Wednesday, October 27, 2021

Walmart cryptocurrency conversion rejected by trade group

Image copyright Reuters Image caption US experts were sceptical that Walmart would ever accept Litecoin, despite the price being high

Stock in cryptocurrencies rocketed when investors were told that Walmart would accept the cryptocurrency.

Following on from an announcement by Intel earlier this month, it led many traders to believe that Walmart would be the latest retailer to accept the cryptocurrency.

This is not the case as the statement said that Walmart was merely offering Litecoin as a form of proof of completion on its website.

The actual benefit for retailers is unclear.

The company behind the Litecoin website, Coinbase, said it had decided to stop newswires from reporting this as a Walmart announcement.

Image copyright Reuters Image caption Reports said previous retailers thought cryptocurrency was too tricky to accept

Several news outlets reported the news as an exception to Walmart’s policy which does not allow customers to use cryptocurrencies for any purchases.

However, Sam Price, an associate professor of finance at the Charles Schwab School of Business at the University of California, San Diego, believes retailers would be wise to explore the benefit of cryptocurrencies.

“Right now, cryptocurrencies are not widely accepted, they are not going to be accepted as payments, etc. They would be better in the long run,” Mr Price told BBC News.

Clip game to make money

However, he does not believe that Walmart would ever accept cryptocurrencies.

“When Walmart did not accept it in the past, it was for fear of it scamming customers.”

However, he also believes that retailers would be wise to try the product for a trial period.

Bitcoin and Litecoin were trading more than triple their average for the past week at the time the Reuters news agency published its report.

The story provoked a frenzy in cryptocurrency markets as news outlets quoted spokespeople from Litecoin to talk up its potential.

Image copyright Reuters Image caption Futhermore, some analysts felt the news would make the Coinbase website more attractive to would-be bitcoin users

‘Litecoin sales on the rise’

Coinbase told BBC News it had seen increased demand for Litecoin in recent days, but would not release any figures.

Xapo, a bitcoin wallet company, also said it had seen an increase in the number of customers wanting to try Litecoin.

J. Cole, the rapper, used to own some Litecoin which he did not sell because he believed that the digital token would one day be acceptable as a payment.

‘Many hurdles’

Professor Price, however, believes that there are more challenges than the ability to authenticate currency that lead retailers away from accepting it.

For example, given it is still in its infancy, cryptocurrencies are often denominated in binary terms.

If you add something up in binary terms, you get a value such as “000000”.

In theory, its hard to make a purchase without the willing participation of all the parties involved.

Additionally, while retailers may accept cryptocurrencies, that does not always mean that customers have the keys to the wallet so that they can make purchases.

As bitcoin has a relatively simple and safe way of storing digital cash, it has taken off more quickly.

“Coinbase, for example, has been offering some retailers bitcoin to pay off their store balance and get Bitcoin Balance,” said Professor Price.

“I suspect that will be a good model in which to do transactions as long as the consumers have the necessary resources to get it done.”

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