Forbes magazine’s digital currency specialist Roger Aitken investigates if and when Amazon will accept crypto currencies
The global petition website Change.org – described as the world’s platform for change – has launched a campaign urging ‘Amazon.com should accept Bitcoin and Litecoin cryptocurrency as payment methods ASAP’. The petition has already had the support of around 12,400 signatures.
The petition urges: ‘Amazon should show continued leadership in innovation by eagerly accepting two of the most trusted and proven cryptocurrencies in existence: Bitcoin and Litecoin.’
It continues: ‘Acceptance and intelligent integration of these efficient and groundbreaking payment methods will lead to more streamlined commerce and an improvement in the purchasing experience for the many millions who shop Amazon.’
Fellow tech company Microsoft was famously an early adopter of the new digital currency, you can use Bitcoin to add money to your Microsoft account – and have been able to do so since 2014.
Some shoppers have found a hack for spending Bitcoins on Amazon by using Giftoff.com to purchase Amazon vouchers with the cryptocurrency. But it’s a rather convoluted method, and there is always the real concern that Bitcoin might gain in value after you bought the vouchers. There’s little doubt that if Amazon were to accept Bitcoin directly it would legitimize the currency. Many Bitcoin users see Amazon as the Holy Grail, and believe that the floodgates would open from retailers if Amazon led the way.
James Altucher, the American hedge fund manager and venture capitalist, says it’s more a question of when rather than if Amazon will accept Bitcoin. Says James: “I’m certain that Amazon will accept Bitcoin. They have no choice. And this will be the tipping point that will create massive generational wealth unlike we’ve ever seen before.”
In fact, rumour was rife that Amazon would make the announcement during its third quarter investor’s call on October 26th, 2017. That didn’t happen, with Amazon instead concentrating on news of above market expectation profits, including significant AWS revenues. But that’s not the end of the story: the respected German newspaper Welt says: ‘“Even if the Oct. 26 date is not set in stone, Bitcoin introduction should probably be expected soon.”
Pundits are now holding their breath for Amazon’s annual results meeting, due early February 2018, to see if Amazon finally does decide to take the plunge.
So that’s a done deal then? Well, not quite. Back in 2014 a very similar Change.org petition was launched, urging Amazon to take Bitcoin. That one drew around 5,300 signatures. At the time, Amazon’s head of seller services, Tom Taylor, kicked the idea into touch. “We have considered it,” he said, “but we’re not hearing from customers that it’s right for them and don’t have any plans within Amazon to engage Bitcoin.”
Today, of course, the value of Bitcoin has risen steeply, as has the number of people willing to use Bitcoin in everyday purchases. While no one knows for sure how many people own Bitcoins, there are over 14 million Bitcoin wallets in use; which may give some idea. So far Amazon has not responded to the latest demands, but how long can they resist the call?
Time to Join the Blockchain & ‘Crypto’ Currency Party?
Everyone seems to be talking about blockchain – aka the distributed ledger – and the technology underpinning Bitcoin and other leading cryptocurrencies. Roger Aitken examines the landscape.
Digital currency and the blockchain. No doubt you have probably heard these terms, as well as Bitcoin (the world’s first cryptocurrency and a type of money not backed by any government or central bank) bandied about. While having been around for almost ten years now, it is only very recently that Bitcoin has reached mainstream attention.
Unlike ‘fiat’ or traditional currency, ‘crypto’ money works a different way and the value of some of the major digital currencies have been exploding of late. While the bulk of the market capitalization of cryptocurrencies are accounted for by the big hitters of Bitcoin, Ethereum and a few others, there are currently around 600 cryptocurrencies.
Gold or garbage?
With hundreds of cryptocurrencies on the market one has to figure that there must be some junk available, together with some significant opportunities. Indeed, Jack Tatar, CEO of GEM Research in New York and co-author of ‘What’s The Deal With Bitcoins?’, who I met at a Blockchain event on Turkey Riviera last October, underlined this very point in a talk on assets and investing in the crypto space. I recall his precise words at the time being: “some real garbage out there.”
As such it pays to pick wisely and do your research. But the prudent thinking is that it makes sense to dip your investing toes in the water to gain some crypto exposure as a diversification from your other investments: like shares, bonds and ISAs.
Bitcoin’s price broke through the $1,000 mark in late 2016 and has been on something of a meteoric rise in recent months – despite witnessing some volatile price swings – recently it has reached a high of over $4,000 a coin. There’s one strong reason why the digital currency is on the rise. Most buyers buy Bitcoin as an investment: there will only ever be 21 million of them — and over 16 million are already in existence.
Much of the action on the price front is influenced by investors in Asia – notably China – where there are some significant holders of Bitcoin. That represents a huge spike since the inception of Bitcoin: dubbed the ‘Big Daddy’ of crypto and a combination of a technology, a commodity and a currency.
But it should be noted that fluctuations in the price of top cryptocurrencies can be in the order of double-digit percentages on a daily basis. It can swing around a lot on the back of news flow and edicts from regulators in certain territories.
Simon Dixon, an expert in the crypto space who heads up BankToTheFuture – an online platform for crowdfunding – and who has also launched an investment fund focused on cryptocurrencies together with Max Keiser called Bitcoin Capital – has suggested the price could reach as much as $10,000 within the next five years.
And, there seems to be no stopping an idea whose time has come; and that is now witnessing a similar adoption cycle to that the automotive sector, electricity and the Internet. It’s not only Bitcoin that is on the rise. One particularly notable alternative digital currency is Ethereum (ranked number two overall) which has been dubbed ‘Bitcoin 2.0’,
Ethereum, which has also gained traction for its blockchain technology and application of so-called ‘Smart Contracts’, was trading at around $46 earlier by April 12 this year, which implied a market cap of over $4 billion. That was significantly up from just over $8 a pop at the start of 2017 (c.$722 million market cap). This September it was trading at around the $270 mark, so it has seen quite an uptick. (see: www.coinmarketcap.com).
Other names in the top 10 of cryptocurrencies by market capitalization include – Ripple, Litecoin, Dash, Monero and IOTA.
Some warn Bitcoin and its fellows are all reminiscent of the Internet/dotcom of the late 1990s – a passing fad that created a bubble. That said, as more and more adventurers brave this new frontier it becomes harder for the rest to deny the success of cryptocurrencies and the blockchain technology that supports them.
Linking to the blockchain
It is easy to trace the origins of blockchain, as it all began with Bitcoin, but it has only very recently reached mainstream attention. A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. The blockchain is a core component of Bitcoin, where it serves as the public ledger for all transactions. Blockchain is a disruptor and one thing is clear; since its creation the world will never be the same. Bitcoin and blockchain arrived together, on October 31, 2008, when information first circulated about the creation of an electronic protocol – independent of any extraneous structures.
The appearance of the electronic currency, and the blockchain that allows the currency to function, are both associated with one person – namely Satoshi Nakamoto. In October 2008, Nakamoto published a paper describing the Bitcoin digital currency. It was titled Bitcoin: A Peer-to-Peer Electronic Cash System. In January 2009, Nakamoto released the first Bitcoin software that launched the network and the first units of the Bitcoin cryptocurrency. Or at least this is what seemed to be the case! In fact, Satoshi Nakamato seems to be a pseudonym for one, or more, cryptocurrency pioneers, and no one has ever discovered his true identity. Attempts to reveal the ‘real’ Nakamoto have been undertaken more than once, provoking a considerable stir. Yet all proved to be in vain.
Bitcoin likely owes its success to enthusiastic early adopters with a tremendous amount of faith in the technology. Indeed, it has seen a sizable increase in value since its inception. In early 2010 one Bitcoin (BTC) was worth around a mere US$0.008. Five days later the price per BTC rose to US$0.08, which equates to a 1,000% increase.
Fortunes were made and lost in the formative years, but according to some pundits this cryptocurrency has enjoyed overall growth precisely because there are still people who believed in it (i.e. through the network effect), count the principles on which it is based worthwhile and stuck with it.
Highlighting the extremely dynamic and volatile nature of Bitcoin’s price, in 2017 the price reached US$3,018 before dipping to US$1,938 about a month later. But subsequently it rallied and reached a high of US$4,382. Today it is being exchanged at around $4,000 a pop.
Blockchain technology could have far reaching implications. As the irrefutable ledger than underpins transactions it records them on a ‘block’ and is shared with parties on the network. Once executed a transaction’s record cannot be amended or deleted. The technology is increasingly being applied to a whole host of industries to remove the need for manual tasks, reduce costs and increase security.
The process of continual verification of these blockchain records of transactions is called mining. Mining Bitcoin can be very profitable as Bitcoin miners get a chance to win new Bitcoin. But the huge amount of blockchain records means ever more sophisticated computing power is needed.
For example, it has been applied to registering land and property rights, and tracking the global food supply chain from ‘farm to fork’ (as with IBM’s recent blockchain this August with a consortium of food and retail giants including Nestle and Walmart). One interesting application is by the US exchange Nasdaq, who started utilizing the technology in early 2017 to drive its pre-IPO (Initial Public Offerings) trading in shares in private companies.
One could also cite the banking and insurance industries, online dating, decentralizing the Hollywood movie industry; and a whole slew of other sectors that are ripe for blockchain adoption.
The response from financial regulators around the globe to cryptocurrencies has been uneven and many are grappling to address matters. For example, the US Securities & Exchange Commission (SEC) ruled late this July on a token offering – from the DAO (a cryptocurrency software venture capital fund) – saying that the offering to investors constituted being a ‘Security’ and it would be monitoring the area.
And, just this September, six regulators in China signaled that they would clampdown on so-called Initial Coin Offerings (ICOs) with a ban. The Chinese authorities were reported to view ICOs as legally questionable. And, of course fraud cannot be discounted in the future when it comes to crowdfunded token offerings.
Worth the risk?
Collectively ICOs – effectively a way for investors to gain exposure to start-ups using blockchain technology to build platforms – have raised over $1.2bn this year to date. That is up from a tiny $24m back in 2014. Typically, funds are attracted from investors already holding Bitcoin and Ethereum and used to fund projects.
With a report from the World Economic Forum indicating that over $1.4bn has been invested into blockchain technology in a period of just three years, it is remarkable to think that in ten years an incredible 10% of global GDP is predicted to be stored on blockchain platforms.
As such getting a slice of the action could well make sense, notwithstanding the risk associated with blockchain start-ups that some may not ultimately succeed. And, if you do not understand the business you are investing in or the business does not have a real-business case it is probably best to steer clear. But if one does invest, ensure your crypto assets are securely held as you do not want to be hacked. ‘Caveat emptor’ (buyer beware).
About the author: Roger Aitken is a London-based contributor to Forbes and a former FT writer who covers exchanges, trading and IT.
Where can I spend Bitcoin?
Most people buy Bitcoin primarily as an investment. However, if it really is burning a hole in your virtual pocket, there are an increasing number of places to spend your crypto cash.
Traditionally there is no getting around the fact that cryptocurrencies have been associated with the sale of drugs, and other illegal items, on sites such as Silk Road.
Today, however, there are substantially more entirely-legal sites that accept Bitcoin payment. From Microsoft – an early pioneer – to online stores such as Overstock, the range of items you can buy us considerable. In the UK alone, there are pubs and restaurants happy to accept Bitcoin, and you can lease cars and even buy luxury hammocks. Well over 500 British retailers have already embraced Bitcoin, and many more worldwide. In fact, the Japanese Bitcoin exchange Coincheck says 26,000 stores across Japan are now thought to be accepting Bitcoin.
You can also buy gift cards in Bitcoin for sites such as Amazon and Argos from Giftoff.
One word of caution: currently the transaction fee for Bitcoins is higher than most credit cards; meaning it’s not the ideal currency to buy a low value item such as a coffee or a pint!
Most buyers buy Bitcoin as an investment: one reason to buy Bitcoins is because only 21 million of them will ever be issued—and we are already at 16.3 million.
Bitcoin and its fellow crypto currencies are becoming more and more mainstream. America’s Commodity Future Trading Commission just gave the green light for firms to sell digital currency options and other derivatives. The exchange Ledger X is launching its digital currency trading service this month (October).