After Amazon published a job post for a “digital currency and blockchain product lead” last week, speculation broke out that the ecommerce giant is looking at getting involved in the crypto space sooner rather than later. So here’s what “getting involved” might look like – and how it’d impact the company and crypto market at large.

Accepting crypto for payments

Amazon specifically denied that it’d start accepting crypto for payments this year, but it didn’t say anything about next year and beyond. According to one company insider, Amazon would start by accepting bitcoin followed by ether, bitcoin cash, and Cardano-native cryptocurrency ada, before eventually accepting another four of the most popular cryptocurrencies.

Creating non-fungible tokens (NFTs)

If bitcoin is the digital equivalent of gold, NFTs – unique digital “crypto collectibles” hosted on a blockchain – are the equivalent of paintings or polished diamonds: no two are quite alike. Amazon could create NFTs out of some of the digital content it sells – its exclusive Prime Video movies and shows, say – and squeeze even more value out of them.

Adding crypto to Amazon Pay

Payments giant PayPal already allows its users to pay at online checkouts with four different cryptocurrencies. But Amazon has a competing payments service called Amazon Pay that allows users to pay on external merchant websites using their Amazon accounts. The firm could boost the appeal of the service – and better compete with PayPal – by also allowing users to check out with crypto.

Integrating blockchain technology

Almost half a trillion dollars worth of goods were sold on Amazon’s marketplace in 2020. That’s a lot of money moving around between customers, Amazon, and its selling partners. If there’s one thing blockchain technology promises to do, it’s to make transactions and settlements between different parties faster and cheaper. So Amazon could integrate the technology into its systems to do exactly that. After all, it already has some expertise in this area from its cloud computing business, Amazon Web Services, which offers some blockchain solutions of its own.

Creating a stablecoin

Amazon could go a step further and create a stablecoin – a cryptocurrency whose value is pegged to a government currency like the US dollar – that could be used for payments across its platform. Stablecoins bring the benefits of cryptocurrency and blockchain’s faster and cheaper transactions, but without all the typical price volatility.

Creating a token

Amazon could go a step further still and create its own cryptocurrency token. It wouldn’t be the first time a tech giant considered such an initiative, with Facebook already working on its own cryptocurrency under a project called Diem – although admittedly the pilot only involves stablecoins so far.

Amazon could, for example, offer its own crypto exclusively to its lucrative Prime customers to keep them eternally plugged into its ecosystem. Prime users could then use the token to pay for orders and get discounts or rewards, in what would essentially be another spin on the firm’s points program.

How could all this impact Amazon?

If Amazon can make payments across its platform faster and cheaper, it would translate to tangible cost savings that would prop up its profits and its stock price. Similarly, if the firm can increase its revenue by luring in more Prime customers or selling NFTs, that would also bode well for the firm’s stock price. And even before the company realizes any of those benefits, its involvement with crypto – once official – could provide a boost to its stock price, as investors look for different ways to play the wider crypto theme.

But Amazon’s decision to accept crypto could also introduce some complications. Take, for example, returns and refunds: bitcoin’s price remains highly volatile, so it would be difficult for the company to accurately refund customers the same value that they paid into the system. And if Amazon starts to hold bitcoin on its balance sheet, it could introduce an unwanted correlation between its stock price and bitcoin – just like it did to Tesla. What’s more, whatever sustainability credentials Amazon has (if any) would be tainted if it gets involved in something in the middle of huge environmental debate.

How could all this impact the crypto market?

If one of the world’s biggest ecommerce platforms starts accepting crypto, it would add a lot of legitimacy to the burgeoning market and could push several other firms to follow suit. That might be why several cryptocurrencies shot up on the news of Amazon’s rumored involvement earlier this week. Plus, recall how almost half a trillion dollars worth of goods were sold on Amazon’s marketplace in 2020? If bitcoin’s used to pay for just 1% of those transactions, it would add more than $10 million to bitcoin’s daily transaction volume.

The biggest potential risk to the crypto market, meanwhile, is competition. If Amazon introduces its own stablecoin or token and then throws its financial weight behind the projects, that could siphon off money from existing cryptocurrencies.

Many think Amazon’s foray into crypto to end up using existing coins and introducing its own, so I’d personally expect, net-net, the overall market should get a boost from the ecommerce giant’s involvement. Stay tuned.