Amazon Introduces New Currency: Should Bezos Replace Bernanke?
Yesterday, Amazon.com announced plans to introduce Amazon Coins—a new way for Kindle users to pay for their purchases—starting in May. Adding its own centralized payment method allows for all currencies to compete for ease of use by customers and developers alike.
Amazon Coins are similar to Nintendo Points and Microsoft Points. But they differ from the in-house currencies of these tech and gaming giants in one big way: convertibility. With Amazon Coins, one Coin is equivalent to one cent.
Longtime customers might be familiar with all of the changes Amazon has made in an effort to make paying for purchases easier. Like most retailers they offer gift cards and PayPal, but they also allow Discover Card users to pay for purchases with their bonus points and have integrated a "Buy now with 1-Click" button to condense the payment process and verify shipping information all on one screen.
Amazon is promoting this new payment method with freebies:
When Amazon Coins launches in May, we will be giving out tens of millions of dollars worth of Coins to customers to spend on Kindle Fire apps, games, or in-app items.
Which is right in line with Jeff Bezos' vision for Kindle products:
Well, our approach to our hardware Kindle devices, Kindle Fire and our Kindle readers, is to sell the hardware at near break even, and then we have an ongoing relationship with the customer where they buy content from us—digital books, music, movies, TV shows, games, apps. And the reason that we like that approach is because we don't make $100 every time we sell a Kindle Fire HD, since it's near break even. Instead of making a bunch of money, then, we're happy if people keep using our products. We don't have to have you on the upgrade treadmill.
For more Amazon's vision, see Brian Doherty's "Amazon: A Loss for Them is a Profit for You!"
Amazon's goal is to keep customers coming back, while making life easier for app developers and content creators. But introducing a new currency into Amazon's slew of current payment options is also a neat experiment. Bezos is allowing several forms of currency to compete—dollars, points, Coins—with market participants free to determine which is most useful.
Here's something to dream about: What if Jeff Bezos replaced Ben Bernanke chairman of the Federal Reserve? If Amazon is any indication of what his leadership could look like, it's easy to image a world where F.A Hayek's idea of denationalizing money and allowing currencies to compete actually sees the light of day.