Friday 31 May, 2013

Amazon Coins – Amazon Launches Its Virtual Currency

With the recent popularity of Bitcoins, virtual currency is starting to be a hot topic again. In response to the popularity of Bitcoins, Amazon launched its own virtual currency in May called Amazon Coins.

You can use Amazon Coins to buy software, apps, and add-on features for games through Amazon. They can be used at the Amazon Appstore. To get Amazon Coins going, the online retailing giant gave away 500 Coins to existing Kindle Fire customers. One Amazon Coin is worth a penny, so that’s a paltry $5, but Amazon says it gave away tens of millions of dollars’ worth.

Why Amazon Coins?

Amazon’s stated reason for releasing a virtual currency is to make it easier for customers to make purchases, but obviously it’s a means to drive profits for Amazon. Another motivation is to encourage more developers to use its platform.

You can use Amazon Coins to make purchases in games. Several years ago, some savvy marketers figured out that you could build and sell things in Second Life and Amazon Coins can be used in a similar way.

If you’re a developer, you may get paid in Amazon Coins. If more people are using Coins and buying their apps and software through Amazon, this means more profits for you.

The Future of Virtual Currency

Critics of Amazon Coins charge that they’re useless. They say that Amazon Coins are just a fancy version of the gift card. Their use is currently so limited that they’re pretty much meaningless, they say. Furthermore, Coins are only available in the United States and are based on the US dollar.

Another problem with Amazon Coins and actually any type of virtual currency was put succinctly by iOS developer Garrett Murray on his blog when he said, ‘We already have money, it’s called money.’ He charges that the currency is a cheap ploy to make consumers think they’re saving money on online purchase when they could be paying more if Amazon ever devalues its Coins.

Whether Amazon Coins takes off or not, the implications of a virtual currency that is widely used could be huge. Virtual currencies can be a more stable alternative to government issued fiat money during tough economic times.

Despite many efforts to create virtual currencies, the idea hasn’t taken off in a big way with consumers. One reason is possibly that it goes against the interests of governments that create and regulate currencies. They don’t like having competition. Because of this, they regulate heavily and do whatever they can to prevent virtual currencies from gaining ground.

Right now, Amazon Coins are only available in the United States. You can purchase them at www.amazon.com/coins.

Bob Steele

Bob Steele is an entrepreneur, software developer, marketer, and author living in the Denver metropolitan area. He’s an avid outdoorsman who loves skiing, hiking, fishing, boating, and just plain having fun. His interests include games, space, technology, physics, cooking (well eating actually), economics, business, internationalism, and team sports. With over thirty years of professional consulting experience, Bob has been exposed to many diverse business models and has gained a sensible approach to life. Bob’s company, WaveCentric is focused on commerce, marketing, and entertainment related products.

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