In May, Amazon is planning to roll out a digital currency system called Amazon Coins to be used to purchase apps in its Kindle Fire Tablet ecosystem, a move that could give the company an advantage in the Android marketplace, if Amazon can succeed where others have failed.

When Amazon launches the currency this Spring, it will give a number of U.S. customers free Amazon Coins worth “tens of millions of dollars” to jump start the program according to a press release, with each coin worth one cent.

Amazon is promoting the currency to app developers as a way to increase sales through the Kindle Fire’s app store, which has already had more success than the wider Android market.

From Amazon:

For customers, it's an easy way to spend money on Kindle Fire apps and games. They'll be able to purchase as they do now, but with the ability to choose to pay with a credit card or using Coins. For you, it's another opportunity to drive traffic, downloads, and increased monetization. Plus, there's no integration required--you'll get paid the same 70% revenue share whether the customer chooses to use Coins or their own money. 

Some developers are still skeptical, however, as it still isn’t clear how Amazon Coins will be any easier than normal purchases, especially considering Kindle Fire users already use Amazon’s fast one-click ordering system.  Kevin Galligan, an Android app developer and organizer, gave his reactions to Amazon Coins in an interview with The Verge, “Anything that’s going to help Android monetize anything at all is good," he said. "But how do you get Coins? They don’t go into that. If you have to buy Coins, then I don’t understand what’s the difference between that and money."

Amazon announced the currency a few months in advance to give time to developers to prepare, as Amazon Coins will be used to purchase in-app items as well.  This may be especially helpful to Android game developers, who often already use a digital currency for purchasing in-game items.

As pointed out by The Verge, gaming companies like Valve have had huge success with digital wallets used to hold funds for downloadable content in games.

Yanis Varoufakis, an in-game economist with the company, explained how digital currencies can help the company offering it:  “Just like frequent flyer point schemes, they capture their audience and prevent them from transferring value generated within a game or company to some other game or firm," Varoufakis wrote in an email. "Courtesy of perfect control of this ingame ‘money’ supply, it is a cheap way for rewarding certain behavioural or consumption patterns, or even penalising others.”

Rewarding loyalty to Amazon’s app store will probably be vital to the Coins’ success, as Amazon could offer the currency as rewards for taking surveys or completing achievements without running into legal problems surrounding paying money to customers.

Other digital currency systems have had mixed track records, though, since customers often find moving their money between point totals and digital wallets to be limiting and inconvenient.  

Even successful gaming currencies like the Microsoft Points used on the Xbox Live Marketplace have been criticised by users for forcing them to buy bundles of points that don’t match exactly what they need for a purchase, which inevitably leaves leftover totals.  The problem was so bad that Microsoft discontinued plans for the currency on its PC app store.

Another use for Amazon Coins that’s garnered some speculation is allowing parents to more easily regulate their children’s purchases through Kindle FreeTime.  The service already lets kids to use and explore the Kindle Fire while preventing unauthorized purchases, but the inclusion of Amazon Coins could allow parents to deposit some funds to be used to buy a limited number of apps and games without running up a huge bill.

If Amazon decided it was worth it to expand how Coins work in the future, consumers could conceivably use it for purchases outside of the Kindle Fire app store, such as in Amazon’s physical goods store.  It transfers between users were possible, a new dimension to digital gift giving (or even an alternative to PayPal) could emerge.

For now, though, consumers and developers will have to wait until May to see how much Amazon Coins will change things for the Kindle Fire ecosystem.

You can reach Staff Reporter Shea Huffman here or follow him on Twitter.