Rumors, gossip and speculation have been rampant since last November, when Amazon bought three cryptocurrency domains: amazonethereum.com, amazoncryptocurrency.com, and amazoncryptocurrencies.com.
Some newsletters have even announced dates when Amazon will start accepting cryptocurrencies, including Bitcoin, seeking to drive up the price.
However, Amazon Pay’s VP Patrick Gauthier told CNBC last month that Amazon had no plans to accept cryptocurrency because there hasn’t been much demand yet, and Amazon may simply be protecting its brand name, a common practice among Fortune 100 companies who don’t want their brand hijacked by some guy in his parent’s basement.
Amazon’s legal department registered amazonbitcoin.com in 2013 and, after the last three registrations, someone named Byron Wiebe registered amazonripple.com.
The registration of blockchain 2.0 site Ethereum might be an attempt to head off a potential rival. Joseph Lubin, one of Ethereum’s co-founders, has said Ethereum could be used to build a decentralized competitor to Amazon, made up of “many different actors with different roles.”
Amazon does run an enormous cloud service for other companies so theoretically could be mining cryptos on a massive scale, but Amazon CEO Jeff Bezos’s business philosophy has always been to be number one in a field or don’t enter it.
There is one other possibility that could be a world-beater for Amazon and also cryptos — the company is planning on launching its own crypto exchange.
There would be several huge payoffs for Amazon through several verticals. First off, Amazon, though hugely successful, isn’t that profitable. The profit margin on its main business, selling goods, is around 1% compared to 40% for it’s Chinese competitor, Alibaba.
The biggest source of profits for Amazon is actually its web services division, which brought in $10 billion last quarter and offset a loss on its retail side.
Amazon would experience three revenue streams from a cryptocurrency exchange and any one of them could push them to profitability.
Fees from transactions, for one. Coinbase charges 1.75% per transaction and estimates are that it’s clearing over $100 million per day.
Amazon could offer its service to Prime Members and very likely convert a significant minority to cryptos clearing $1 billion a day in transactions and making billions per month in profits.
Offering crypto purchases to customers might bump sales a couple of percentage points, but would not be the prime mover.
Another possibility is Amazon is rolling out its own blockchain and possibly its own cryptocurrency, which would make sense as Bezos has always been an innovator in owning the infrastructure that other tech companies use.
Any one of these scenarios would be a huge boon for crypto investors. Mass acceptance of Bitcoin or an Ethereum application would legitimize crypto and likely result in a long-term rise in value for everyone else.