More and more people have joined bitcoin’s meteoric rise over the past year. The digital currency has grown in popularity even among billionaires. Young people invest their college money. Many people mortgage their homes and invest everything. There is a lot at stake, and people’s savings and livelihoods are at stake. However, bitcoin is a problematic investment in its own right.
Besides being extremely volatile, dropping as much as 30% in a single day-recovery of funds is extremely difficult when bitcoin is hacked. Bitcoin’s technology may be lagging behind newer cryptocurrencies, which offer greater anonymity, programmability, and scaling. When thinking about which cryptocurrency might overthrow bitcoin, people usually think about popular altcoins. Would more tangible threats present a greater threat, however?
Among all online retailers, Amazon is the largest.
Almost half of all American online purchases are made on Amazon.com, with 94 billion dollars in sales last year. Amazon does not currently accept bitcoins or any other cryptocurrencies despite offering many payment methods. This is one of the reasons it is in a prime position as the leader in online retail. I’m sure any cryptocurrency adopted by Amazon would gain mass appeal. What is Amazon holding back from this currently popular form of payment?
It has limited transaction speeds, which may be why Amazon is avoiding cryptocurrency. The top two cryptocurrencies can be found here and here.
- bitcoin: 7 transactions per second
- Ethereum: 15 transactions per second
During last year’s prime sale, Amazon performed 600 transactions per second at its peak. The waiting period for transactions would be hours if even a fraction of their traffic used cryptocurrency. For the customer, this is not an enjoyable experience. Does this mean Amazon will avoid cryptocurrencies?
We know that the company features innovative scaling solutions. Amazon’s demands are too high for Bitcoin and Ethereum right now, but other cryptocurrencies can handle it. Ripple, an alternative cryptocurrency, tested as many as 1500 transactions per second.
Why Amazon Might be Considering Cryptocurrencies
Amazon has not announced its official position on cryptocurrencies; however, several signs suggest it may be considering this space in the future and not necessarily in a bitcoin-friendly way. In the early hours of October 31st, it was reported that Amazon purchased amazonethereum.com, amazoncryptocurrency.com, and amazoncryptocurrencies.com.
Amazon is probably just doing it to cover its bases. It may also indicate what it will do in the future. Amazon currently offers amazon gift cards for bitcoin on their site, so selling bitcoin on their site would essentially eliminate the middleman. Customer obsessivity is one of Amazon’s guiding principles.
Amazon will eventually offer cryptocurrency payment methods to customers who demand them. Because many of its shoppers buy goods worldwide, a cryptocurrency is an excellent way for them to enjoy standardized currencies without worrying about exchange rates.
What Could Happen
Bitcoin’s current reign could be challenged in several ways:
1. Amazon might choose to stay away from cryptocurrencies
Merchant acceptance is necessary for bitcoin to transition from investment to currency. There’s little chance that Amazon will remain out of this sector for very long, but the world’s largest online retailer would certainly suffer if it did. Bitcoin wouldn’t be destroyed, but its future as a currency would be affected.
2. A Bitcoin competitor could be adopted by Amazon
A bitcoin failure to meet Amazon’s transaction requirements seems likely. Ripple appears capable of handling 1,000+ transactions per second. Bitcoin’s position as the premier cryptocurrency could be at stake in this scenario. A fictional agreement with Visa raised almost 700% of the Monaco cryptocurrency’s value. The partnering cryptocurrency with Amazon will soon rocket in value. It is not likely that Amazon’s use of such a coin would kill bitcoin, but it could cause bitcoin to lose its top position.
3. Amazon could create its cryptocurrency
According to Amazon Prime Video, the company thrives in high potential areas where it can leverage its extensive developer pool to make huge inroads. Its holdings can provide hardware, cloud storage, and video streaming with its holdings. The company has the technical resources required to break into the cryptocurrency market if it sees potential.
As a large established company, this is not the first time they have created their token. Chat giant Kik raised 75 million dollars in an ICO in September 2017. ICO plans announced by publically traded e-commerce giant Overstock in December have helped boost its stock price by 30%. If Amazon developed its cryptocurrency, it could use it to facilitate the transfer of funds between its various services: from Amazon Prime to Twitch to Audible.
The AmazonCoin initiative could make AmazonCoin an attractive alternative to other cryptocurrencies by offering a 5% or 10% discount on Amazon purchases. There are tens of thousands of developers and high salaries, which could lead to creating a coin that outperforms bitcoin when it comes to scaling and privacy. In this scenario, bitcoin faces the greatest danger, but it relies on Amazon to break into a field it has not been involved with.
As cryptocurrency demand rises, keep your eyes on Amazon.
As of now, Amazon does not seem to be making any announcements in this space. Nonetheless, whatever cryptocurrency Amazon chooses could become an overnight sensation. Whether they choose bitcoin or Ethereum, Amazon’s choice will have dramatic implications for the existing cryptocurrency landscape. Cryptocurrencies and their technology will always exist, but Bitcoin will likely not remain the number one cryptocurrency.