I hadn't heard the rumour about amazon accepting bitcoin as a payment method for purchases on the platform by year-end. But apparently, such a rumour did spread and many were wondering if this is the "news" that led to a sharp rise in the price of Bitcoin.
Unless it came from official sources, I doubt the majority of people would have believed this rumour. I don't think that unverified news like this will cause people to accumulate Bitcoin. Today, I think Amazon has declined the rumour, as expected.
This rumour and the Tesla news makes me wonder - How much does it really matter if companies start accepting Bitcoin as payment for goods?
At the end of the day, goods and services are measured in the local currency of a country. For simplicity sake, let us assume this local currency to be US Dollars for this post. So if everything will be valued in US$, then do people need more payment methods? Especially, if that payment method is a volatile asset that can change its value by 10% in either direction on any given day. Why would a consumer, who has so far shown no interest in Bitcoin despite all the million-dollar predictions, take the pain of purchasing Bitcoin to purchase something on Amazon that can be bought with US$. After all, the amount of Bitcoin that he/she will have to pay will depend on the dollar value of the product. In addition to that, the consumer will also have to pay fees towards bitcoin purchase, and also a premium for the Bitcoin volatility that the seller will charge to hedge its risk.
One can say that the above argument is for people who are not Bitcoiners. How about those who hold bitcoin. I think I read in a tweet today that 50% of the Bitcoin already mined did not move at all last year. I can't verify the veracity of this tweet but it is safe to say that most Bitcoiners are hardcore HODLers. They won't sell till Bitcoin adoption reaches close to current internet adoption unless there is some external shock that takes bitcoin to 0. Even then some may not sell, hoping that Bitcoin will rise again from the ashes. The point here is that these HODLers are unlikely to spend Bitcoin. There is no reason for them to sell bitcoin to buy some shit on Amazon or a ridiculous liability such as a Tesla.
That leaves a small number of people who believe in spend and replace strategy. However, what good is that? That shouldn't lead to increased Bitcoin adoption. Those who side with those who think Bitcoin is rat poison will not become adopters just because they or some Bitcoiner can now buy goods on Amazon using Bitcoin.
The good that comes out of Amazon or any other company accepting Bitcoin is a) Publicity and b) Legitimacy. Even then, can we say that Facebook launching its own crypto project did push new users towards Bitcoin? Can we say that Tesla accepting Bitcoin pushed millions of new users towards Crypto? Even if it did, I would like to believe that it was a small number and quite insignificant in my opinion.
Bitcoin does not need that much publicity anymore, and well it needs legitimacy as a financial asset. It needs regulatory approvals for it to become mainstream. Sure, Amazon accepting Bitcoin is indeed a positive thing. Sure, it can push the price of Bitcoin higher. However, does news like this matter a lot for Bitcoin to succeed? I don't think so.
Posted Using LeoFinance Beta
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