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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."
A virtual gift card is not the same thing a a virtual currency.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
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
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' ?
People getting confused about currency and money is something that is a very very old phenomenon. This article is no exception.
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.
Amazon Coins are nothing but 'points' or 'credits' or 'tokens', and those have been around for a very long time.
The blog author is... pretty much clueless. Nobody but him is confusing Bitcoins and Amazon Coins, or referring to the latter as crypto-currency. Nobody but him is confused about the difference between the two.
Who gives half a shit how many line items are on their debit/credit statement? This has all the logic of putting money on a gift card.
I guess it could be used like an allowance for kids but it'd make more sense to give the kid a pre-paid Visa/Mastercard and drop a fixed amount on it every month. That way they can use it anywhere instead of just at the one or two places where some proprietary currency is accepted.
The whole thing smacks of Itchy and Scratchy Bucks.
Bitcoin blocks are Sha checksums of transactions digitally signed. Blocks have the check sum of the previous block in the chain. Bitcoins contain complete transaction record going all the way back to the original bitcoin that started that chain of transactions. But if Alice buys drugs from Bob and given a bit coin forever there is a transaction recorded that Alice gave so many bitcoins to Bob. The transactions are between cyber entities and it is difficult to decode the block, find the cyber identity and then link it to a real identity. But all claims of anonymity is based on the level of difficulty in decoding the blocks to get the cyber accounts and linking them to real life. Not based on any notion of mathematical impossibility or secrecy.
Is it anywhere close to being right?
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Microsoft used to sell "points" to buy stuff over Xbox Live. Interestingly enough last year they stopped and went to a currency based system. So instead of "rent a movie on demand for 600 points" it became "Rent Movie for $2.99" or whatever the real dollars equivalent were. And I much prefer the new system.
"The problem with socialism is eventually you run out of other people's money" - Thatcher.
Can you buy an ounce of blow with it?
If yes, it's currency.
If no, it ain't.
Pretty simple. It also sums up why governments have issue, and will inevitably crack down.
A crypto currency backed by a nation-state would be a very interesting thing indeed.
..don't panic
From TFA:
"Expanding the currencyâ(TM)s reach is also a potential win for Amazon, which wants to create an end-to-end ecosystem for app developers."
Um, no, that's not the main reason Amazon created the coins, esp. since the app developers see the same amount of cash regardless of how the user paid. The reason Amazon likes the coins instead of making a bunch of 99 cent charges to a credit card is simple:
1. Charging $10 once to a credit card is cheaper to Amazon than charging $1 10 times.
2. Lock-in, this is the traditional "gift card" route, any money put into the Amazon coin ecosystem will eventually have to be used on an Amazon good/service. If you buy $100 in coins but only use $80, well tough. This has nothing to do with creating a huge ecosystem where the coins can be traded freely for goods and services that have nothing to do with Amazon.
Monstar L
Could Amazon ever allow other merchants to accept its "coin", in effect creating a more fungible currency?
They're big enough in enough ways (size, computing capacity, etc) that they almost could create a stored value system and transaction processing ability that they might be able to induce other vendors to accept their coin that they would in turn redeem for the merchant as actual currency.
Smaller vendors would get access to a sophisticated payment system and perhaps gain customer confidence or customers wanting to spend/get rid of coins on items Amazon doesn't carry.
Amazon would gain the transaction info for their analytics as well as maybe more consumer acceptance of their coin.
I wonder how long until big e-commerce companies attempt to create a common currency-type payment system that allows them to bypass Visa/MC/banks and possibly even deal with national currency conversion costs.