Engadget: Why Amazon is Right to Steer Clear of Bitcoin


A while ago, Tyler Cowen posted an explanation of Bitcoin that resonated with me (though it’s worth noting that Cowen’s opinions skew strongly towards anti-Bitcoin). Bitcoin, or any cryptocurrency, is a product. Whereas a typical currency provides an agreed upon medium of exchange, a cryptocurrency confers additional benefits (anonymity for one) that give it value over and above a typical currency tied to a government. With this is also the issue that cryptocurrencies lack certain benefits that currencies tied to a government have (look at the volatility of Bitcoin versus the volatility of the dollar, for instance).

Now, the problem with Bitcoin is that its purported benefits are being questioned, as incidents like the MtGox bankruptcy are calling the security and anonymity of Bitcoin into question. Without both the promised benefits and the security inherent in a currency, Bitcoin has no chance in the long run.

It was a friend of mine who recently summarized this very well for me: Bitcoin is version 1 of cryptocurrency technology. Even if one was to see a benefit to using a cryptocurrency over conventional dollars, version 2 or 3 is probably a better place to become an adopter. Amazon is simply a large example of this very fact: with a business their size, becoming an early adopter of something so financially unstable is not a sound business decision.


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