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The Almighty Buck Bitcoin

Amazon Coins and How the Definition of 'Crypto-Currency' Is Getting Too Loose 115

Posted by samzenpus
from the call-it-money dept.
Nerval's Lobster writes "Amazon has expanded support for its Amazon Coins from Kindle Fire tablets to Google Android mobile devices.In its press release, Amazon positioned its e-currency as the ultimate in convenience for customers who don't want their credit-card statements riddled with lots of micro-purchases from Amazon's App Store. Expanding the currency's reach is also a potential win for Amazon, which wants to create an end-to-end ecosystem for app developers. But Amazon Coins' existence could alienate the same demographic that made Bitcoin and other crypto-currencies such a hit. The company tethers the Coins to a user identity, and likely keeps significant records on its crypto-currency ecosystem: who buys what when. That concept is anathema to those online denizens who embraced Bitcoin as a way to make purchases without needing to reveal a real-world identity, or deal with a currency tethered to a central repository; genuine crypto-currency can be used to purchase pretty much anything from a purveyor willing to take it, including—in the case of Silk Road and other online bazaars—drugs and weapons. Indeed, Amazon Coins has more to do with a corporate 'currency' like the now-defunct Microsoft Points than an actual crypto-currency like Bitcoin. But that hasn't stopped some people from getting confused about it."
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Amazon Coins and How the Definition of 'Crypto-Currency' Is Getting Too Loose

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  • by DerekLyons (302214) <[moc.liamg] [ta] [retawriaf]> on Wednesday February 19, 2014 @10:03PM (#46292039) Homepage

    Amazon Coins are nothing but 'points' or 'credits' or 'tokens', and those have been around for a very long time.
     
    The blog author is... pretty much clueless. Nobody but him is confusing Bitcoins and Amazon Coins, or referring to the latter as crypto-currency. Nobody but him is confused about the difference between the two.

  • by wiredlogic (135348) on Wednesday February 19, 2014 @11:15PM (#46292347)

    I don't think reducing the number of credit card transactions actually benefits the consumer since the consumer isn't paying a per transaction fee

    You pay it indirectly through higher prices on goods and services. For a business as large as Amazon's or any other major retailer, the fees on small transactions add up to a significant amount that can either be passed back to the consumer with lower prices or kept as more profit.

  • by subreality (157447) on Thursday February 20, 2014 @02:41AM (#46292917)

    You're close. There's no difficulty decoding the blockchain. The transactions are a public ledger. Have a look: https://blockchain.info/tree/1... [blockchain.info]

    It's not anonymous - it's pseudonymous. Your address is your pseudonym. It can be linked to you in many ways:

    When you buy something the seller knows who you are (they have your mailing address, your IP address, etc), and they know your Bitcoin address (the transaction is public information). Anyone watching your address will also see the transaction. If the address you sent coins to is a known address the investigator can then go to that seller and request your identity (via subpoena, violence, bribery, etc).

    When you transmit the transaction it's first received by a few network nodes. If the investigator is running one of those nodes they see your IP. They won't know for certain it's you (perhaps you were just relaying a transaction), but it's still a short list to check. If it's the NSA or anyone else who can monitor your internet connection directly, they can easily discover that the transaction originated from you because no one sent it to you first.

    People use mixing services to help obscure the origin of their coins. It makes it harder, but it's still possible to perform statistical analysis. For a simple example: https://blockchain.info/taint/... [blockchain.info] . The investigator can find some addresses which correlate with yours. Even if they don't find YOU they might find someone you do business with, then coerce them into giving up your identity.

    It's a lot like cash. You can pass it around freely, but every dollar bill has a serial number. You can spend it with relative anonymity, but it will be scanned whenever it passes through a bank. If someone is looking for certain serial numbers then they can easily find the bank your merchant uses; then stake out the merchant; then find you.

  • by Squash (2258) on Thursday February 20, 2014 @07:19AM (#46293493) Homepage

    Well, let's correct a few things there.

    First, while there is a maximum of 21 million BTC that can be mined, each BTC is divisible to the 8th decimal place. Think of the Bitcoin as a 1 million dollar bill, and you can still break it into pennies. The "maximum number" is hardly more relevant than the amount of trees in the world that can be milled into paper currency before they "run out".

    Second, the suggestion that BTC users would feel threatened by something like Amazon Coin is quite a dubious claim. The only real similarity they have is the use of the word "coin" in the name. Calling it a "competing currency" is just false equivalence.

    Likewise, the "altcoins" such as litecoin and dogecoin provide many (or all) of the same features as BTC, but are more complimentary than competitive. R&D being put into one can benefit the others, and markets exist to easy convert between them. The ecosystem makes it very easy to participate, hardly what you would get from groups of people "attacking" each other. Trying different takes on the cryptocurrency process, putting theories through their paces, will ultimately make for a stronger ecosystem.

    Finally, speculative value. Accept that this is a reality, and pretty much universal. Fiat currencies are based on speculative value as much as bitcoin is, the difference is that the fiat is more widespread thus the value tends to shift much more slowly. You accept a $20 with the speculative assumption that you can trade it later for something of equal value. Because it tends to have a lower volatility, this is considered a low risk assumption. Ask a Russian over 35 or so how that isn't necessarily true. Similarly, the USD has shown its own volatility, which has been overall quite negative, losing 95% of its value in the last 100 years.

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