The Mercado Coin announced Thursday (Aug. 18) by Latin American eCommerce giant Mercado Libre may be a digital currency issued on the Ethereum blockchain, but it’s not really a traditional cryptocurrency.
It will be free-floating, with an initial price of $0.10, so it’s not a stablecoin, but it will only be tradable — and at present storable — on the company’s own Mercado Pago digital wallet, Reuters reported. Nor will outside exchanges list it at present.
Besides, Mercado Pago already has a stablecoin — the USD Paxos (USDP) coin added in December, along with bitcoin and ether when the company added crypto capabilities to the digital wallet. That’s the same one that Meta is integrating onto its WhatsApp messaging service.
Mercado Coin won’t be sold directly either, but earned via the company’s loyalty program — and, at present, only in Brazil, where it will roll out to the firm’s 80 million-strong customer base by the end of the month.
This all raises the question, “What is Mercado Coin?”
A Private Currency
One answer is that it’s something like Facebook Coin, the social media giant’s first attempt at an internal digital currency, which ran from 2011 to 2013.
Unlike Meta’s more recent, but equally abortive, Libra/Diem stablecoin project (2019-2022), Facebook Credits weren’t blockchain-based cryptocurrencies, but a proprietary virtual currency usable for payments on the platform. It was also valued at 10 cents, but targeted independent sellers on Facebook’s platform.
Facebook also took a 30% cut of all sales, which didn’t help, but a far bigger problem was that there just wasn’t enough to buy on the platform to give people a reason to use it.
Given that Mercado Libre is Latin America’s largest online marketplace and its answer to Amazon, it doesn’t seem likely that users will have trouble finding a way — or a reason — to spend it.
In some ways, Mercado Coin looks similar to the JPM Coin launched by banking giant J.P. Morgan in February 2019 on its Quorum blockchain — a permissioned system usable only by approved partners (and sold to Consensys in August 2020). While that was a back-end, or wholesale, settlement token usable between companies using Quorum to make internal-only value transfers, it was a cryptocurrency for a closed ecosystem.
