How Amazon Could Topple Bitcoin
It would be an understatement to say that bitcoin has risen exponentially over the last two years. In 2017, it has shot up from just under $1,000 to $17,644 as of December 15, 2017; and it’s lightning-speed ascent has not gone unnoticed.
“The Amazon Effect”
Previously utilized only by financial experts, crooks, and dreamers, the digital currency has now become a global household name.
With the chances of it suddenly imploding seeming less likely to many, there remain a few key threats that could change the trajectory of bitcoin.
Amazon is the world’s largest online retailer, with net revenue of almost $136 billion in 2016. The multinational e-commerce company is responsible for close to 50 percent of online purchases in America.
Amazon’s success lies not only in their being able to cut out many brick and mortar stores, but also through their affiliate sales and self-produced electronic devices.
Despite their considerable influence over the global market, the company has chosen not to add cryptocurrency as an approved payment method; at least not to date.
The only method for clients to make Amazon purchases with bitcoin is by using third-party gift cards. One such company is Gyft, a firm which provides gift cards for Amazon, eBay and Best Buy (among others), and accepts bitcoin as a payment method.
What Would Happen if Amazon Were to Start Accepting Bitcoin?
One of the most significant hurdles bitcoin faces is crossing the chasm between investment vehicle and currency.
In the last six months, the value of the digital currency has appreciated so much that people are “hodling” their coins in the expectation that their bitcoin will be worth more in the (near) future.
The way of thinking outlined above poses a problem as bitcoin’s value is currently linked purely to its demand, which in turn is connected backed to its value.
This principle founds widespread belief that it is a bubble; as its value is not linked to anything other than itself. Should it begin to be more widely used as a currency, its value would be tied to purchasing power, which is far more stable.
Amazon’s integration of bitcoin would thus become a critical factor in this change of mind and usage.
What is Stopping Amazon from Accepting Bitcoin?
Although there are no official statements from the American online marketplace, one would assume that one of the main reasons for hesitation is the number of transactions that can be processed by bitcoin every second.
On average, the cryptocurrency can only process seven transactions per second, which falls desperately short of Amazon’s 600 operations per second during their peak periods.
From these figures, it is clear that bitcoin is not a viable payment method for Amazon, which is not good news for the leading digital currency.
Should Amazon choose to partner with a different cryptocurrency, it would likely cause a spike in the interest of that currency, possibly drawing attention further away from bitcoin.
Possibility of Future Cryptocurrency Payments
On October 31, 2017, Amazon appeared to have purchased three crypto-related domains; and it had nothing to do with Halloween.
AmazonEthereum.com, AmazonCryptocurrency.com, and AmazonCryptocurrencies.com were all new registrations; a possible sign that the leading e-commerce site is considering cryptocurrency payments in their future.