In yet another sign that the non-fungible token (NFT) market could be ready to rebound in 2023, reports are now circulating that tech giant Amazon (AMZN 1.15%) 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 of 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 a few scenarios for the rollout of the NFT initiative, and how it might impact the future outlooks of top cryptos such as Avalanche (AVAX 1.60%), Ethereum (ETH 3.09%), and Polygon (MATIC +0.00%).
Avalanche
One potential beneficiary of an expanded 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 of boosting enterprise 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. Thus Avalanche would need to widen its partnership with Amazon beyond AWS. In this scenario, Amazon could use the Avalanche blockchain to mint new NFTs that would then be sold directly on the Amazon website as "digital collectibles" or given away as part of blockchain games. Obviously, this has the potential to boost demand for Avalanche NFTs, and could provide a huge boost to Avalanche as investors rethink its future long-term growth prospects.
Ethereum
Another scenario is that Amazon is planning to build a digital NFT marketplace similar to OpenSea, which is currently one of the top NFT digital marketplaces by trading volume. In this scenario, Amazon would presumably build out an online marketplace for NFTs that would be modeled on the current Amazon e-commerce experience. You would buy an NFT just like you buy anything else on Amazon. Browse what you like, put it into your shopping cart, and pay for it with a 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 (SOL 1.82%) NFTs. Thus Amazon's choice of blockchain would be crucial here.
CRYPTO: ETH
Key Data Points
If Amazon decides to leverage its existing partnership with Avalanche to build this digital marketplace on the Avalanche blockchain, it could potentially upset the balance of power in the NFT marketplace. The immediate winner would be Avalanche, while both Ethereum and Solana (which rank No. 1 and No. 2, respectively) might lose market share. If the goal is to grow and scale the NFT market quickly, though, Amazon simply can't 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 +1.73%) and Nike (NKE 0.62%). Polygon has also partnered with Meta Platforms (META 1.35%) on the rollout of NFTs for Instagram users. This could be problematic from the perspective of Amazon, because it could push Meta's NFT ambitions into direct conflict with Amazon's NFT ambitions. The tech industry is full of "walled gardens," and this could become another example of competing tech rivals and competing tech platforms. For that reason, I'm less optimistic about Polygon being able to benefit from any new Amazon NFT initiative.
The long-term future of the NFT market
For now, I'm 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 in which Avalanche is not somehow involved. If Amazon is able to grow the overall size of the NFT market and make buying and trading NFTs even more mainstream, then it will obviously also help the future growth prospects of Ethereum and Solana.
Until we know the exact direction of Amazon's NFT project, all of this is just speculation, of course. But it appears something is coming this spring from Amazon, and it's worth paying attention to what Amazon does. After all, Amazon doesn't enter a market unless it thinks it can be a huge, multi-billion-dollar opportunity.
