Walmart and Amazon Move Closer to Issuing Real-World E-Corp Ecoins in a Real-World Game of Thrones
Where crypto fits into this clash of business empires.
Of all the interesting concepts covered in the TV show Mr. Robot, E-Corp’s e-coin is probably our favorite :)
In case you haven’t seen it, E-Corp is an evil multinational company that the show’s main character has targeted for the biggest computer hack ever. Because E-Corp is so big and so evil, the hack eventually threatens to bring the corrupt American financial system crashing down.
The crisis makes average folks realize that E-Corp is the real power behind the American government. They have more faith in a currency issued directly by E-Corp than a currency issued by a government “owned” by E-Corp.
And so in a moment of radical honesty, the American regulators ask E-Corp to issue a cryptocurrency that people will actually use and not riot in the streets.
It would be like if the Federal Reserve asked Disney to start making more Disney dollars — because the company was more trustworthy :)
Subtract the Computer Hack and Add Global Supply Chains and You’ve Got Two Similar Stories Coming Soon from Amazon and Walmart.
In twenty years, the Walmart vs Amazon business “war” is going to be one of those classic business school case studies. Like the Gates vs Jobs, Microsoft vs Apple one was a few years ago.
And it looks like crypto is going to play a factor in this war:
- Walmart is filing patents for its own stablecoin. They’re talking about “banking the unbanked,” which makes good sense. Walmart offers an assortment of financial services with many targeting low-income or undocumented customers in the United States who do not actually have traditional bank accounts. These customers who can’t get a credit card, for example, or need what is essentially a bank account for relatively low balances with no Know-Your-Customer (KYC) rules.
- Amazon is going to get into crypto sooner or later. We keep writing about this. Amazon runs its own payments service that is somewhat similar to Walmart’s in that it makes it easier for customers to send money around the Amazon ecosystem. And by the way, guess who just audited Amazon? The Federal Reserve, aka the crypto bogeyman. That’s how strongly Amazon is plugged into the American financial system — and Walmart’s crypto coin is not going to go unanswered for long.
Obviously, there has not been (and probably won’t be) some sort of black-swan computer hack that is pushing Walmart’s stablecoin initiative or will push the Amazon version that we are anticipating.
Instead, it will be good old capitalism. Walmart’s “banking the unbanked” story sounds nice but in our opinion, this is going to morph into something else. Namely, a cryptocurrency plugged into Walmart’s supply chain, which is one of the biggest in the world. It runs on very low margins and tight relationships with suppliers in China and other export economies.
An “in-house” cryptocurrency is going to make that supply chain run better and shave off transaction fees, exchange rate markups, etc.
We think it will be the same story with Amazon, whose supply chain rivals Walmart’s in size and efficiency.
When Crypto Gets Involved, Governments Get Involved — and that Means a Multi-sided Game of Thrones Style Power Struggle.
Governments have a lot of policy tools (playthings?) but fiat currency is arguably their favorite.
Thus the political brouhaha about Facebook’s Libra. It boils down to governments saying, “How dare they consider using anything but our fiat?”
As we’ve written before — whether or not it works out might not matter as much to Facebook as changing the PR narrative about what a user-friendly, forward-thinking company it is.
Anyway, that means that if Amazon and Walmart are going to compete with each other using cryptocurrencies, they are going to have to factor in government relations.
Here’s how we think they are going to be smart about it.
We Bet that Walmart and Amazon Will Run Stablecoins that are Pegged to the USD — Until They Aren’t.
What if Facebook pegged the Libra only to the USD instead of a basket of global currencies.
Governments would still say “How dare they use anything but our fiat?” ….. except maybe for the US government!
The Feds might just say “Good choice. If someone doesn’t like, have them come talk to us.”
In the news you might see something like what what one analyst actually said:
The coin doesn’t appear to share the same “global intentions” of Facebook’s Libra.
That’s why we think Walmart and eventually, Amazon will “ally” their stablecoins with fiat currency from a government they believe has the strongest political influence — until something better comes along.
Kind of like how so many families were allied with the Lannisters early on in Game of Thrones. As time goes on, expect these alliances to break down as other powers emerge.
For example, imagine that in five years, Walmart’s supply chain runs on its new stablecoin. It has gained popularity “piggybacking” on the confidence that everyone had in the USD as the world’s reserve currency and the blessing of the US government.
But then Walmart decides to peg it to something else — maybe not even fiat currency. Maybe a combination of fiat currencies and Walmart’s tokenized real estate assets. Or maybe not to peg it to anything at all. Who knows what will be available then.
At that point the cat would be out of the bag, so to speak. Changing the peg would mean essentially punching in some different numbers in the system for what is essentially a walled-off sub-economy. The US government might complain about the outside, but on the inside, it could be that nobody even notices.
Remember that a Key Source of a Given Cryptocurrency’s Value Comes from How it is Used in a Functioning Market.
We’ve written about this a lot before.
The stablecoin approach is a nice way to build confidence piggybacking on a familiar source of value that people trust today.
But when that trust erodes, you’ll have to replace it with some other source of trust — or maybe just on how well that market is functioning with supply and demand on both sides.
If you think really long-term, it might be worth investing the Walmart stablecoin in anticipation of when Walmart floats it freely, i.e. de-couples it from the USD and makes it not a stablecoin anymore. You could expect the actual value of the Walmart coin to rise in this case, if confidence in the USD is falling so badly.
Who knows how long that will take if it actually does happen.
In the meantime consider investing in altcoins with solid use cases that are plugged into functioning apps. No pegs mean faster appreciation as these apps gain popularity!
Make sure you’re part of the BlockStamp social community and feel free to ask any questions there!
About BlockStamp:
BlockStamp is a multipurpose Bitcoin blockchain fork developed to promote liberty, transparency, and sovereignty in areas of the digital economy where these fundamental values are most at risk. BlockStamp hosts a radically fair gambling platform, a digital tool for transparently sealing data, a censorship-proof internet Domain Naming System, and the BST crypto coin.
