Amazon Coins and How the Definition of 'Crypto-Currency' Is Getting Too Loose

Nerval's Lobster writes "Amazon has expanded support for its Amazon Coins from Kindle Fire tablets to Google Android mobile devices.In its press release, Amazon positioned its e-currency as the ultimate in convenience for customers who don't want their credit-card statements riddled with lots of micro-purchases from Amazon's App Store. Expanding the currency's reach is also a potential win for Amazon, which wants to create an end-to-end ecosystem for app developers. But Amazon Coins' existence could alienate the same demographic that made Bitcoin and other crypto-currencies such a hit. The company tethers the Coins to a user identity, and likely keeps significant records on its crypto-currency ecosystem: who buys what when. That concept is anathema to those online denizens who embraced Bitcoin as a way to make purchases without needing to reveal a real-world identity, or deal with a currency tethered to a central repository; genuine crypto-currency can be used to purchase pretty much anything from a purveyor willing to take it, including—in the case of Silk Road and other online bazaars—drugs and weapons. Indeed, Amazon Coins has more to do with a corporate 'currency' like the now-defunct Microsoft Points than an actual crypto-currency like Bitcoin. But that hasn't stopped some people from getting confused about it."

Comments

Not the Same

[SuperKendall]

A virtual gift card is not the same thing a a virtual currency.

Re:Not the Same

[msauve]

I think they meant "cryptic," not "crypto." You and the GP are right, this is more proprietary gift card/scrip than anything else.

Re:Not the Same

[Ralph Wiggam]

So write some code. That doesn't sound difficult to implement securely. Oh wait...it sounds virtually impossible.

"Satoshi Nakamoto", the person or people who created bitcoin, are believed to have about a million bitcoins from early mining. That stash was worth a billion dollars at one point recently. Not a single transaction has occurred with the coins since Satoshi disappeared in 2011.

Nobody really knows why the bitcoin protocol was created. But evidence does not support the theory that they did it to make money.

MS got rid of MS points

[Anonymous Coward]

Surely Microsoft had a good reason for moving away from MS Points. I don't think reducing the number of credit card transactions actually benefits the consumer since the consumer isn't paying a per transaction fee

Do we care?

[Alwin Henseler]

In my experience, 'classic' electronic currencies follow this general pattern: 1) you obtain them from a bank, 2) you pass it to another user, and 3) that other user brings it back to the bank.

At best, the bank can't see where the receiving party's money came from. But still, every 'coin' in circulation goes from bank -> user -> another user -> back to the bank.

The big difference with cash is this: using cash, money can pass from #1 user to a 2nd user -> 3rd user -> 4th user -> back to the bank. With the bank having no way to figure out what happened in between. Transfers from 1 -> 2, 2 -> 3, and 3 -> 4 need not involve a bank at all.

To me, anything that fits the 2nd definition is interesting. Anything that fits the 1st definition, is just electronic payments in the classical sense that eg. governments might be monitoring every single transaction. Regardless of implementation. So if in this case, Amazon = 'the bank', do we even care, if that currency clearly isn't 'electronic cash' ?

Re:Do we care?

[Wycliffe]

Transfers from 1 -> 2, 2 -> 3, and 3 -> 4 need not involve a bank at all.

In theory this might be true but in practice cash is very tracable. US currency has serial numbers.
You get your money from the bank. You buy food at a restaurant. The restaurant deposits it in the bank.
There might be an extra hop or two if you're lucky but the number of hops without passing a bank is
minimal. If you don't believe me, try to pass off a counterfit bill. The secret service is extremely good
at tracing backwards the route it took to get to the bank and can usually do it in only a couple hops.
Smaller bills might get passed back and forth a bit more but even a place like walmart rarely gives back
$20 bills as change except for a tiny bit of cashback but the majority goes straight back to the bank.

Re:Do we care?

[bonehead]

There isn't anything special about paper money

If you truly believe that, then you really haven't thought this through.

A couple of hours ago I stopped at a convenience store and purchased a 12-pack of beer and a pack of smokes. I paid with one of my credit cards. I take it for granted that multiple entities can see that I made a purchase. I also take it for granted that most of them can take the total, subtract the sales tax, and then fairly easily determine which combination of items would have added up to that amount. Hell, that's pretty simple stuff, and I assume that "they" can do hard stuff, too.

Now, if I had thrown a $20 bill down on the counter instead of the credit card? "They" wouldn't get any info at all.

So why do I use credit cards? Honestly, I don't give a shit if "they" know I bought a 12-pack of shitty beer and a pack of smokes tonight.

But if I was making a purchase that I did want to keep to myself? Hell yeah, cash would be the only way to go.

At present, paper money is the one and only way to make a purchase and be assured of anonymity. To think that there isn't anything special about paper money is simply delusional.

Different Solutions to Different Problems

[grapes911]

Amazon Coins and Bitcoin solve two different problems. The average Amazon customer probably heard of Bitcoin but doesn't know exactly what it is. They probably understand that Amazon Coins are just gift cards though. I don't see the problem.