Is Amazon Taking Over Crypto?
Rumours swirl as Amazon could bring explosive growth to the industry
Amazon founder Jeff Bezos originally wanted to call it Cadabra, but his lawyer convinced him otherwise. Then, Bezos favoured the name Relentless, and if you go to Relentless.com, it redirects you to Amazon. He eventually settled for Amazon, hence the original logo.
Bezos selected the reference to the world’s largest river because he wanted Amazon to be ‘an everything store’, not pigeonholed to only peddling books. Amazon expanded to become one of the largest companies in the world by dominating a variety of fast-growing industries, from cloud computing to grocery shopping.
Recently rumours have emerged that Amazon has set crypto in its sights as the next fast-growing industry to dominate.
Sources at Amazon have suggested the retail giant is preparing to launch an NFT and blockchain-based gaming initiative as soon as April this year. The company reportedly plans to encourage users to play crypto games to win, collect and trade NFTs.
NFTs (non-fungible tokens) are unique digital assets such as art which can be verified on blockchains. They allow creators to monetise their digital content and for collectors to own and trade unique digital items.
Blockchain games exploded in recent years, with the likes of Axie Infinity giving players a chance to ‘play-to-earn’ by earning cryptocurrencies as they play the games.
Besides registering a few crypto-related domains, Amazon has done little to develop a presence in the industry in recent years. However, Amazon recently announced a partnership between their cloud services division AWS and Ava Labs, the founders of Avalanche, to help bring services to users of the blockchain.
Short of the fact that Amazon plans to launch something NFT and possibly gaming-related in the space, we don’t know anything else at this stage. But what we do know is Amazon’s entry would bring a tsunami of capital and users into the fledgling world of crypto and blockchains.
The market capitalisation of all cryptocurrencies currently sits at about $1 trillion; while that’s nothing to be sniffed at, the market cap of Amazon alone is around the same. It has been estimated that there are roughly 420 million crypto users worldwide, and it was estimated in 2022 that there were approximately 310 million active Amazon customers.
It’s not hard to imagine that the impact on the space would be astronomical if a company with almost the same market capitalisation and volume of users became involved.
Crypto is currently in a bear market after drawing down drastically from all-time highs, companies dying, and frauds being exposed. But prices are starting to rise again, people are getting more interested, and that one annoying friend at the pub is lecturing you again about how Dogecoin will change the world.
Amazon’s entry into the space could be the catalyst for a new bull run and unimaginably higher prices. When Facebook rebranded to Meta in 2021, an indication of their plans to go full force into the crypto-adjacent world of the Metaverse (don’t worry, I don’t know what it is either), prices soared, and people went crazy for all things crypto and NFTs.
The wild west
The crypto industry, also known as Web3, is not dissimilar to the unregulated internet of the 90s. Legal and regulatory uncertainty has caused large institutions to keep the space at arm’s length up until now.
Can you blame them? Just this week, the SEC (Securities and Exchange Commission) fined crypto exchange Kraken $30m as they accelerated their crackdown on digital assets in the light of the collapse of the fraud-fuelled FTX. Governments worldwide are increasing their scrutiny of the industry and trumpeting the need for more regulation to protect users.
Dapper Labs, the creators of the licensed NFT trading card project NBA Top Shot are currently embroiled in a legal battle which will dictate whether NFTs are considered securities in the US. The effect of this could have massive financial implications for the company as well as the industry as a whole.
The new influx of crypto games offering chances to earn and sometimes even gamble poses a considerable risk regarding violating gaming and gambling laws across different jurisdictions worldwide. Currently, there is little to no guidance or precedence to help institutions like Amazon mitigate the risks of establishing themselves within the space.
With great power comes great responsibility
Did you know that quote was from Spiderman? If I had a penny for everyone who thought it was from one of history’s great thinkers, I would be up there with Jeff Bezos.
Amazon is a gigantic behemoth compared to any other entity in the crypto space. Its impact would be mindblowing, but with this great size comes enormous risks. Amazon will want more regulatory and legal clarity as it dips its toes into the space.
Given the fallout from the ongoing crypto winter, regulators are coming. Many in the space see this as a negative, but to be honest, this is a prerequisite for massive institutions like Amazon to enter.
Lack of legal and regulatory clarity isn’t the only problem facing the crypto space; a lack of safe and convenient storage options has also been on the minds of users and projects alike.
It might be a while before Amazon, and other tech giants fully enter the industry. Nevertheless, they are planning on it, and regulatory action and clarity will encourage them to accelerate the process.
Once they do, the industry will progress to a new phase; we will see all-time highs in prices, user bases, and innovation. Growth will kick into overdrive.