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There is no doubt Amazon (NASDAQ:AMZN) is a destructive force when it enters a new sector. After all, "your margin is my chance." The only thought that AMZN changing health care has impressively affected many of the industry's actions. So, when Amazon points to a new technology or industry, it's time to pay attention. And this time, AMZN is preparing to change a potentially revolutionary sector. We are talking about new Amazon blockchain services.
No, the retailer is not ready to start accepting Bitcoin for purchases. But what he is doing could be even more important to advance the blockchain and the use of digital master books. And it comes courtesy of its successful AWS division.
Amazon gets blockchain fever
You can argue all day if digital currencies like bitcoin, ethereum or dogecoin have real value or never reach their goals of being used as "money" in your local bar. But what can not be discussed is the development of the blockchain and its growing importance. The basis is that the technology allows peer-to-peer transactions without the use of an intermediary. Blockchain provides a distributed public ledger of these transactions and cryptography to encode the ledger. As more transactions move down, encryption increases.
Digital currencies such as bitcoins use blockchain for their transactions. However, the idea is that the blockchain can be used for a variety of other industries. From traditional banking to insurance to food production and medicine, blockchain can be implemented for many back-office processes. For example, Walmart (NYSE:WMT) has adopted a program that uses the blockchain for food safety with its pork suppliers after an important recall. Meanwhile, Starbucks (NASDAQ:SBUX) has recently started a program using blockchain with its coffee suppliers to improve prices.
So, the potential for blockchain to help transform businesses is there. That's why old technology companies like IBM (NYSE:IBM) are seriously looking at technology. The problem for IBM and others is that Amazon has decided that blockchain is worthy of investment.
To this end, AMZN has just announced that it will offer two Amazon Blockchain services through AWS: Amazon Quantum Ledger Database and Amazon Managed Blockchain. The managed blockchain product will allow users to create and manage scalable blockchain networks using the famous open source frameworks Hyperledger Fabric and Ethereum. Incidentally, Hyperledger is what IBM uses for its blockchain operations. The idea is that the new Amazon blockchain product allows end users to configure and manage a scalable blockchain network with just a few mouse clicks and lines of code.
After creating the blockchain network, the new Amazon service will allow you to deepen your data. Amazon's Quantum Ledger database will allow customers to replicate a copy of their Amazon blockchain network activity and dig into the data to analyze and view transactions in the digital ledger.
Amazon Blockchain products will be huge
For Amazon and AMZN investors – this is really exciting news. And it could send a lot of additional revenue and money flowing on its way.
AWS is already a monster in cloud computing and web hosting. A number of large companies have chosen to use AWS for its various services. Names like Abbvie (NASDAQ:ABBV) Netflix (NASDAQ:NFLX) and Airbnb are just some of the companies that use AWS services. Addressing small and medium-sized businesses, Amazon has more than 1,000,000 active users in its AWS service. According to the company, the Amazon blockchain product launches were designed at the request of existing customers in the "Mortgages, health records, supply chain traceability and vehicle history records"Spaces.
The beauty lies in the simplicity and scalability of AWS. If Amazon can show that a smaller company can take advantage of Amazon blockchain as a service (BasS) and the cost is right, it will be able to get additional revenue per customer. The same could be said for the big fish on its platform.
And since customers are already "stuck" in AWS, Amazon will be the go-to name when customers want to explore blockchain. They will not invite IBM to develop a ledger if AWS makes it very easy for a company to provide additional services in the platform if necessary. Often these services can be offered with various levels of Amazon's hand-holding. The same goes for the new Amazon blockchain operations.
Still in the first innings for Amazon and Blockchain
Now, it is still very early in the process of Amazon blockchain. But given the tremendous success of AWS and Amazon's ability to convince customers to add services, blockchain has the potential to be great for AMZN. In the long run, as more companies are starting to use these digital records to track transactions, it could be another huge source of revenue for AMZN. Last year alone, AWS revenues rose more than 43% to $ 17.5 billion. Blockchain could be another big leap forward.
Moreover, given the success of the AWS system, it is a giant hit between companies such as IBM and Microsoft (NASDAQ:MSFT) that are currently leading the blockchain game. They could see their leadership positions slip while Amazon's new products create steam with their customers.
All in all, it's another example of why Amazon is so dangerous when it comes into your industry and why the AMZN title is a big long-term purchase.
Disclosure: At the time of writing this book, Aaron Levitt was a long ABBV stock.
