Three Reasons Why Tech Giants Steer Clear of Cryptos
If Bitcoin’s blockchain technology really is as disruptive as it’s purported to be, then why aren’t bigwigs like Amazon.com, Inc. (NASDAQ:AMZN) and Google launching their own cryptocurrencies? It’s a question we mull over often. After all, for companies like Amazon, which already have a digital currency in circulation (hint: “Amazon Coin”), creating a cryptocurrency should make all the more sense.
But it’s not that simple, you see. There are at least three reasons that may help explain why these technology behemoths have so far steered clear of cryptos.
The first and the most obvious reason is that creating a cryptocurrency doesn’t make economic sense. Try to be in their shoes to understand this concept.
Corporations like Google and Amazon have a primary motive behind furthering any technology they create—that is, to make money off it.
On the contrary, blockchain is built on a non-profit concept. The underlying idea is to decentralize power, to uphold anonymity, to take control out of the hands of the creators of a technology and put it in the hands of its users. None of these enlisted qualities of blockchain motivate a profit-seeking corporation.
So, why would these corporations throw their money at a product that creates little to no value for them or their shareholders?
Secondly, the people running the show are either skeptical of—or, in most cases, hostile toward—cryptocurrencies.
Take the example of Microsoft Corporation (NASDAQ:MSFT) founder Bill Gates. While Microsoft is spending heavily in the way of blockchain, Gates still thinks that cryptocurrencies, as of now, have no more utility than for buying prohibited drugs. To him, cryptocurrencies have become a direct cause of drug-related deaths. (Wait, so has cash, hasn’t it?)
It certainly is a preposterous claim, but since it comes from a man of high stature, it somehow gathers weight.
Remarks like these make the average Joes wary of cryptocurrencies. But more than that, such remarks more passionately reverberate within the tech community, where like-minded business owners jointly turn their backs on cryptocurrencies. The end result is that no technology heavyweight wishes to create a cryptocurrency of its own.
It doesn’t scare us, though. Recall that at one point, the banking industry shared the same sentiments. JPMorgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon called Bitcoin a “fraud” and spread sheer negativity for months. That is, until he revealed that his daughter was investing in Bitcoin. And as it eventually turned out, Dimon slowly turned complacent to the idea of cryptocurrencies, and, in fact, began adopting blockchain at his own bank.
Finally, there’s another crucial reason why we don’t find any tech frontrunners in the crypto industry. Regulatory uncertainty is another factor keeping the likes of Google and Amazon at bay.
Let’s face it. Cryptocurrencies are still a novel concept. Law-abiding corporations do not want to risk entering unchartered territories. One wrong step and they land in the government’s bad books.
Public backlash, government crackdown, or worse—billion-dollar lawsuits—are just some of the potential outcomes they want to avoid. So until the regulatory environment gets more transparent, chances are these big corporations will continue to avoid getting their hands dirty in cryptocurrencies.
Will Amazon/Google Create Their Own Cryptocurrencies?
At this point, you may be wondering; what are the odds that Amazon will ever create its own cryptocurrency? Will Google like to create its own cryptocurrency in the future?
We cannot disregard that possibility. There’s certainly a good chance that these corporations may eventually introduce something along similar lines.
Amazon’s digital currency, Amazon Coin, is built on a comparable concept. The only difference is that it’s not decentralized. There may be a chance that Amazon would like to create a decentralized payments ecosystem within its e-commerce ecosystem, allowing its users to transact directly with Amazon without involving a third-party, like a bank or a payment processor. It’ll save fees on both ends, and create a win-win scenario for Amazon and its customers.
Google may likewise wish to do something similar like perhaps add a “crypto rewards” functionality within its search engine. Similarly, Google’s self-driving car project, which is currently underway at its parent company Alphabet Inc (NASDAQ:GOOG), may find utility in creating a cryptocoin like IOTA that will allow autonomous cars to transact with each other or with toll booths on the go.
The possibilities are endless.
Mind you, Google is already investing in blockchain, if not directly then indirectly through other smaller blockchain-focused companies. If Google eventually finds value in their products, it may take them under its wing, thus effectively acquiring, if not creating, a cryptocurrency platform.
Regardless, we’ve reasons to believe that, even if these companies do launch their own cryptos, their coins will possibly be pre-mined. Just like Ripple.
It’s safe to assume that these companies would like to have some control over the supply/ownership of coins, even if they are decentralized in spirit.
If major corporations move into the cryptocurrency world, it will be a major endorsement for cryptos. From thereon, the cryptocurrency industry may pull in hordes of new investors. However, it’s still premature to speculate on this theory.
Regardless of whether companies like Google and Amazon make a major move or not, we at Profit Confidential believe that the top cryptocurrencies like Bitcoin and Ethereum, which have presented real-world solutions like decentralizing money flow and decentralizing web and mobile applications, respectively, will continue to thrive.