Cryptocurrency is becoming increasingly more mainstream, and as a result, even institutional investors are strategizing on how they can get into the game. Many are now speculating on where Bitcoin could find itself in the consumer market as a common form of payment.
With Amazon being the largest e-commerce marketplace in the US, it makes sense that people are curious as to whether the tech giant will join in on the crypto craze. So will Amazon ever accept Bitcoin as payment?
No, and here’s why.
There’d Be a Ton of Legal and Financial Implications
As one might expect with a decentralized currency, there’s a lot of grey area. Currently, just about every country where people are trading crypto is scrambling to regulate it.
The regulations on Bitcoin vary too heavily from country to country and even state to state for Amazon to be able to manage it.
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Amazon being an international enterprise, would have to essentially create a financial infrastructure so that it could buy, sell and manage Bitcoin.
The setup of said infrastructure could cost more than they could ever hope to gain with actually implementing Bitcoin.
The other concern is that no other large international company has widely adopted Bitcoin, so there is no infrastructure for them to reference. This would lead to an immense amount of trial and error, which could prove to be extremely costly in terms of time and money.
The Volatility of a Non-Fiat Currency
Although the value of national currencies does fluctuate to a degree, the fluctuation is nowhere near that of Bitcoin. For example, the Canadian dollar may fluctuate 5% per year while Bitcoin may fluctuate 5% or even 10% on any given day. Needless to say, the crypto market is not for the faint of heart.
Even if Amazon had everything in place to go through with it, they’d have to have a large Bitcoin reserve. With this kind of volatility, there is always the chance that 1 billion dollars of Bitcoin could be worth 1 million the next day; the company would just never take on that much risk.
The Crypto Transaction Fees
Many crypto wallets take a cut or a fee to pay for items. In that case, the buyer might actually have to pay $62 USD worth of Bitcoin on a $60 USD priced product.
There are also transaction fees when converting crypto to fiat and vice versa. So if you wanted to change the Bitcoin you have accumulated into USD, you would have to pay a fee. Say you sell $900 USD worth of Bitcoin; you may be left with only $820 USD.
That transaction fee could remove a large margin of profit for Amazon and its sellers.
Amazon is investing heavily in its financial venture Amazon Pay. In layman’s terms, Amazon Pay is essentially another version of Apple Pay or PayPal.
This discourages the chances of Amazon adopting Bitcoin because, if anything, it will lead to Amazon creating its own cryptocurrency. The reason being is that it would likely be easier to implement their own cryptocurrency into a financial infrastructure that they created rather than build a new financial infrastructure around Bitcoin.
A known issue Amazon has with Bitcoin is the demand is not high enough. If Amazon was really pressed to enter the cryptocurrency game then it would make more sense to just start an Amazon Coin or something.
I could write a whole blog on the possibility of an Amazon cryptocurrency. Maybe they could make money by selling it and having it increase in value. They could also encourage people to buy into it with deals, say maybe if you pay for your prime membership with “Amazon Coin” you save 10%.
The Average Amazon Customer Doesn’t Use Bitcoin
Although Bitcoin is everywhere in financial news of late, it still hasn’t really been adopted by the masses. Even though Bitcoin is currently hovering around $50k USD, a large amount of the population still doesn’t know what Bitcoin is.
Thus, if most Amazon customers have no stake in Bitcoin, would there be any real benefit for Amazon to implement it in their business model? Ultimately I’d say no.
So Why Do People Say or Think There’s a Chance?
I think people, myself included, see Bitcoin as a positive thing full of opportunities. The fact that Bitcoins went from being a few cents to 50 thousand USD within a decade is truly amazing.
So, as a result, I think that crypto investors like to believe anything is possible when it comes to Bitcoin.
To be fair, there were a few things that teased the idea.
Amazon purchased the domains amazonbitcoin.com amazonethereum.com, amazoncryptocurrency.com, and amazoncryptocurrencies.com. This certainly got people excited, but ultimately I think Amazon is just covering its bases.
Another interesting factor is that Amazon Web Services now offers blockchain solutions. AWS Blockchain Templates now allow for you to launch an Ethereum or hyperledger fabric (private) network.
As well, Andy Jassy will be taking over as CEO. He was head of Amazon Web Services, and he introduced Amazon Managed Blockchain. So people are still speculating Bitcoin adoption will have a better chance with him at the helm rather than with Bezos.
I’m not 100% sure I want to be right or wrong about the claim made in this article. As a crypto investor myself, I always want the price of the crypto assets I hold to go up. I would think Amazon buying into the Bitcoin game would increase the asset price for a period of time, but I could be wrong. In that case, maybe it’s better that Amazon doesn’t touch Bitcoin just yet.
In my eyes, Bitcoin has become more of an asset than something you would use to pay with. It’s almost like gold; it started out as a universal currency, and now it’s more of a universal investment.
Ultimately, I just don’t think it makes any business sense for Amazon to start accepting Bitcoin. I think we’re all a bit caught up in this whirlwind that is Bitcoin, and we have to take a step back and realize maybe there are still some applications where it doesn’t make sense. It is not a one-stop solution to everything.
It’ll be interesting to see how this plays out, and maybe after a year when I look back on this blog I’ll laugh because of how wrong I was. Until then, we’ll just have to keep speculating.
Hey, my name is Nolan, and I’m a copywriter at AMZ One Step. My job allows me to explore all areas of the Amazon seller experience. I write weekly blogs about various topics regarding Amazon that may be useful to independent Amazon sellers. I may also be directing or acting in a few YouTube videos, and we’ll see if I get around to podcasts.
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