Samsung is another big-name company to consider issuing its own cryptocurrency. Similar stories have already emanated from the likes of Facebook and JPMorgan Chase, with analysts speculating on various use cases for these cryptocurrency tokens.
While not yet confirmed officially, a “Samsung Coin” could find application as a payment means on the company’s app store and traded on cryptocurrency exchanges. The company has revealed that its flagship Galaxy S10 smartphone will have a built-in cryptocurrency wallet.
With these mega-corporations delving into the blockchain scene, it is perhaps important to see how their virtual currency implementation compares with each other and the rest of the virtual currency ecosystem.
Samsung readies new ETH-based blockchain mainnet and cryptocurrency token
On Wednesday (April 24, 2019), an inside source within Samsung revealed that the company’s blockchain division was developing an Ethereum-based blockchain mainnet. According to the source, the project would also create a virtual asset dubbed “Samsung Coin.”
Currently, the Samsung hierarchy has offered no confirmation of the proposed blockchain mainnet and token. However, the reports appear to be consistent with the recent activities of the company in the cryptocurrency and blockchain technology space.
Answering questions at the Blockchain Expo in London on Thursday (April 25, 2019), the business development and fintech chief at Samsung SDS Europe, Moritz von Widekind, said the company hadn’t decided on anything concrete yet.
According to the Samsung executive, various departments within the company are working on the project. Von Widekind also added that the proposed token could be launched on the company’s NextLedger enterprise blockchain platform.
Samsung recently participated in a $4 million investment round for ZenGo — a smartphone cryptocurrency wallet app. NextLedger continues to receive significant interest from companies around the world, most recently by Indian IT behemoth Mahindra.
In the absence of an official word from Samsung, it is impossible to know for certain the way in which the rumored token would work. However, given the electronic giant’s business model, there are some plausible assumptions to be made.
Samsung Coin could be used as a payment token within the company’s payment app, Samsung Pay. The token may also be traded publicly on cryptocurrency exchanges across the market.
Like the proposed Facebook Coin, no one can know for sure how the “tokenomics” of the cryptocurrency would work. If it turns out to be a payment coin, can it compete with the likes of bitcoin?
Facebook making another play at a payment system
Back in December 2018, Cointelegraph began reporting that Facebook, the largest social media platform in the world, was looking to launch its own in-app virtual currency. Like Samsung Coin, there isn’t any official word on what form of crypto-related project could best describe the Facebook Coin (FB Coin).
Some analysts and commentators say FB Coin will be a stablecoin pegged to a basket of fiat currencies and used for money transfers within the platform’s apps. Such a move could potentially be a huge deal in the cross-border remittance market.
According to the World Payment Report (WPR) of 2018, global mobile money transactions topped $41 billion in 2016. This figure formed more than 8% of all noncash transactions, showing the growing appeal of e-wallet transactions.
The WPR study also showed that large tech firms like Google, Facebook and Tencent accounted for more than 70% of the global money transfer market as far back as 2016. An excerpt from the report reads:
“These companies are leveraging their large-platform user base to make an impact in the payments space, focusing on providing seamless user experience, value-added features, and making use of network effects. Incumbents should learn from the BigTechs and invest in technology platforms in order to compete with them.”
The proposed FB Coin isn’t the company’s first foray into the digital currency scene. Back in 2011-2012, the social media giant launched FacebookCredits and Facebook Gifts.
However, the company discontinued the FacebookCredits service in 2012. The company did launch a peer-to-peer (p2p) payments service for the Messenger platform in 2015 but recently announced that it would also be shutting it down.
Some commentators even identified Facebook’s decision to discontinue the Messenger payment service as a clear indication of the imminent launch of its cryptocurrency token. Earlier in April, Nathaniel Propper of The New York Times declared that Facebook was on the hunt for $1 billion in venture capital funding for the proposed token.
According to Propper’s Twitter account:
“One person I spoke with said that Facebook is talking about using the money as collateral for its cryptocurrency. Facebook has been designing the coin to keep a stable value, pegged to a basket of foreign currencies held in bank accounts.”
Has blockchain technology finally helped Facebook crack the code for establishing a functioning digital payment system? Does the social media giant now possess the requisite expertise to run a remittance platform or is FB Coin going to find some other user outside the payment arena? Only time will tell.
Consumer use case for private blockchain cryptocurrencies
In mid-February 2019, Wall Street giant JPMorgan Chase announced its own cryptocurrency, becoming the first United States bank to adopt virtual currency in business operations. According to the bank, JPM Coin will run on Quorom, an Ethereum-powered private blockchain.
Unlike FB Coin, a lot is known about the plans JPMorgan Chase has for its cryptocurrency. JPM Coin, which is a stablecoin, will first be deployed in the bank’s internal settlement protocols to increase the efficiency of the overall process.
Right off the bat, some commentators expressed the position that JPM Coin could challenge bitcoin and XRP in the payment arena. However, by even JPMorgan Chase’s own submission, the adoption of JPM Coin will be restricted to its large corporate clients.
There are, however, future plans to move the utilization of JPM Coin beyond the internal transactional paradigm in use at JPMorgan Chase. An excerpt from the project’s FAQ reads:
“Over time, JPM Coin will be extended to other major currencies. The product and technology capabilities are currency agnostic.”
On Thursday (April 25, 2019), Cointelegraph also reported that footwear giant Nike is looking to launch its own cryptocurrency. Nike has reportedly filed a trademark with the U.S. Patent Office for “Cryptokicks.”
An examination of the filing document shows Cryptokicks being described using language that points to its being some form of cryptocurrency or digital payment system.
The democratization of payments on the global level is one of the foundational principles of bitcoin and blockchain-based currencies in general. Thus, the question of how the cryptocurrency tokens being created by these companies fits into such a philosophy is becoming pertinent.
According to Jerry Brito of Coin Center, these companies are creating in-house payment systems and are pale imitations of real cryptos like bitcoin. Commenting back in February, Brito opined:
“There’s a lot of confusion. [...] I see folks referring to it as a cryptocurrency. It’s not a cryptocurrency. A cryptocurrency is one that is open and permissionless. If you want to download it, you don’t need permission, you just need some software.”
Some critics suppose there is no decentralization and label such efforts as being akin to companies that hedged their bets with the private intranet being more successful than the public internet in the 1990s. Just as the public internet became more popular and more successful than enterprise intranet protocols, some critics say permissioned blockchains will end up playing second fiddle to their public, permissionless counterparts.
Samsung could well be aware of this notion and would perhaps be more amenable to accepting a hybrid enterprise blockchain than a purely permissioned one. Cointelegraph contacted Samsung for further comments on the matter, but hasn’t received any as of press time.