.
But the benefits go beyond this. It could eliminate many of the current financial expenses associated with accounting and payroll processing, as well as helping bypass costly SWIFT and ACH transfers on an enterprise level. Sending money from one wallet to another is free. In terms of accounting, all of the information is stored on a blockchain – reducing the need for expensive accountants, giving more scope to automated accounting.
And this is just the beginning. Customer sales would also be recorded on the blockchain, making it easier to analyze trends. Legal and tax documents would soon be uploaded on their own blockchain network, and all products would be accounted for on a blockchain-based database.
The move by Walmart was undoubtedly influenced by Libra – the new cryptocurrency introduced by Facebook. However, the Walmart coin is likely to have an easier time getting approved by US regulators. For one thing, it is backed by the US dollar.
Facebook’s Libra is backed by a number of other stable currencies and it will be based in Switzerland. Walmart will have a far easier time proving that the release of their coin will not constitute a monopoly. A direct competitor of Walmart would be Amazon, and a new coin would generate a competitive advantage.
Note that Walmart has only filed a patent for the creation of a cryptocurrency. They have not officially claimed that they are releasing a cryptocurrency token, unlike Facebook. The patent also seeks to eliminate credit cards and introduce biometric data (retina or fingerprint scans) as a means of authentication.
A spokesperson for Walmart has indicated that they do not intend to create a cryptocurrency at this time. Companies often engage in the creation of patents to cover every eventuality. At the same time, we’ll most likely see a Walmart cryptocurrency in 3-4 years, a move which could easily promote the adoption of cryptocurrency all over the world.