Could Amazon Be Gearing Up For A Cryptocurrency Exchange?

Via Valuewalk.com,

Amazon.com may not only be gearing up to accept cryptocurriences as a means of payment, but I also believe that the company could be on its way to creating one of the world’s largest cryptocurrency exchanges in a move that would, I believe, be extremely synergistic for Amazon and would likely help them generate a substantial new revenue stream.

https://www.zerohedge.com/sites/default/files/inline-images/20180122_btc_0.jpg

A lot of speculation is being tossed around with regard to Amazon’s potential involvement in cryptocurriences going forward. Despite bitcoin's volatility, it is being speculated that Amazon may soon accept bitcoin as a method of payment, a move that not only would lend credibility to bitcoin but one that could also create some additional demand for bitcoin itself.

It has been reported that Amazon has gone out and registered some domain names that appear to be associated with cryptocurriences. Last week, the following was reported on by CNBC:

Amazon has secured three new domain names related to cryptocurrency, sparking speculation that the e-commerce giant could be preparing a move into the cryptocurrency space.

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.

The domains are: amazonethereum.com, amazoncryptocurrency.com, amazoncryptocurrencies.com.

Trade publication DomainNameWire was the first to report on Amazon’s move. The report said Amazon registered for the domains on Tuesday.

The media and financial pundits all pretty much rushed to the conclusion that Amazon may soon be accepting cryptocurrencies on its site as a method of payment.

This led not only to a litany of stories and social media discussion about it being a possibility, but also to the price of bitcoin getting a boost. My first look at the news resulted in drawing a conclusion that could have an even further far reaching set of consequences, and that is that Amazon may look to set up its own cryptocurrency exchanges. No one has speculated as such so far, but it seemed to just naturally make sense as a conclusion to draw.

When I took one look at these domain names, that is how they read to me. What would be the point of going out in registering a domain name like these if you were simply going to use one of the digital currencies on the website as a method of payment? A domain name is a placeholder for a bigger project than that and, the thought of Amazon exchanges was literally the first thing that popped into my mind when I saw the domain names. I literally said out loud “they’re going to set up exchanges”.

Why do this? First off, it is a burgeoning marketplace with an extremely long runway ahead of it. Coinbase, for instance, just went out and was able to easily raise money to expand its software offering at a valuation well north of $1 billion now. The notion of being able to take a fee off of every transaction in the future is, I believe, a promising runway for new revenue growth. In addition, the managing of exchanges would be an extremely synergistic enterprise for Amazon as not only do they already have the massive computing power necessary to run their own exchanges and potentially mine for cryptocurrency themselves, but they are already one of the world’s largest marketplaces and the addition of cryptocurrencies to their arsenal would likely be a self-fulfilling prophecy that helps bolster the value of the cryptos that they would be transacting in.

Using all of their resources to run a cryptocurrency exchange could be one of the best new runways for revenue growth that Amazon could possibly enter into at this stage in the game. It is a new industry, it is expected to continue growing, there are limited players in the space and doing so would be synergistic with Amazon’s already existing hardware set up and its primary role as a retailer.

Revenue Potential for Future

Bitcoin appreciates: The ways that Amazon would be able to generate revenue from such a move would be twofold. The first is that, assuming Bitcoin continues to appreciate, the exchanges holdings would rise in value. Assuming Amazon also begins mining bitcoin and the price continues to appreciate (over $7400 as of now), the potential for a small profit off of bitcoin itself is possible. This is the method that companies like MGT Capital Investmentsare trying to use; mining for bitcoin and just hoping the price goes up.

Exchange fees: There have been numerous estimates about what the final “market cap” of Bitcoin could wind up being. Some articles predict as much as $1.75 trillion in Bitcoin possibly being traded each day. From that, I worked up some scenarios.

Coinbase charges a fee of 1.49% to buy and sell bitcoin, per their website,

Assuming the Bitcoin can wind up trading $1.75 trillion per day (which admittedly is an extremely aggressive assumption and would price BTC at about $100,000 per BTC), I can then try to make some assumptions about what type of revenue Amazon would be able to generate in a best case scenario – and whether these prospects would make it worth it for AMZN to pursue this industry.

For the above model, I assumed 1.75T in BTC changes hand each day and then laid out fee assumptions (based on 1.49% of a fraction of how much total BTC traded in a day that Amazon would account for). In a case where BTC ever got exponentially more valuable, the potential for a serious revenue stream occurs. If AMZN transacts 1% of all daily BTC with a $1.75T market cap, it could stand to make as much as $262M per day in revenue. From there, estimates just get ridiculous. Yes, these assumptions are aggressive, but they show that there’s a real potential revenue stream here. While modeled aggressively, it’s clear that there’s something worth investigating for Amazon. In addition, the above estimates don’t include potential transactions of other cryptocurrencies such as Ethereum and Litecoin, two other coins supported by most major exchanges like Coinbase.

Conclusion

Regardless, this will be a positive not only for the cryptocurrencies themselves, but also for Amazon. The company could also very easily go out in acquire Coinbase if they wanted to as a means for jumpstarting this business.

For existing Amazon shareholders and possible new entrants that are buying here near all-time highs, an entry into this industry could produce extremely positive results for Amazon stock. Not only could it possibly be a new revenue generator for the company, but associating a company with cryptocurrencies has been one of the most effective ways to make a stock rally, as denoted by companies like Overstock.com, who recently rallied due to its involvement with blockchain technology and a forthcoming ICO.

The clues could be right in front of our faces with these domain names. Amazon would not be setting up domain names like the ones that it has set up if it was only going to be accepting digital currency as a means of payment, I believe. I think the Amazon digital currency and cryptocurrency marketplace exchange is coming soon and I think it will do great things not only for the credibility of digital currency, but for Amazon itself.

Comments

Gap Admirer Looney Mon, 01/22/2018 - 16:03 Permalink

At the bargain basement $16 per transaction fee, of course!

WINNING!!!!

Amazon can charge a measly $9 transaction fee when you purchase a $4 item with bitcoin and still make a killing. No doubt everyone will now flock to bitcoin with such low fees.

To the moon!!!!

In reply to by Looney

zebra77a bob_stl Mon, 01/22/2018 - 16:39 Permalink

IT WILL NEVER FLY EVER EVER EVER EVER..

WHEN AMAZON SIGNS A BOOK AUTHOR THEY TAKE 30% FOR US PUBLISHERS AND 70%! FOR INTERNATIONAL SALES.  They are totally used to stepping on everybody including their merchants and clients. They'll learn the stock market especially the cryptos won't even consider any load above 1% processing..

In reply to by bob_stl

sessinpo Gap Admirer Mon, 01/22/2018 - 22:36 Permalink

Gap Admirer 

Amazon can charge a measly $9 transaction fee when you purchase a $4 item with bitcoin and still make a killing. No doubt everyone will now flock to bitcoin with such low fees.

To the moon!!

----

Very unlikely until bitcoin is fully utilizing the lightning network. Payments are to sliw and expensive at this time.

Other crypto currencies will be used such as litecoin or even bitcoin cash.

Amazon will probably keep their current model of free shipping for large enough orders or for prime members.

BTW - transaction fees that the sender of a crypto currency would not go to amazon. The go to the miners or those running nodes depending on whether it is POW or POS. That is their payment for verifying transactions.

In reply to by Gap Admirer

sessinpo Mine Is Bigger Mon, 01/22/2018 - 22:40 Permalink

Mine Is Bigger toady 

If it is true, this will be a game changer.

Apparently, cryptocurrencies' choke-point is on-boarding ramp.

Amazon handling cash and letting people trade cryptos will explosively expand the market

-----

Yes. Current naysayers have not done their research and therefore do not see the demand. They simply say it's bubbleand write it off.

It will go into a bubble and burst but we are not in that stage yet.

In reply to by Mine Is Bigger

Harry Lightning toady Mon, 01/22/2018 - 16:40 Permalink

The banks will kick their ass on this one, Amazon would be foolish even to get involved. Once bank's are convinced the crypto's are here to stay, they will offer deposit customers translation services to change any currency into any other currency, and use the end result for bill paying purposes. So the worker in Lyon, France has direct deposit of Euro in her deposit account at BNP. She goes online and sees that one of the crypto's that her electricity provider accepts is offered at a discount to recent levels, so when she asks BNP Online to pay that bill, she asks that they pay it in the crypto currency that has dropped in value since the bill was issued. This the smart young lady can buy the crypto at a reduced value but pay her electrical bill at the old higher value, saving her some money.

The bank handles the exchange plus the paying of the bill.

Sounds a bit complex but people will catch on fast enough. Even if the arbitrage does not exist and no one deliberately pays bills in a currency other than the one they are paid in, the factg that one's money already resides in a bank account makes it easiest to us that account for any crypto purchases the depositor would like to make. And the customer can be sure that they will receive the crypto, they can be sure they are getting a fair price for it, and they can have greater protection than if through a crypto exchange that may not have the same proficiency to safeguard customer accounts against hackers.

On a retail level the banks are far better equipped to perform the currency exchange function. On the wholesale level, expect the present major exchanges to open cryptocurrency arms. NYSE, LSE, CME...they have far more expertise and the existing business software necessary to perform the exchange function for crypto. Everyone is waiting to see if crypto stays relevant before they spend the significant start up costs that will be required for currency exchanges involving crypto.

 

In reply to by toady

lew1024 toady Mon, 01/22/2018 - 18:37 Permalink

No, this is a mining operation.

Amazon has all these servers that NSA is paying for, but Amazon's networks route traffic between. If NSA is paying for the electricity, why would not Amazon use their systems for cryptocoin mining. Great ROI!

In reply to by toady

RAT005 pitz Mon, 01/22/2018 - 15:58 Permalink

If Amazon wasn't polite enough to tell you they are going to take more money each month for Prime, I think it would be polite to quit Prime.  At least for a couple months until you need to do something useful with them.  Either people that use them are going to switch to annually at a lower fee, or people not using them much will reconsider and quit Prime.

In reply to by pitz

Atlas Crapped Mon, 01/22/2018 - 16:02 Permalink

Finally, a good use of the technology. It has utility, but speculating on its value is like investing in electricity. If electricity was just discovered 9 years ago it would be worth millions today to "own" a single "volt" yes?

Don Pancho Mon, 01/22/2018 - 16:04 Permalink

1 pay fee to buy crypto

2 buy something on amazon paying with crypto

3 pay fee for having used crypto to buy something on amazon

sounds legit...

Peak Finance Mon, 01/22/2018 - 16:14 Permalink

Well I am doing my best to FUCK AMAZON right in the Bezos-hole

By buying ALL MY SHIT including BULK and DRY GOODS with Amazon Prime

then MAKING THEM SHIP IT to the DOOMBUNKER in the MIDDLE OF FUCKING NOWHERE

LOLZ!!! 

Dragon HAwk Mon, 01/22/2018 - 16:14 Permalink

remember the Browser Wars?  I'm old enough to know history repeats and we are going to see one great big battle on Who's Crypto coin we finally adopt. I'll also bet the Winner is not on the Market Yet