In a recent filing in the US patents office, Walmart has submitted a patent for a cryptocurrency similar to Libra of Facebook. It will be a stable coin based on the US dollar.
Hot on the heels of the Facebook Cryptocurrency Libra, Walmart has begun the process to patent a new cryptocurrency for use in its Mall chains. The crypto will be centrally owned by Walmart, similar to Libra. The paper does not specify a name for the token. It will be a stable coin tied to the US Dollar. Many in the crypto community are happy with the move. This is because it may be possible to exchange other crypto for the Walmart Coin.
Walmart will be the latest in a list of corporations making their own cryptocurrency. Their supply chain software has been moved to blockchain, making this a no-brainer.
What is a Cryptocurrency?
A cryptocurrency is any virtual currency which has 3 main components –
- Peer to Peer
The currency is a purely peer to peer exchange with no central authority. There is no central bank that prints more money and no rate checks or any other control by a single unit. This makes it completely decentralized.
- Blockchain Based
All transactions in a standard bank are stored centrally. It is not transparent and open to exploits. Blockchain keeps a public record which everyone has on their personal devices. It cannot be hacked and is completely safe.
- Some Proof of Work
All cryptocurrencies have some algothrm to check the validity of a user. This is done with something called a Proof of Work. To complete recording of the transaction in a block, a user will have to solve a mathematical problem. All cryptocurrencies have some form of PoW. This process is called mining and a miner gets a percentage of cryptocurrency for any work done.
How is Libra and the Walmart cryptocurrency different?
- Not Decentralized
The most obvious difference between bitcoin and Libra is that Libra is completely controlled by Facebook. No one can get in on the action without a contract with them. This has been the most controversial part where many crypto advocates have warned against.
- No Transparency
Due to the fact that Libra and Walmart control the entire blockchain of their respective coins, there is no way to check the actual transactions without being a partner. Being a partner involves signing a contract. While Facebook has claimed that they will be opening the blockchain in the future, no one trusts them to keep their word. Past experience has proven that trend.
- Stable Coins
Usually cryptocurrencies are not tied to any value other than themselves. That means that Bitcoins values depend on how much people consider it valuable. Many in the crypto community do not like StableCoins because they are tied to fiat currency. Fiat currency is currency backed by governments. For example, US Dollar, UK Pound, etc. Cryptocurrencies were introduced to remove fiat currency. Stable coins are unpopular because it looks like they are based on a faulty system (Fiat currency).
This move by Walmart is good news for the crypto community. While the coin might not be great for decentralization, it validates the effectiveness of crypto. Large corporations would not be making their own if it were not profitable.
Read the full document here.
