Amazon launches Coins virtual currency

Amazon.com's customers can now use Amazon "Coins" to buy apps and games from the online retailer, after it launched its own digital currency.

All Kindle Fire owners in America were given 500 free Amazon Coins – worth $5 (£3) – to mark the launch on Monday. The virtual money, emblazoned with a woman drawing a bow, is presently only available for US customers, who can use it to buy apps, games and in-app items from the Amazon Appstore, and for the Kindle Fire. Each coin is worth $0.01, with bulk purchases getting a discount of up to 10%. However taxes are still payable on items bought with the "coins" – making their usefulness questionable.

Amazon said that the new currency was "an easy way to purchase apps and in-app items" for customers, and "another opportunity to drive traffic, downloads and increased monetisation" for developers.

"Today we are giving Kindle Fire owners $5 worth of Coins to spend on new apps and games, or to purchase in-app items, such as recipes in iCookbook, song collections in SongPop or mighty falcon bundles in Angry Birds Star Wars. And with discounts of up to 10% when you buy Coins, this is a great way for customers to save money when they buy apps, games and in-app items," said Mike George, vice president of apps and games at Amazon. "We will continue to add more ways to earn and spend Coins on a wider range of content and activities – today is day one for Coins."

Purchased Amazon Coins never expire, the site says.

Amazon Coins joins a range of virtual currencies offered by larger sites, including Microsoft's Points for its Xbox Live marketplace and Facebook Credits. Sites generally do not allow people to swap accumulated points back into physical currency to avoid arbitrage (where users take advantage of currency fluctuations), money laundering and theft.

The virtual currency has already received a mixed bag of reviews from early users. Out of 46 write-ups, eight reviewers gave it five stars. "Do you like to budget? Then Amazon Coins could be for you. Buy your selected amount and then use them for the month," wrote one user.

But 13 customers gave the Amazon Coins just one star. "What is the purpose of this nonsense? Why waste time exchanging pennies for Coins? They can't be used to purchase merchandise. They can't be used to purchase ebooks," wrote a reviewer. "IMHO Amazon is wasting a lot of time and money creating massive nothingness."

Another was less serious, writing: "My kids are leaving these 500 free Coins all over the frackin' house. They get stuck in the vacuum, my wife slipped on one and fell hard on the tile floor, and I keep unsuccessfully trying to use them in vending machines before realizing they aren't real money. Then last night the dog ate one and we had to take her to the vet to have it extracted from her colon. Figures that the vet wouldn't take the other 499 coins as payment towards the bill. Thanks Amazon, this has been SOME GIFT."