On Amazon, bitcoin and Stan Lee

After experimenting with bitcoin in July 2010 ("the great slashdotting") and finding it to be a sound design, my thoughts ran in a predictable direction:  what are the implications of a global digital currency?  What are the engineering practicalities required to bootstrap a brand new digital economy from zero?

If you imagine a new currency being rolled out worldwide, the idea of how Amazon.com might implement the currency inevitably comes up.  Amazon's business has several major components that deal with payments of various types.  It is relevant to Amazon and bitcoin that we consider all of these payment types, not just the well known storefront payment flow.

• Amazon.com storefront.  Buy a book, pay with credit card, etc.
• Amazon Payments.  A bit of a Paypal clone, though they don't market it that way.  Can have a positive balance, send P2P payments in-system.
• Handling fulfillment and payout to merchants who sell goods through their systems.
• Amazon AWS Flexible Payments Service
• Amazon AWS DevPay
• In the time it took for you to read this, Amazon has probably created another cloud payment service.

While performing research related bitcoin, I examined the money transmittal space to learn which corporations maintained money transmittal licenses nationwide.  According to my research circa 2010, Amazon is one of the few Fortune 500 companies with money transmitter licensing in all US states.  Adopting bitcoin, at a minimum, probably requires Amazon to re-evaluate compliance at a time when they are also trying to lobby US states on sales tax issues.

The network effect (Amazon's size) must also be considered.  Amazon.com today is basically "the Internet store." No need to qualify further.  With upcoming local delivery efforts, that effect is even more pronounced.

Like Google or Wal-Mart, every move by a company of this size has enormous consequences, intended and unintended.  Amazon adopting bitcoin today would have a disruptive effect on bitcoin, credit card systems, and banks worldwide.  At scale, one hopes Amazon acknowledges that great power and aims to wield it responsibly.  It is a fair and rational position for a company of that size to sit back and let the market sort out which crypto-currency to adopt.

On the technical side of the equation, a new payment system at Amazon.com is likely a major undertaking.  Amazon's software is entirely homegrown, and quite complex.  So complex that their store evolved into a web services business (AWS).  Having been recruited by Amazon myself, and having friends who work at Amazon as engineers, I know that Amazon stays at the bleeding edge of computing technology.  Integrating bitcoin -- or any digital cash -- probably requires extensive software updates throughout the system.  Digital cash, after all, does not behave like a credit card or debit card.  Those behavior differences can ripple through highly custom software, increasing engineering costs.

As a bitcoin supporter, I certainly feel the aforementioned disruptive effect is a positive one for the world.  But there are many reasons why Amazon in particular would be conservative about adopting an experimental new digital cash.  Given the above factors, my prediction -- dating back to 2010 -- was always that Amazon would sit back and let others decide the bitcoin-or-not question.