As Bitcoin continues to grow its user base and popularity, many wonder how major corporations will adapt to the rise in demand for payment using its digital currency. This makes Amazon, the world’s largest online retailer and growing cloud-based computing business, a company which could change the course of Bitcoin depending on its stance on the new technological innovation.
Many would believe Amazon and Bitcoin would be the perfect match, with Bitcoin being able to service Amazon’s huge customer base for transacting around the globe quickly and efficiently. Still, Amazon hasn’t started accepting Bitcoin or any other digital currency, and has no plans in the works to do so. This has left customers frustrated, and there is even a petition for CEO Jeff Bezos and his company (which can be viewed and signed here) to begin accepting Bitcoin on its platform.
Yet, what if Amazon and Bitcoin are not potential partners, but instead, competitors at heart? Could Amazon be the company which takes down the entire Bitcoin network, or, creates its own cryptocurrency to undercut Bitcoin in the market?
Why Amazon Matters
Overstock.com was the first major corporation to begin accepting Bitcoin back in 2014, however, most companies believed the network was too slow and expensive at the time to take on an influx of transactions, and therefore stayed out of the Bitcoin business. Recently, with the launch of Layer 2 solutions designed to help scaling, most notably the Lightning Network, the Bitcoin blockchain has been able to scale and function at a higher capacity. This has brought on other major corporations (such as Starbucks) to begin accepting Bitcoin payments from customers, thus growing the market for Bitcoin in commerce and trade.
Still, these companies which have begun to accept Bitcoin do not have the same clout, or power Amazon has in the global economy, which makes it the main potential disruptor to Bitcoin out of most major corporations. It isn’t just that Amazon has control of online retail and cloud computing, the company has started to slowly make its way into almost every industry through acquisitions and heavy research and development.
Alongside its massive ecommerce business, Amazon has one of the world’s largest supply chains, operating its own fulfillment centers, and sending out millions of packages a day to its customers. It’s purchase of a small online pharmacy for about $1 billion made shockwaves in the healthcare industry. The company has also become a large player in the growing digital advertising business, producing a reported $2 billion of revenue from ad sales. The Amazon Alexa is an internet-of-things (IoT) connected device which has the potential to change the way devices are connected throughout the home and office.
With so many industries in its purview, Amazon could be the most important company to determining the success of Bitcoin and other major digital currencies. CEO Jeff Bezos seems in no rush to adopt Bitcoin, which leaves many wondering if Amazon isn’t going to partner with the world’s leading digital currency, and instead, potentially decide to take matters into their own hands.
The Threat of Attack
Bitcoin, like any other proof-of-work (PoW) blockchain, is always susceptible to the threat of a 51% attack. In such an attack, one entity obtains control of 51% of the hashing power of the Bitcoin network and is thus able to falsify transactions and change previous block information in an effort to bring down the entire blockchain. This would eventually lead to the chain being seen as untrustworthy, making it relevant for market participants.
While Amazon is mostly known to the general public as the one of the world’s largest online retailers, the most growing aspect of its business provides the foundational layer for much of the internet. Amazon Web Services (AWS) is a cloud computing platform offering computing power, database storage, and content delivery to businesses and consumers around the world. The functions of AWS have already caused it to house an estimated 2 million data servers around the world.
Companies such as Bitmain had previously used their resources and hardware to mine Bitcoin, and as a result gained a significant amount of the hashing power of the network. There was even an instance where GHash, a Bitcoin mining pool, obtained 55% of the power on the network, although it quickly decided to scale down its efforts. Amazon could easily use its data servers and computing power to control the entire Bitcoin network if it desired.
Still, even though the Bitcoin network has yet to experience any such attack, and has been operational for over 99% of the time since its inception, such an attack is not only possible, it already could have been carried out if desired. It is estimated it would cost just over one billion dollars to carry out such an attack, resources Amazon has at their disposal if they wish.
Amazon may have the computational power to conduct a 51% attack, but it currently has no reason or incentive to do so. Bitcoin is still relatively irrelevant in the larger financial world, and taking it down would require allocating precious resources and provide no real benefit to Amazon.
On the other hand, instead of attempting to take down Bitcoin, Amazon could do something much more devious by creating a cryptocurrency of its own. The company has reportedly been engaging in discussions and research on how such a project could unfold, but needless to say, its potential is quite large.
It is obvious Amazon has cryptocurrencies on their radar, as it is taking some precautionary measures to secure the assets needed to get into the business. The company has already purchased several cryptocurrency domain names including amazoncryptocurrency.com and amazoncryptocurrencies.com, which have raised speculation of how they will be used in the future.
Implementing its own cryptocurrency into its online business would have the potential to create a benefit for Amazon’s billions of customers who shop on the site by allowing them the convenience of paying for goods with an internal Amazon currency, with the company likely to offer some sort of monetary benefit to customers for doing so. Using a cryptocurrency in this way would help keep money within the Amazon ecosystem, creating more revenue and profits.
However, a cryptocurrency isn’t just useful to transact across markets, it also provides a way to store, track, and receive almost any kind of data or information securely and quickly. The use of blockchain technology in the business of Amazon would make it easy for the company to implement in its new areas of business previously mentioned.
- Use to better track products from source to end user
- Monitor drug prescriptions and purchases
- Connect Alexa with other IoT and smart devices
- Maintain and facilitating ads on its digital advertising network
An Amazon cryptocurrency would be a huge blow to Bitcoin in its attempts to be viewed as the gold standard for transacting digitally across the globe. A successful launch of an Amazon token would pave the way for other companies to launch their own token to conduct transactions and track data, eventually leaving much less space in the industry for Bitcoin to be of use. It would create a reason for investors and users to take a step back and wonder whether or not Bitcoin has real value in the future digital economy.
While Amazon has remained hush-hush in regards to its views on Bitcoin and cryptocurrency as a whole, speculation will continue in regards to what the company will decide to do about digital currency. This will become even more intriguing as Bitcoin’s popularity and usage begin to rise, eventually making it a form of payment which cannot be ignored by corporate giants.
Valued at close to $1 trillion, Amazon is not just another company, it is a massive corporation which could takeover the Bitcoin network in one fell swoop. How it aligns itself in the digital economy will be something all Bitcoin enthusiasts will be taking note of in the coming years.