It's an interesting idea with lots of potential marketing applications for Amazon. But as far as creating an alternative currency is concerned, it just boils down to who do you trust - Jeff Bezos or the US government?
It sounds like an ordinary obscured discount, i.e. a discount that sounds larger than it really is. It's akin to S&H Green Stamps (remember them?) or frequent flyer miles. With Green Stamps your grocer gave you stamps that you pasted into a book. When you had a full book you could redeem it from a catalog of mostly useless stuff. The book gave the illusion that you had something much more valuable than you really did. The same thing is true of frequent flyer miles. The real value of a mile is hard to pin down but the apparent value seems very high because the unit is so small, somewhere in the neighbourhood of a penny, but possibly much less. An Amazon Coin has the value that's exactly a penny so 500 Coins is only worth $5. However 500 Coins sounds much larger than $5 because it's not a common unit. If they said you had 500 pennies in your account you would treat it as worthless, after all most people have at least that many pennies sitting on their dresser.
This is very different from Bitcoin which sounds like an ordinary Ponzi scheme (if I'm wrong on this would someone please explain why it's different than a Ponzi scheme).
"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!
"This is very different from Bitcoin which sounds like an ordinary Ponzi scheme (if I'm wrong on this would someone please explain why it's different than a Ponzi scheme)."
Be careful what you wish for. There are Bitcoin fans (fanatics?) that will talk your ear off.
The biggest question that comes to mind is "why?" The "it's an easy way to..." really doesn't hold water. Not much is easier than buying things online. I can't imagine it being any more secure either.
What I can imagine is that it's like loading up a store gift card. It's just like real money except you can only use it in one place. In exchange for locking a lot of your money up, they give you a coupon. I'd say this is a pretty old and conventional marketing program just described in a "new and innovative" way.
Another benefit to Amazon is that they may choose to "retire" particular issues of the currency....and those that are un-spent then become worthless.
Unless users of the currency have managed to spend up every last Coin prior to the "retirement" they may end up having given money to Amazon for nothing, which may wipe out any discounts offered at purchase.
The production of "scrip" (private currency) is common in a variety of venues ranging from folk music festivals, arcades, carnivals, remote towns, and subways. It benefits the provider by making the currency only usable within their venue. In exchange, they may provide some kind of discount. With widespread "gift cards", users get locked in but they also pay fees and taxes to get the card. This approach removes some of the overhead costs (but still means that the funds are locked into a particular provider without any external guarantees).
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.
'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.
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.
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!
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.
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.
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?
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.