Walmart Coin, Dubai 2020 and A New Superfast Exchange

Off the Blocks | Vol 79, August 6, 2019

Our views on blockchain technology & the changing investment, regulatory and tech landscape.

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The Walmart Coin

Walmart is not a novice in the blockchain space. Way back in early 2017, long before the ICO craze started, Walmart was one of the first companies to team up with IBM and go all in on adopting Hyperledger as its preferred way of tracking mangoes on a private blockchain. Ever since it has expanded slowly but steadily into tracking food chains and Walmart can trace the origin of over 25 products from 5 different suppliers using a system powered by Hyperledger Fabric. In the meantime, IBM has experimented with tokens and recently launched World Wire, a remittance service based on cryptocurrencies.

So, it was not a surprise when last week a patent application filed by Walmart was published that detailed the retail giant’s ambitions in the cryptocurrency space. It’s vision of the world: A Walmart Coin.

Instinctively, many were quick to compare it with Facebook’s Libra. However, it must be mentioned that the Walmart patent application was filed in January 2018, much before Facebook had announced any plans for jumping into the crypto arena. Even if for bragging rights, it does make them a pioneer of sorts in this space.

Interestingly, there are a few common elements between the Walmart Coin and Libra. They are both described as a ‘stablecoin’. While Walmart prefers to peg its coin to a regular currency, the Libra is pegged to a basket of regular currencies. Both the digital currencies have a noble aim of providing economic services to people who have been left out of the banking system due to the high cost of serving small holdings.

For example, many people are from low-income households where credit can be a problem and carrying cash can be problematic. The cost of having little money is high because of frequent short-term borrowing, accumulated interest on short-term borrowing that becomes long-term, high bank fees proportional to wealth, high credit card fees, and high payday loan interests, all of which can take money away that could be available--and would be used--to buy necessities. Providing digital currency based on blockchain may overcome the drawbacks associated with the low-income households. 

However, the companies perhaps differ in the scale of their ambitions. While Libra is positioned as a global currency, the Walmart coin has not been backed by official statements. It seems that Walmart is keen to avoid any kind of regulatory scrutiny of its crypto currency in the early stages and is content to develop it almost in a stealth mode. This could potentially be a better strategy and position it for thoughtful adoption as compared to the Libra.

The applications for a Walmart Coin are immense. By some estimates, Walmart paid about $3B in interchange fee to Visa and Mastercard in 2013. Simply eliminating this expense can directly boost shareholder value. Walmart MoneyCenter offers a wide variety of financial services in store. A digital currency can provide the benefit of real time gross settlements for money transfer, remittances, or other forms of payments. This in itself can literally position the coin at the highest echelons of a desirable currency. The Walmart Coin is supposedly pegged to the US dollar. It would not be unthinkable for Walmart to pay its employees in the Walmart Coin through a Walmart wallet, instead of a direct deposit to their bank accounts. Flicking such a switch can completely bypass banking services as we know today. An additional advantage: a huge on ramp to crypto adoption and if done correctly, a huge customer and user lock in for Walmart consumer, employees and anyone who does any business with Walmart.

The retailer already has extensive experience with Walmart Pay and presumably understands the money transmission, custody, record keeping, insurance and banking regulations well enough to keep clear of the issues that have seemingly tripped up Libra. The breaking point is not in the technology, but in making sure that the new system has robust integration points with legacy infrastructure or at least does not abruptly disrupt existing services.

Even though the global unbanked population is close to 2 billion, there are about 5 billion people who access banking services regularly. From an enterprise perspective, the opportunity to service the latter remains much greater.

Now some significant news form the world this week:

  1. Dubai 2020 | KYC-Focused Blockchain Consortium for Businesses: A new partnership between the Dubai International Financial Centre (DIFC), Mashreq Bank and fintech firm Norbloc aims to launch a blockchain-based Know Your Customer (KYC) data-sharing consortium in 2020. As part of the project, the parties will establish a consortium agreement to amalgamate the KYC efforts of future participating financial institutions and government bodies. The program will purportedly create a single digital KYC record, which can subsequently be authenticated with an electronic ID, allowing users to share data with other financial institutions. [… Read More on CoinTelegraph]

    This initiative provides a unique opportunity to harness innovative technology to deliver a seamless experience for both newly established and existing companies at the centre.

    - Arif Amiri, CEO of the DIFC Authority

  2. Security Token | Seychelles Beats Zurich With First Blockchain-Based Equity Token: The operator of the stock exchange in Seychelles is about to win a race that stretches from the white sands of the tropical archipelago to the spotless streets of Zurich: the launch of the world’s first regulated security token on a national stock market. In the next few days MERJ Exchange Ltd., operator of the bourse, will list tokenized securities in its own stock, Chief Executive Edmond Tuohy said in an interview this week. By doing so it will beat competitors including the Swiss exchange company SIX and the Gibraltar Stock Exchange, which are close to introducing the securities. [… Read More on Bloomberg]

    There are a lot of people in the market who want this but there is a big gap at the moment: there is no, at least on the exchange side, well-regulated institution that does listing, trading, clearing, settlement and registry that’s using distributed ledger technology.

    - Edmond Tuohy, CEO, MERJ

  3. Gaming | Blockchain Gaming Part I: The opportunity: Today’s video game industry looks like one dominated by several Triple A companies that push out increasingly expensive, frustrating, and unrewarding games for the global population of billions of gamers. Small-time and indie developers are crushed by their enterprise counterparts, and their labor rarely pays off. Essentially, Nobody is having fun. Fortunately, blockchain provides solutions to the woes of the global gaming industry. Game currencies, items, avatars, gameplay inputs, and even entire games can be propagated on and secured by the blockchain. Proper execution of blockchain into online games suggests players can interact with one another and the games they play in a manner that has never before been possible. It also suggests that developers can formulate new genres of games by emphasizing gameplay elements unique to blockchain gaming. [… Read More on The Block]

  4. GovTech | Blockchain technology key in new Canadian Government policy: Blockchain technology innovation and experimentation is at the centre of a major new policy which government departments in Canada will be forced to implement. The new ‘Policy on Service and Digital’, outlines the future of government service delivery in Canada, with blockchain technology and artificial intelligence the preferred technologies to help drive digital transformation within government departments. The launch of Canada’s blockchain policy comes just days after Canadian Pacific Railway Ltd  announced it was joining the Blockchain in Transport Alliance. [… Read More on]

  5. HealthCare | Blockchain Could Save Industry $100B Annually by 2025: Healthcare blockchain could save the industry up to $100 billion per year in costs related to IT, operations, support functions, personnel, and health data breaches by 2025, estimated a report by BIS Research. Pharmaceutical companies will benefit from using blockchain to track drugs, thus reducing the around $200 billion these companies lose from counterfeit drugs each year, the report noted. Health insurance companies will benefit from using blockchain to reduce IT and operational costs in insurance process and health insurance fraud. BIS Research forecasts that the global healthcare market will increase at a compound annual growth rate of 64 percent through 2025, reaching a value of $5.6 billion by then. The use of blockchain for healthcare data exchange will contribute the largest market share throughout the forecast period, reaching a value of $1.89 billion by 2025. [… Read More on Hit Infrastructure]

The Final Word | Branson-backed cryptocurrency firm launches a super-fast exchange to take on Coinbase

GP: Blockchain CEO Peter Smith 190729
Image Credit: CNBC

Blockchain, one of the world’s largest cryptocurrency wallet platforms, says it’s launched a digital currency exchange aimed at delivering “lightning-fast” trades. The company’s exchange, called The PIT, is the result of a behind-the-scenes effort led by a team of former executives from the New York Stock Exchange, TD-Ameritrade, Google and Goldman Sachs. According to Blockchain CEO Peter Smith, the new exchange’s matching engine Mercury can execute buy or sell orders in “40 to 50 microseconds,” an “order of magnitude faster than other market players” like Coinbase and Binance. The company has raised over $70 million from investors including British billionaire Richard Branson, Alphabet venture arm GV and early Spotify backer Lakestar. It has also accrued over 40 million users, Blockchain said, who will be able to transfer crypto from their wallets to the exchange. [… Read More on CNBC]

About Proteum
Proteum is a global blockchain advisory firm that works with public, private and start-up companies to help them transition into the world of blockchains and decentralized applications. We help companies strategically build their ecosystem and unique capabilities so that they can own and control their future. ProteumX, our accelerator program, invests in and accelerates the time to market for companies building blockchain solutions. |  | Twitter: @proteumio | ProteumX