If Amazon comes to NFTs, which coins will skyrocket?
In another sign that the non-fungible token (NFT) market could be poised to pick up again in 2023, reports are now circulating that the tech giant Amazon (AMZN -2.02%) will formally enter the NFT market as soon as April. There are a number of different directions this new strategic initiative could go, with significant implications for all the major players in the NFT market right now.
So which cryptos could skyrocket as a result of this new NFT initiative from Amazon? Below are some scenarios for the rollout of the NFT initiative and how it could affect the future prospects of top cryptos such as Avalanche (AVAX -4.30%), Ethereum (ETH -2.45%)and Polygon (MATIC 170.01%).
Avalanche
A potential beneficiary of an extended Amazon push into NFTs would be Avalanche, due to its existing partnership with Amazon Web Services (AWS). In mid-January, Avalanche became the first ever Layer 1 blockchain to partner with AWS in a move that was primarily heralded as a way to boost business and government adoption of blockchain technology.
Image source: Getty Images.
Early reports about the new Amazon NFT initiative are that it will be coordinated by a consumer-facing unit of the company, such as the e-commerce unit or the Twitch gaming unit. Therefore, Avalanche needs to expand its partnership with Amazon beyond AWS. In this scenario, Amazon could use the Avalanche blockchain to create new NFTs that would then be sold directly on the Amazon website as “digital collectibles” or given away as part of blockchain games. This obviously has the potential to increase demand for Avalanche NFTs, and could provide a huge boost to Avalanche as investors reassess their future long-term growth prospects.
Ethereum
Another scenario is that Amazon plans to build a digital NFT marketplace similar to OpenSea, which is currently one of the top digital NFT marketplaces by trading volume. In this scenario, Amazon will presumably build out an online marketplace for NFTs that will be modeled on the current Amazon e-commerce experience. You will buy an NFT just like you buy anything else on Amazon. Browse through what you like, add it to your shopping cart and pay for it by credit card. This would be somewhat innovative if Amazon decides to make crypto one of the preferred payment options for NFTs.
Currently, most of the top NFT marketplaces specialize in NFTs from a particular blockchain. For example, OpenSea specializes in Ethereum NFTs and Magic Eden specializes in Solana (SUN -4.31%) NFTs. Therefore, Amazon’s choice of blockchain will be decisive here.
If Amazon decides to leverage its existing partnership with Avalanche to build this digital marketplace on the Avalanche blockchain, it could potentially disrupt the balance of power in the NFT market. The immediate winner would be Avalanche, while both Ethereum and Solana (which rank #1 and #2 respectively) could lose market share. If the goal is to grow and scale the NFT market quickly, Amazon simply cannot ignore what already exists with Ethereum, which built the NFT market from scratch and is home to some of the most popular NFT collections in the world.
Polygon
Over the past year, Polygon has significantly boosted its profile in the NFT space, thanks to its many brand partnerships involving the likes of Starbucks (SBUX -0.50%) and Nike (NKE -1.93%). Polygon has also partnered with Meta platforms (META -4.27%) about the rollout of NFTs for Instagram users. This could be problematic from Amazon’s perspective, because it could push Meta’s NFT ambitions into direct conflict with Amazon’s NFT ambitions. The technology industry is full of “walled gardens”, and this could be another example of competing technology rivals and competing technology platforms. For that reason, I am less optimistic that Polygon can benefit from any new Amazon NFT initiative.
The long-term future of the NFT market
For now, I am most optimistic about Avalanche, which is the only top crypto with an existing partnership with Amazon. It’s hard to think of a future scenario where the Avalanche aren’t somehow involved. If Amazon is able to increase the overall size of the NFT market and make buying and trading of NFTs even more mainstream, then of course it will also help the future growth prospects of Ethereum and Solana.
Until we know the exact direction of Amazon’s NFT project, this is all just speculation, of course. But it looks like something is coming this spring from Amazon, and it’s worth paying attention to what Amazon is doing. After all, Amazon doesn’t enter a market unless they believe it could be a major multi-billion dollar opportunity.
John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of marketing development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Dominic Basulto holds positions at Amazon.com, Ethereum and Polygon. The Motley Fool has positions in and recommends Amazon.com, Avalanche, Ethereum, Meta Platforms, Nike, Polygon, Solana and Starbucks. The Motley Fool recommends the following options: long $47.50 calls in January 2025 on Nike and short $100 calls on Starbucks in April 2023. The Motley Fool has a disclosure policy.
