Walmart Enters Crypto (For Real This Time)

Why is Walmart Installing Bitcoin ATMs?

Owning a Bitcoin ATM allows you to earn a percentage of each transaction made buying and selling Bitcoin through the ATM. The more transactions are made on the machine, the higher the profits earned. With the amount of traffic a single Walmart store generates, it makes sense as a location to place an ATM.

This is known as a Pick and Shovel Play style of business. Instead of exposing themselves to the risk of investing directly in Bitcoin, Walmart will be generating revenue from the buying behavior complicit with the adoption of Bitcoin. This business model gets its name from the days of the California Gold Rush.

The odds of striking gold were minimal, but each prospector needed a pick and a shovel to search for gold. By selling the picks and shovels, entrepreneurs were able to still profit from the gold rush without the risk of not finding gold. The potential reward is smaller, but a profit is guaranteed by adjusting to novel buying behaviors. In this case, Walmart’s ATM’s are the picks and shovels being used to profit from Bitcoin’s adoption.

Will Walmart Go Deeper Into Crypto?

It is unclear whether Walmart owns any Bitcoin on their balance sheet or has any plans to do so. What we do know is that Walmart placed a job posting for a “cryptocurrency product lead” near the end of September. Whether or not this culminates entirely into the current Bitcoin ATM roll-out is unclear. Given the increasing relevance of crypto, Walmart will likely need to continue making use of their new crypto product lead.

This isn’t Walmart’s first foray into crypto. And no, I’m not talking about the Litecoin partnership that turned out to be a hoax. Walmart’s Chinese subsidiary has teamed up with VeChain to help facilitate their supply chain needs. Walmart China’s goal was to have 50% of all packaged meat, 40% of vegetables and 12.5% of seafood tracked on the VeChain blockchain by the end of 2020. It is unclear whether they reached this goal.

What Does This Mean For Bitcoin?

At this point, and especially during this point in the bull market, bullish news seems commonplace. Any recent price movement we have seen from Bitcoin was likely due to the recent Bitcoin Futures ETF. Walmart’s slow move into crypto is big, but registered quietly in the market.

It cannot be denied that this is a step in the direction of mass adoption. CoinMe machines are not the most efficient way to buy Bitcoin. There are plenty of online options available at a fraction of the cost that don’t require a trip to Walmart. The fees at these machines require KYC, a 7% exchange fee, and a further 4% Bitcoin transaction fee. Anyone with experience buying crypto would avoid these ATMs. Perhaps this is a sign that we are moving into the “early majority” phase of the Rogers Adoption Curve in the US.

What will be interesting to see is how Walmart’s ATMs influence retail behavior. Walmart is a massive chain, with an also massive customer base. Therefore, their ATMs should be giving significant retail exposure to Bitcoin. This could certainly help boost Bitcoin’s price, and bring crypto closer to the mainstream.

Hazardous Timing

The timing for Walmart’s ATMs comes at an interesting time for new wallet holders. On the one hand, making it convenient to buy Bitcoin is great for the average American. Holding Bitcoin is an education in financial literacy, and will hopefully help mitigate a historically lacklustre savings rate for the average American. On the other hand, we may or may not be near the top of a bull market. Of course, Bitcoin is on the up over the long term, but will new HODLers be able to stomach a large correction?

There is a chance that Walmart’s ATMs will fuel retail hype around Bitcoin. If this does happen, then Walmart’s customers might be in for a nasty (and inaccurate) introduction to what Bitcoin is all about.

Dipping Their Toes in the Crypto Pond

For a company as large as Walmart, their ATMs seem like a meager foray into the crypto world. This comes at a time when other institutions are placing Bitcoin on their balance sheets as a reserve asset, and integrating crypto with existing services.

Regardless, Walmart is a significant name that gives credibility to Bitcoin. As they roll out their 8,000 machines, it will be interesting to follow their customer’s response to the ATMs, Bitcoin’s adoption in America, and how Walmart might continue to explore crypto.