Why has Amazon created its own money? A bit of fun, a short-term promotion, or could Amazon be testing the water ahead of a BitCoin-like move?
Amazon.com Inc. (Seattle, Wash.), the world's largest online retailer, announced on May 13 that it has launched Coin, a virtual form of money that customers can use to purchase software and add-on features for games at its Appstore.
And to "celebrate" the move Amazon deposited 500 Coins in the Amazon accounts of all its existing Kindle Fire customers in the U.S. Apparently that was tens of millions of dollars worth of Coins given to account holders to encourage them to visit the appstore. Those that want to can purchase additional Coins online from www.amazon.com/coins and get a discount of up to 10 percent if they buy in bulk.
Amazon did not give a very compelling justification for the creation of Coins saying that is an "easy way" to make purchases. The good old U.S. dollar, or the euro or the pounds sterling and so on, and credit card accounts denominated in those currencies, are also easy ways to make purchases.
"We will continue to add more ways to earn and spend Coins on a wider range of content and activities today is Day One for Coins," said Mike George, vice president of apps and games at Amazon, in a statement.
Does this sound familiar?
It reminds me a bit of BitCoin, the notorious online currency that bubbled up in the news a couple of months ago.
The BitCoin started being used to make purchases in 2009 and rumbled along quietly for a while but in late-2011, the Bitcoin exchange rate fell from over $30 in June to below $2 in October, thereby revealing the online currency's liability, in the Internet era, to speculation and bubbles. In 2013 it happened again when the BitCoin reached a high of $266 on April 10 before falling back below $100 within a few days.
The point must be made that right now Amazon's Coin is tied to the dollar, with one Coin being equal to one cent. There is no indication that Amazon has any intention to let the Coin float free, thereby encouraging it to become an object of speculation. But as Mike George said, this is Day One for Coins.
Multinational companies including those in the upcoming digital generation like to play national governments off against each other when it comes to taxation. In the last few days in the U.K. we have had a senior Google employee being quizzed by a Parliamentary sub-committee over the way Google organizes its affairs so that European sales are conducted in Ireland, which offers a lower tax regime than the U.K.
Imagine how tempting it would be for companies from the digital generation to use their key positions in the online world to try and take control of money from governments so that it can be controlled for their shareholders' benefit but probably not for the benefit of customers or the general public. Maybe BitCoin has shown them it is possible.
Virtual money are now becoming more and more popular. Bitcoin is also a very interesting currency. It is a form of money which may supplant other currencies in future. Crypto currency can't be controlled and influenced by any governmental staff or business entity which is a good opportunity to efficient prices settlement. Besides such system is very safe and it can never be cracked. Today you can find no credit check payday loans online being given in crypto currencies.
To me, this sounds more like a well promoted marketing program than anything else. As pointed out, if successful, the program will benefit Amazon. It may have some benefit to customers, or may look like it has some benefit to customers, but as in Vega, the house always wins.
I do wonder if there is something of an attempt to skirt state sales taxes in this program someplace though. I don't know tax law well enough to know if such a loophole exists, but if it does, something like this might have that as an ulterior motive.
Yes, 2% inflation - where prices of goods and services are constantly increasing and savings and purchasing power are constantly being eroded - is "good" while any amount of deflation must be avoided at all costs. After all, imagine living in an economy where prices fall and purchasing power actually increases - what a catastrophe!
An interesting point.
If Amazon did decide to pay staff in Coin could the company argue that everything an employee could need could be bought at the company shop.
Probably not, so would there then HAVE to be an open market on converting Coin into dollars and vice versa?
Will Amazon soon pay employees salary and shareholders using Amazon Coins?
A currency similar to frequent flyers miles is one thing. Trying to walk away from country currency, with a side product of avoiding taxation, is much more serious. I am not sure how much federal can tolerate.
It seems the brightest and best university graduates are recruited by the financial sector where they invent financial "instruments" setting their own rules and making a killing at the expense of all other members of society.
As they are allowed to set their own rules by the government, control by the government tends to be too little and too late.
In my opinion money's purpose is to measure value of work and products, not as a gaming media by the financial sector.
You make this sound like a covert conspiracy, but the FED does have transparency with regards to inflation. They are targeting 2% and are having a hard time getting there, even with quantitative easing.
'Imagine ... online world to try and take control of money from governments'. I am sorry that you don't appear to know what is really going on right now. In the USA, the control of money is not by government - it is by the Federal Reserve which is a private cartel of banks who are responsible to their shareholders (not the people). The current round of US government deficit spending is aided by the Fed by Quantitative Easing (money-printing) which, via inflation, is a form of stealth tax of which most of the public is totally oblivious. BitCoin may eventually be a way around the totally profligate behaviour of the Fed and the US government.
Not only can Amazon lock users into the Amazon maze, but the company can control the financial transactions rather than relying on third part processors. Let's face it, managing financial transactions is big money and everyone wants a cut, which is why the electronic payments solutions segment is so fragmented.
"mostly useless stuff"! (S&H Green stamps). Hey, that is were our family got most of our "wouldn't it be nice to have" stuff. BBQ, Croquet set, Badmitten set, etc. All the stuff you needed to be real back in the 60's!