Amazon coins: The online retailer's brilliant first stab at digital currency

Meet the Amazon coin. You won't be able to throw it in a piggy bank, but Amazon hopes its newly minted digital currency will be a hit with users.

Essentially, the coin is the online retailer's first whack at proprietary digital currency. Come April 25, Kindle Fire users will be able to spend Amazon coins on games, apps, and other in-app incentives.

To jumpstart the initiative, the company plans to give "tens of millions" of these virtual coins away for free in May so that people can buy real, fully functioning apps from the Amazon Appstore. Customers will still be able to use their credit cards for purchases, if they like. And app developers will still be paid the same 70 percent revenue share they're entitled to.

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Why do it? Amazon vaguely states that the coins are "another opportunity to drive traffic, downloads, and increase monetization."

Or think of it this way: Amazon coins are smart because they work as another incentive to keep hard-fought users locked into the Kindle Fire's ecosystem. If you have a bunch of coins left to spend, for example, you're less likely to jump ship to an iPad Mini or a Nexus 7 the next time you have to upgrade your hardware. Remember, the company already takes a financial hit with every Kindle Fire it sells — so Jeff Bezos has no qualms about losing a few bucks to keep consumers locked in for the long-term. (Via CNET, Los Angeles Times)