To date, Amazon, the world’s largest online store, has avoided using bitcoin as a payment method. However, could PayPal’s entry into the digital currency space also encourage Amazon to accept bitcoins? Decrypt website at an essay It has recently published the opinion of some experts, considering the possibility of accepting bitcoin in Amazon.
Amazon is the world’s largest e-commerce platform, generating $ 280 billion a year. However, the platform has so far avoided accepting bitcoins and other digital currencies; Amazon, however, has no problem selling products that are emblazoned with the Bitcoin logo.
The prospect of accepting Bitcoin as a payment intermediary in the world’s largest e-commerce company is very attractive to Bitcoin fans, because it can pave the way for more digital currencies to attract the public and create a new wave of acceptance of this digital currency.
Amazon has a 47% stake in the US e-commerce market and a net revenue of more than $ 280 billion (as of 2019). Amazon hosts more than 150 million Prime users worldwide, and this is just the number of special users of this e-commerce giant. Considering ordinary users, the Amazon user base can be estimated much higher than this.
Fortunately, the millennial generation (born in the 1980s and 1990s), who consider themselves to be the biggest fans of Bitcoin, are also interested in Amazon, and the generation of this generation on the Amazon platform is higher than the generations before and after.
With more than 150 million known customers, many of whom are interested in digital currencies, the tremendous impact of Amazon’s acceptance of bitcoins is quite obvious. However, since 2014, Amazon has not welcomed the idea of accepting bitcoin. But what is the cause?
Barriers to Bitcoin Acceptance by Amazon
Apparently, there are many barriers to Amazon accepting bitcoin, one of the most important of which is the not-so-favorable fluctuations of this digital currency.
Sean Rolland, product manager of the Bitcoin payment service BitPay, said in an interview:
For Amazon to be able to accept bitcoin directly, it must establish certain processes and procedures. In addition, the platform must maintain and manage bitcoin and thousands of other digital currencies. To maintain digital currencies, Amazon must accept the risks associated with Bitcoin market fluctuations, which are part of the nature of this digital currency, and consider it in the company’s balance sheet. In addition, selling and converting digital currencies to Fiat currencies through digital currency exchanges is another issue that needs to be addressed.
Bitcoin is certainly familiar with the problems of accepting Bitcoin, as it is one of the leading providers of Bitcoin payment services to thousands of different businesses around the world. In fact, Bitcoin provides a way to buy from Amazon using Bitcoin, albeit indirectly. This method uses prepaid gift cards that are purchased through digital currencies. However, Roland noted that technical shortcomings are more important than market fluctuations, and that some of the biggest obstacles to Amazon’s acceptance of bitcoin are related to all technical aspects.
Things Amazon believes Roland should consider include: support for nodes (networked computers), blockchain management, accepting payments from custodian and non-trust wallets, and even support for other coins; Coins that users will be able to request payment with.
Compliance with various regulatory rules is also likely to be one of the concerns of the world’s largest online store. However, according to Danny Scott, founder of the CoinCorner Bitcoin Service Center, the biggest bitcoin problem is the inability to scale (fast, low-cost transactions). He said in this regard:
From a payment intermediary perspective, Bitcoin is not ready for this level of scalability.
On the special day for special users in 2016 (Prime Day 2016), the volume of transactions on the Amazon platform reached a record 636 transactions per second. Currently, Bitcoin can only process 7 transactions per second, which is less than a drop in an ocean compared to the processing speed of 65,000 transactions per second offered by payment networks such as Visa and MasterCard.
However, Scott remains optimistic that scalability solutions, such as the Lightning network, can provide the scalability needed in the Bitcoin network even more than Visa and MasterCard. WhitePaper Lighting states that when a network becomes operational, the second-tier scalability solution can reach speeds of up to millions of transactions per second.
In June 2018, Michael Suppo, a digital currency analyst on social media, wrote in support of the Lightning Network:
If you think IAS is going to make a dramatic change and raise the transaction ceiling to one million, Lightning Network will go even further, turning Bitcoin into a potential macro-level payment option. Visa 24,000 transactions per second, the current bitcoin 7 transactions per second, Bitcoin with the Segway solution 14 transactions per second and Bitcoin with the Lightning network solution can do 3.5 million transactions per second.
However, even Lightning in its current state can not solve the problem of bitcoin scalability.
Will the entry of People into the world of digital currencies make a difference?
In October 2020, People, a major digital payment company, announced after years of research that users of the payment service could use PayPal, Bitcoin, Ethereum, Bitcoin Cash and Litecoin credit cards.
Of course, some digital currency enthusiasts are critical of some of People’s policies; For example, People does not allow digital currencies to be taken out of a company’s digital wallets. However, this move of the people can be considered as a big step towards the widespread acceptance of digital currencies. The company also eliminated the problems associated with bitcoin fluctuations by automatically converting digital currency payments to Fiat currency at the time of sale.
According to Roland, the entry of People into the world of digital currencies as a role model will make it very difficult for other companies to reject bitcoins.
PayPal’s decision to offer digital currencies for sale means that more consumers will use digital currencies for online shopping, especially when the price of bitcoin and other currencies rises. In this way, online business owners, including Amazon, will be encouraged to embrace digital currencies as a means of payment in order to gain more market share.
Ross Gerber, co-founder and CEO of Gerber Kawasaki Investment Company, recently tweeted:
Bitcoin has reached $ 16,000 in its upward trend. Let’s be realistic. PayPal, Square and Shapifa have all turned to bitcoin and turned digital currencies into practical tools. Ordinary people are aware of this, and if Amazon accepts bitcoin, that’s it. Bitcoin will have a very upward trend.
Roland believes that the adoption of digital currencies could extend the sales reach of online stores to international markets and even areas where credit card acceptance is not practical. He added:
It also reduces high fees and increases transparency and payment efficiency. Digital currencies are very valuable because they can be used to buy and sell goods and services worldwide without the risk of fraud or identity theft.
Scott also confirmed this opinion and stated:
It only takes a while for Amazon to accept Bitcoin as a payment intermediary.
In 2013, Amazon acquired the domain name amazonbitcoin.com, and four years later, Amazon acquired the domain names amazonethereum.com, amazoncryptocurrency.com, and amazoncryptocurrencies.com. At the moment, these URLs are redirected to the Amazon.com homepage, but this shows that Amazon is at least aware of the potential of digital currencies and has defined its territory.
According to Scott, the first step for Amazon is probably not to accept bitcoins, but to follow in the footsteps of MicroStrategy and Square, which recently invested more than $ 6.7 billion in the list of publicly traded companies. Coin joined. Scott added:
It may take years to reach this goal, but it is inevitable that all companies around the world will eventually deal with bitcoin in some way.
Of course, it is not unreasonable for Amazon to take its actions step by step and possibly use bitcoin as a store of value before using it in its online store. But until Bitcoin is accepted as an intermediary for payment, Amazon has a long way to go and will probably have to wait for other acceptors to pave the way.