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On August 1, the official website of the United States Patent and Trademark Office disclosed Walmart's digital currency patent application documents. Based on blockchain, Walmart will be able to issue a 1:1 equivalent digital currency pegged to the US dollar.
From financial institutions represented by JPMorgan Chase, to Internet giant Facebook, to retailer Walmart, digital currency has great room for development, whether it is based on innovation in the existing system or a completely new financial system.
JPMorgan Chase, Walmart and others hope to establish a payment system in their ecosystem through digital currency, which is an innovative extension outside the legal currency framework. Libra is also building a currency system that transcends sovereignty. Different goals lead to different journeys.
Banks are actually the first to test the waters. The first to target the digital currency market are actually banks.
In February this year, JPMorgan Chase successfully created and tested the fiat-pegged digital currency JPMCoin, which aims to achieve instant transfer payments between institutional clients based on blockchain technology, becoming the first banking giant to issue a currency.
According to Umar Farooq, head of digital treasury services and blockchain at JPMorgan Chase, JPMCoin is not a currency, it represents the US dollars held in the user's designated account, so JMPCoin is equivalent to the value of 1 US dollar.
When one customer sends money to another, the JPMCoin on the account is transferred and converted into an equivalent amount of U.S. dollars, reducing settlement time.
As shown in the figure below, its customers deposit money into designated accounts and receive the same amount of JPM Coin, which they use to trade with other customers through the blockchain network, and holders can exchange for US dollars at JPMorgan Chase. Umar Farooq said that JPMCoin is anchored 1:1 to the fiat currency held by JPMorgan Chase and is only used for inter-enterprise fund flows. It is currently only being tested among a small number of institutional clients.
On the other hand, in response to the initiative of a cashless society, Japanese banking giants are also planning digital currencies. Compared with JPMorgan Chase, which is limited to inter-institutional settlement, the Bank of Japan's digital currency has more room for development.
In early 2016, Mitsubishi UFJ Bank revealed that it was developing the digital currency "MUFG Coin".
In May this year, its group president Kanetsugu Mike announced that it plans to put its original digital currency into practical use by the end of the year, and hopes that other companies under its umbrella, such as retail stores, will use it as their own proprietary currency under their own names.
Mitsubishi UFJ Bank hopes to connect companies from different industries into a unified economy through digital currency.
In addition, according to Cointelegraph, in December 2018, Mizuho Bank announced that it would launch the digital currency J-Coin in March this year. However, no new moves have been seen so far.
According to the Wall Street Journal on June 3, a financial alliance led by Swiss bank UBS plans to use Bitcoin-like tokens in cross-border trade settlements.
According to reports, the 14 companies in the alliance include major banks in the United States, Europe and Japan, and have created a new company, USC, to develop tokens. USC Token can be used as a payment method and can also carry all the information required to complete a transaction, which can reduce the time and cost of transactions.
On the one hand, banks' layout of digital currency will bring digital currency into the mainstream vision. On the other hand, it may indicate that blockchain will usher in a new stage in the financial industry and is being integrated into the global financial infrastructure. Internet giants: aiming at payment, but more than payment
On June 18, the Libra Association, composed of Facebook, Paypal, Master Card and other companies, released a cryptocurrency white paper, claiming to establish a simple, borderless currency and financial infrastructure to serve billions of people.
Libra has three main features: 1) based on a secure, reliable and scalable blockchain; 2) backed by a reserve of assets with intrinsic value; 3) governed by independent Libra.
The Libra Association also established a subsidiary called Calibra to provide wallet services for Libra. The wallet application will be launched on WhatsApp and Messenger and will become an independent application next year. For more information about Libra, please see Zinc Link’s previous report "Shaking Fists at the Old World, Facebook’s Ambition and Future". Facebook tried to explain that it was only a member of the Libra Association and did not have full say, but the regulators did not buy it.
Since Libra was launched, it has faced constant regulatory obstruction from all sides, with the main focus being on Facebook's privacy protection issues and the systemic risks that Libra will cause to the global financial system.
At the same time, Facebook's allies Paypal, Visa and Master Card are also having a hard time and will face stricter regulatory scrutiny.
In general, financial regulators are not optimistic about Libra. Zinc Link previously reported in detail: "Libra finally faces head-on attack amidst multiple regulatory fire."
In addition to Facebook, Japanese social platform LINE has also joined the digital currency camp. However, LINE's digital currency road seems to be smoother.
According to Bloomberg, the social software LINE officially stated that its crypto trading service license is about to be approved by the Japanese Financial Services Agency (FSA).
In January this year, LINE Pay officially announced that LINE and VISA jointly launched the LINE Pay branded credit card to accelerate Japan's transition to a cashless society.
LINE's deployment of digital currency is a response to Japan's advocacy of a cashless society, while Libra has greater ambitions. It is positioned as a supranational currency that aims to challenge the global currency issuance system. Retail layout: "Walmart Coin" can be consumed, stored and invested. Last week, the official website of the United States Patent and Trademark Office disclosed Walmart's digital currency patent application documents. Based on blockchain, Walmart will be able to issue a 1:1 equivalent digital currency pegged to the US dollar.
1) Consumption payment <br />According to reports, users' salaries can be converted into Walmart currency, which can be used to purchase goods and services at Walmart and its selected partner companies. It can also be used in unattended retail environments, such as open shelves and refrigerators to purchase products and use self-service payment.
2) Savings and Investment <br />In addition to consumption, users can also store Walmart digital currency in Walmart Bank at a low cost and earn corresponding interest. Similarly, users can also choose to exchange it for US dollar cash. In addition, digital currency futures can also be purchased for investment.
At the same time, Smart Analysis AI helps customers recommend the appropriate amount of digital currency to purchase based on their budget, value, affinity, and preference.
3) Personal credit record <br />Digital currency can obtain the user's authorized biometric identification (for example, fingerprint or eye pattern) in advance, and obtain credit data through feature recognition. A person can be his own digital value bank credit card. Image source: Walmart patent. According to Bloomberg, on August 5, Jaret Seiberg, a senior policy analyst at investment bank Cowen, believed that Walmart’s digital currency is pegged to the US dollar and is more like a stored-value card. It does not seem to have Libra’s “global intentions” and therefore will not be subject to the same regulatory resistance as Libra.
A Walmart spokesperson said there are no immediate plans to use the patent.
Liu Changyong, the founder of Zhimi University, told Zinc Link that Walmart's digital currency is anchored to traditional legal tender and is essentially a compliant stable currency. As a digital currency of a large retail enterprise, its goal should not be to provide a stable currency that is common to the cryptocurrency market, but to overcome the drawbacks of traditional credit card payments for the circulation of its own business ecosystem, reduce costs and improve efficiency.
Different original intentions and ambitions. In addition to different fields, the original intentions of the giants' digital currency plans are also different.
The digital currencies of banks such as JPMorgan Chase are more aimed at reducing payment friction in their businesses, while Walmart wants to bypass credit card payments through digital currencies and establish a more convenient payment method in its ecosystem. These two types of digital currencies are still extensions of the original legal currency system.
However, although Libra's goal of establishing a borderless currency has not yet been implemented, it has already caused a stir in the global financial regulatory field.
"Walmart's digital currency is anchored to the U.S. dollar and is actually an extension of the U.S. dollar supply. Even if it has its own name, it does not change its nature. This is essentially the same as the RMB circulating in the Taobao and Alipay ecosystems, which is an extension of the RMB supply. Both are digital versions of legal tender," Liu Changyong told Zinc Link.
He believes that the extension of the legal currency framework is subject to legal currency supervision, and at most some innovations can be made. The super-sovereign currency that challenges the legal currency is a political issue, and an international political issue.
It is clear at a glance which is difficult and which is easy.
Meng Yan, deputy director of the Digital Assets Research Institute, believes that in the context of great power competition, anarchist utopian digital currencies will not appear, and Libra is bound to play an important role in currency wars, financial wars, economic wars, and innovation wars. The US political circles and Wall Street forces will force Libra to get on the so-called "right track" through the game with Facebook.
Despite numerous difficulties, Libra seems to be a recognized future trend.
Kong Jianping, co-chairman of Canaan Creative, told Zinc Link that Libra is a cross-sovereign currency. While it is innovative, it will inevitably bring huge challenges to traditional supervision and traditional finance. If American companies don't do it, companies from other countries will do it sooner or later. From this perspective, it is in the interests of the United States, but it needs legal procedures and a contest between different interest groups in the process.
So, how will the country respond?
Liu Changyong believes that from the perspective of improving payment efficiency alone, there is little need for large domestic companies to issue digital currencies. What China needs to consider is whether the traditional banking system needs to adapt to the development trend of digital currencies or cryptocurrencies and make necessary improvements. This is an innovation at the level of the basic currency system.
"It is recommended to give enterprises the opportunity to try, closely follow up on the research, and formulate corresponding norms and regulatory systems in a timely manner. Under the premise of moderately controlling risks, seize opportunities and discover new economic growth points."
ArcBlock founder and CEO Mao Zhihong told Zinc Link that domestic enterprises should see this as a milestone in development. Blockchain technology and digital currency, as a technological advancement, are difficult for any government, regime, or traditional force to contain. (Zinc Link) |
