Bitcoin Cryptocurrency

Amazon and bitcoin payments – what are the odds?

Bitcoin Payment

Immense volatility of cryptocurrency market – specifically huge declines in prices of bitcoin, ethereum, ripple and other cryptocurrency markets – takes the conversation away from profitability of cryptocurrencies for traders to their long-term sustainability.

There is on doubt that for cryptocurrencies to sustain for the long term there has to be support from every walks of life – be it from the general public to businesses and from governments too up to a certain extent. If governments start ruling cryptocurrencies illegal and banks start blocking payments being made for cryptocurrency transactions there’s almost no way left for members of the general public to get cryptocurrency.

While regulatory aspects can be dealt with at another time, the primary focus point of this article is whether Amazon will start accepting bitcoin payments anytime soon. There are no clear signals, but they are not that bad either.

Aside from some online retailers and some less permanent shops, cryptocurrencies are not accepted as a means of payment. What is the primary reason? Volatility in prices. Fluctuations of 20 – 30 per cent have not been rare recently. The adoption would, therefore, involve a considerable risk for the retailer. Well, in the era of exchange-traded Bitcoin futures, hedging via the futures market would be possible. But it would be connected with transaction costs, which would increase the already high fees for Bitcoin.

Another issue is the transaction speed. When bitcoin price starts increasing owing to the volatility there is a huge backlog of transactions that pile up and this effectively means that transactions takes days if not weeks to get confirmed. The Bitcoin Blockchain currently allows just seven transactions per second. For Ethereum, this value is about twice as high. Amazon reported 600 transactions per second last year at its peak. Even if only a small proportion of Amazon customers would pay with Bitcoin or Ethereum (and no other Bitcoin transactions would take place worldwide), the current state of the art would quickly lead to unreasonable waiting times.

These are being seen as teething troubles for cryptocurrencies as most are in their infancy. Either through improvements in the Blockchain of existing currencies or through new, better performing coins, sky is the limit.

Ripple, for example, can today withstand already 1500 transactions per second and could meet the demands of Amazon. For experts, it is not a question of if but simply when the big retailers will accept payment in cryptocurrencies. That would be the final breakthrough. If, for example, Amazon accepted Bitcoin as a payment method, that would give a lot of credit to the digital currency.

We are not so far along but there is clear evidence that the big players are working on the issue. Amazon has, for example, secured some domains connected to cryptocurrency. Starbucks is said to want to accept cryptocurrencies soon.

About the author

Beryl Jones

Beryl Jones

Beryl is a journalism graduate with keen interest in technology. Beryl has been attracted to Bitcoin and other digital currencies from 2009 while she was still pursuing her graduation. She loves writing articles and covering news on cryptography, digital currencies and related subjects.

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