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Amazon announces new virtual currency

Amazon took on the US Mint with an announcement earlier this month about “Amazon Coins,” a new virtual currency exclusive to Kindle Fire tablet computer users.

Basically, Amazon coins could be used to purchase apps instead of actual money. That’s at least the only real use Amazon’s announcement revealed.

“For customers, it's an easy way to spend money on Kindle Fire apps and games,” the company wrote. They'll be able to purchase as they do now, but with the ability to choose to pay with a credit card or using Coins.”

Amazon sees coins as a boon for app developers, too.

“It's another opportunity to drive traffic, downloads and increased monetization,” the post continues. “Plus, there's no integration required—you'll get paid the same 70 percent revenue share whether the customer chooses to use Coins or their own money.”

Coins will be released in May. When the currency launches, Amazon “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.”

“Amazon Coins [are] a great thing for developers who want to make more money on their apps and games,” Amazon spokesperson Sally Fouts told Digital Trends in an email. “Developers who aren’t yet in the Amazon Appstore will want to make sure their apps have been submitted and approved so they’re ready for customers to start spending the tens of millions Amazon is giving customers in Amazon Coins.”

The digital press’ response to the idea was wary, if not downright critical.

Writing for CNET, Stephen Shankland was concerned about the whole idea of virtual currency.

“My biggest concern is that Amazon Coins are a way to suck me and my money into the Amazon financial ecosystem and to make it hard for me and my money to leave,” he writes.

He compares to the idea to early 20th Century ideas of owing your soul the company store.

“Amazon's coins remind me too much of company scrip,” he points out, “which mining and timber companies used instead of cash to pay employees. Scrip could only be used at the company store, the economically wicked institution immortalized in the song ‘Sixteen Tons.’”

Shankland also brings up negative comparisons to other virtual currencies through the years, all of which have failed. He calls out Facebook credits, Zynga’s ZCoins and web 1.0 companies Flooz and Beanz—both online marketplaces suddenly crashed in 2001, leaving customers with worthless digital money.

We’ll have to check back in May to see if Amazon succeeds or completely destabilizes the world economy.