Amazon Coin: The Trillion Dollar ICO
After seeing the recent success of the Initial Coin Offering (ICO) sector of crypto, a thought popped into my head, “When will tech giants like Amazon, Google, and Facebook utilize a token economy?” Think about it, instead of these tech-behemoths going in and out of volatile currencies, why not make their own and peg their products and services in that native currency. A fascinating idea right? It could change the world and boost adoption like we’ve never seen. Below, I’m going to go through my thoughts on what I believe could be the world’s first trillion dollar ICO, Amazon Coin.
Is Amazon Into The Tech?
Rumors have spread since October 2017 that Amazon may soon be making an entrance into the cryptocurrency market. This was sparked by a series of crypto-related domain name acquisitions made by Amazon’s legal department. The company acquired AmazonEthereum.com, AmazonCryptocurrency.com and AmazonCryptocurrencies.com at that time.
That was just the beginning. Later in 2018, Amazon Web Services (AWS) announced they would be creating and launching blockchain templates. The product would give users pre-set blockchain frameworks that support two versions of the technology: Ethereum and the Linux Foundation's Hyperledger Fabric.
Which Angle Would They Take?
At the moment, there are three major ways Amazon could implement a blockchain solution. The more overlooked strategy, and the one that could revolutionize their systems the most, is using blockchain to optimize Amazon’s supply chain. The blockchain can transparently track each step of an order from start to finish. This can all be done under Amazon’s umbrella, cutting down overhead, ensuring fulfillments and increasing efficiency. As the biggest online retailer, Amazon has one of the most sophisticated supply chains in the world, spanning 100 countries and 300 million accounts.
What about accepting cryptocurrencies like Bitcoin as payment? This wouldn't necessarily be a blockchain solution, however it would open the floodgates of adoption. The issue is the volatility involved in the relatively small crypto market right now. There are other tech giants that accept Bitcoin like Microsoft and Overstock. However, Amazon could radically change the game. It’s speculated that instead of using Bitcoin, Amazon would lean towards a more private settlement network like Ripple or Stellar Lumens.
The last possible angle is creating a native asset, or ‘token,’ for the Amazon ecosystem. It sounds crazy, right, but maybe not so much. Amazon has been quietly testing an “Amazon Coin” since 2013. The company introduced Amazon Coins via a promotion in the United Kingdom and the United States. The promotion consisted of giving free coins to all users of Kindle and Kindle Fire devices. They are valued at a penny and are sold for a discount, used to pay developers and function as a virtual currency. Sounds familiar, no?
After reading about Amazon Coins, I was excited about the fact that I could already use a generic virtual currency across their platform. I’m not the only one either. In a recent study by LendEDU, 52 percent of 1,000 Amazon customers surveyed responded that they would use an Amazon-created cryptocurrency to make purchases on the Amazon website.
Having a native asset would make it an easier process of exchanging value across all of the services Amazon now provides. These services include online retail, physical grocery, web services, artificial intelligence, internet of things, video/music streaming and banking. Not only could they reach all of those needs, the reach would be boundless. A standardized Amazon crypto would allow shoppers to purchase goods at a standardized international rate, eliminating the confusion and volatility of fiat currency exchange. This would enable a single marketplace, with a full-circle tokenized economy.
The token could function in a couple distinct ways. It could be a utility token allowing customers and stakeholders to access the Amazon platform. Users would have a wallet and hopefully move into the token through BTC, ETH, or USD. They could also airdrop tokens to users to speed up the transition. It’s possible Amazon wouldn’t make this the only option for payment. Instead, maybe the token could grant discounts and rewards for usage; something a lot of utility tokens being launched today are doing.
It could also be somewhat of a hybrid token-- a security as well as a utility. Tokens could be backed up with Amazon stock, granting holders equity benefits. I think this is the less viable option, but you never know. At that point, holders could spend their tokens, or stake them for dividends in the company. One could ask, “wouldn't they just hold the tokens and stake them instead of spending it? Much like what’s happening with Bitcoin Hodlers?” You could say yes, but actually spending the tokens in this case could drive up tangible value to all participants, thus driving sales and valuation.
This bright idea isn't without its complications, however. Like we mentioned earlier, how will Amazon ensure users are actively spending their tokens? If price appreciates, users may hold the token rather than spending it, making it more of a store of value. Also, how will they price things? Will products and services be pegged to local fiat prices or solely in the token? There can also be complications with price volatility once the coin is released on secondary markets. The crypto market cap will have to grow immensely to bring the volatility down. A larger market, along with regulatory clarity, will be the main barriers to growth for this hypothetical project.
Amazon, Internet Pioneer
Since 1994, Amazon has led internet innovation in e-commerce and continues to expand its reach into different sectors. Jeff Bezos has created a modern day empire, one that could grow with the implementation of a native asset. However, hype and excitement for the possibility of adoption should be measured with a healthy case of concern. Would this give amazon too much power? How much is enough? Regardless, a project of this size will most definitely change the world and e-commerce forever. We can't know for sure if tech giants will choose to make their mark with blockchain, all we can do is speculate and wait.