Will Amazon Virtual Currency Reach Beyond Apps and Games?

Amazon will release its own virtual currency, Amazon Coins, in May. Each coin will be worth a penny and will allow Kindle Fire customers to purchase apps, games and in-game items. Amazon will maintain its 30 percent revenue draw on all purchases made with Amazon Coins. While Amazon plans a small initial launch, some speculate customers could one day use Amazon Coins to purchase e-books, digital music and other products.

Javelin Strategy & Research reports the virtual currency market reached $3.7 billion in the United States in 2012. Amazon plans to launch Amazon Coins in the U.S., but has not ruled out international expansion.

Amazon will release “tens of millions of dollars” worth of Amazon Coins for its initial launch. This will encourage developers to integrate the coins as well as convince people to purchase applications and games in the Amazon ecosystem.

“Amazon hopes the move will drive more revenue to the Amazon Appstore, which would be good for developers and, of course, for Amazon itself,” reports MIT Technology Review.

Edward Castronova, an associate professor at Indiana University who studies online games and worlds, expects Amazon to expand its Amazon Coins enterprise. “The narrowness in scope is purely a decision,” said Castronova. “If they’re going to do this in this narrow area, they have the technology and the functionality to do it for everything.”

Castronova suggests people are more willing to spend virtual currency than real money. Despite this claim, other virtual currencies have failed, even for large companies like Facebook. The social network discontinued its Facebook Credit system last June, which it launched in 2009.