This concept is so simple that someone on Jeff Bezos’ staff must have brought this to his attention already…
While Facebook’s Libra came on to the digital scene much quicker than anyone expected, the most obvious, tech-savvy candidate to be next (and do it more advantageously for themselves) is Amazon. And why not? They have the perfect, existing ecosystem waiting to be utilized.
Amazon already functions like a casino: they give you the online retailer’s version of drinks, entertainment, and prices so reasonable that you feel like shopping until you have no money left. Sound familiar? It should, because Amazon does everything it can to keep customers on their site until there is finally a compelling reason to get off of it. But there can be more.
Enter: Amazon Coin. Why do they create it? To keep people on the site even longer. Here’s an easy example of how it could work:
A customer is about to check out of Amazon’s site with a bundle of goods costing $100. But before their credit card info shows up, a helpful bot appears and says, “wait, have I got the deal for you.” After this initial entrée, the conversation goes something like this:
Amazon bot: “If you convert $100 into 100 Amazon Coin, you can buy that $100 bundle of goods for only 90 Amazon Coin.”
Customer: “Are you saying that I just need to swap $100 for 100 Amazon coin and then I only have to use 90 Amazon Coin to pay for what I want?”
Amazon bot: “Yep, that’s right.”
Customer: “Are you sure? Because that seems like a 10% discount to me for free.”
Amazon bot: “That’s right and there are no catches. And oh, by the way, since you have that extra 10 Amazon Coin lying around like spare change, is there anything else you’d like to purchase today?”
Customer: “That’s a nice suggestion! In fact, I was also thinking about buying a $50 item on another online retail site, but since I have the 10 Amazon Coin in my account, maybe I’ll just convert a few more dollars, so that I can use my existing Amazon Coin change as well.”
What just happened? Amazon entered the digital token market with the aim of keeping shoppers on their site for even longer. The moat around their online castle just got bigger, deeper and wider, since customers will probably not switch as easily to other retail websites when they have virtual Amazon Coin lying around. To be fair, it’s really not that much different than a customer rewards program in concept. But the results can be dramatic and wait a second… the reduction of the use of fiat currency for a digital one (i.e. sell $ for Amazon Coin) continues the trend mentioned in another of my blog posts on “Losing the Use of Fiat Currency in Day-to-Day Transactions”.
But the difference in scale would be ENORMOUS – what Amazon could do almost instantly would dwarf the effect of the other ecosystems and it would have a very real effect on exchange rates over time.