Overstock CEO bullish on bitcoin sales

Mar 06, 2014

Customers using bitcoins have spent more than $1 million on Overstock.com since the site began accepting the virtual currency in January. The figure has exceeded Overstock’s expectations and company CEO Patrick Byrne now believes bitcoin sales could reach $15 million this year, three times what was originally projected. The site’s overall sales exceeded $1 billion last year.

Overstock.com’s support of bitcoin transactions is important in light of some of the recent problems affecting the currency. Mt. Gox, a bitcoin exchange, filed for bankruptcy protection last week after revealing that $470 million worth of bitcoins had been stolen by hackers. A bitcoin bank in the U.K., Flexcoin, closed its doors this week after reporting thieves stole around $610,000 in bitcoins.

Mr. Byrne, via The Wall Street Journal, said, "Banks get robbed and no one says that something must be wrong with the dollar."

Of course, there are some such as Warren Buffet, who take issue with the words bitcoin and currency being used in the same sentence.

"It’s not a currency," Mr. Buffett told The Associated Press. "I wouldn’t be surprised if it’s not around in 10 or 20 years."

Do you see bitcoin becoming a mainstream form of monetary exchange in the future? Should retailers follow Patrick Byrne’s advice or Warren Buffet’s when it comes to bitcoin?

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15 Comments on "Overstock CEO bullish on bitcoin sales"

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Paula Rosenblum

Well, the one thing I know for sure (and I guess it has been written on these pages before) is that the payment industry is ripe for disruption. If you really look at it, consumers aren’t happy about the data thefts or fees tacked onto international transactions. Heaven knows retailers aren’t happy about the interchange charges and are trying to create their own alternative universe (MCX) to reduce some of the charges.

In other words, today’s payment technology works but still ultimately costs too much.

Do I think Bitcoin will be the winner? I have no idea. Do I think that the presence of various forms of crypto-currency (of which Bitcoin is only one) will create conditions that drive price reductions across the board? Absolutely. It’s that disruptive. After all, as a business person, why do I get nicked a $25 wire transfer fee for overseas transactions? And that’s just one piece of the puzzle.

A company that operates on thin margins like overstock.com will always be an early adopter. The final story has yet to be told, but I do believe the billion dollar payment industry is going to become a half-billion dollar industry one way or another.

Max Goldberg

I don’t see Bitcoin becoming mainstream. It might remain a fringe currency. It is not something that retailers need to jump into. With so many other payment systems currently available, retailers have the luxury of waiting to see how Bitcoin develops and then make a decision.

Tom Redd

Bitcoin, robbers, etc. Bitcoin is a form of exchange that some will use and others will not. The dollar is a form of exhange all will use. Until we really get a handle on hacking, I would consider Bitcoin a much risker form of value exchange. It took us a long time to make banking really safe and it still has its bad days.

Larry Negrich

I would be hesitant to accept a speculative, variable form of payment in its early phase. If Bitcoin is still around in 5 years, generally accepted as a payment form, and consistent in value, then perhaps review the practice. I see more risk than reward for a retailer accepting Bitcoin as payment at this time.

Mohamed Amer

Let’s put it this way, on a $1.3 Billion annual sales (2013), Ovestock generates buzz by adopting Bitcoin and with $1 million in sales via this novel “coin” it amounts to a marketing program. Overstock gets more buzz in the media and you get experts to discuss its merits. Novel approach by a smaller player looking to create greater awareness and adoption.

Will Bitcoin become mainstream? Despite some of its attractive features, I doubt that it will. But maybe it’ll be one more element that will help force that elusive “disruption” in the payment industry as discussed on these pages before and re-iterated above by Paula Rosenblum.

Rick Moss

I recently asked my (much smarter, former computer scientist) brother to explain about bitcoins. Throughout the description, I found myself repeatedly asking, “Yes, but what ARE they exactly?”

The talk went on for some time. “Well, they’re not exactly issued,” he said. “New ones have to be discovered…or ‘mined’.” Eventually, I came to understand that they are much like prime numbers, in that finding the first ones are easy but the bigger ones now take massive computer power to uncover. The big difference is that there are only a finite number of bitcoins in the universe. Eventually, theoretically, all of them will be known, thus the reason for all the financial speculation.

If this has your head swimming, try to imagine how something of this complexity could work for consumers. Certainly, we’re all at the mercy of the elite few who actually understand how to manipulate these assets. I may just be too dumb to understand, but seems to me that bitcoin payment is not for the timid. I’d give the gearheads a few decades to work it out first and convince us they’re usable for commerce.

Ian Percy

I really don’t know if this will “catch on” with the general public or not. My guess is “not”…based on the fact that the general population of the USA has an apoplectic fit at the very thought of:

a) no Saturday mail delivery;
b) not being permitted to carry a gun into a family restaurant;
c) getting rid of pennies that cost 2.41 times more than a penny to make;
d) turning short-lived dollar bills (or equivalent) into an enduring coin like most of the world has done;
e) making other bills out of material lasting 100X longer than paper with a design that no one can duplicate (as Canada has done);
f) bringing credit card technology into the 21st century; 
g) recognizing the universality and superiority of the metric system. Etc., etc.

Come to think of it, I hope it catches on if only to signal our willingness to more fully open our minds to alternatives and new possibilities.

Ralph Jacobson

Bitcoin attempts to overcome a few traditional commerce obstacles. It, at first blush, attempts to be a universal global currency. It is not that at all. It attempts to leverage eCommerce by securing shoppers’ trust. Well, that is both true and false depending upon whom you ask.

My single fear of hacking has come to fruition, so it will be a little while before I put my trust in Bitcoin either from a personal or business perspective.

I do believe a universal eCommerce “currency” will eventually arise. However, a soon as security measures respond to hackers’ threats, new threats come to the market.

Phil Rubin
3 years 6 months ago

While there are higher fees for payment processing than Bitcoin offers, and even more vulnerability in terms of security breeches, it’s hard to see Bitcoin going mainstream. Even with all of the US government dysfunction and recent threats of default, dollars are universally accepted and backed by the US Treasury. Bitcoin is backed by what, exactly? An unregulated speculative marketplace that has seen leading exchanges and millions of dollars (ironic) worth of Bitcoins disappear. I can’t imagine wanting to be on the same side of a trade with Patrick Byrne against Warren Buffett. Long dollars, short Bitcoin.

Robert DiPietro

How can you vote against the Oracle of Omaha? I don’t think bitcoin will be a around as a form of currency in the future. The payment industry is ripe for disruption as many had said before; it’s just not going to be Bitcoin.

James Tenser

Virtual currency will likely gain legitimacy over time, whether it is branded as Bitcoin or something else. For now, regular folks seem to prefer to use money that has a more or less stable value. The alternative is the need to factor in speculation on every purchase.

For retailers, accepting virtual currency necessitates an additional, parallel payment processing system, adding overall complexity to reduce friction on a fraction of transactions.

If this is the price of lower transaction fees, then not everyone will want in on the early game.

Craig Sundstrom

No. Buffet. Counterfeit currency “works” for a while too…until you’re the one left holding it when it’s found out.

Lee Kent

Yes, the payment industry is ripe for disruption! Do I think the answer is Bitcoin? Not so much. But I do think some combination of the Bitcoin concept and PayPal are top of list.

The thing about Bitcoin is trying to make it a currency with all the mining simulation, etc. That makes it interesting, but I’m just not seein’ the need.

The concept of a trustless payment, I’m really feelin’ that one. So let’s not take off our “thinking caps” just yet and use Bitcoin as a starting thought.

And that’s my 2 cents worth!

Kai Clarke

No. There are no protections in place, no controls, and no real monetary exchange (i.e. currency placards to establish value). The lack of these controls and systems puts all users as well as Bitcoin in jeopardy, and any products exchanged for Bitcoin, at risk. What is the real advantage of Bitcoin???

Alexander Rink
3 years 6 months ago

My personal opinion is that long term, some form of alternate currency will emerge and be used simply because there are enough people out there who are very concerned about their privacy, and want to be “off the grid” as it were. Is Bitcoin that currency? It certainly seems to be the most credible attempt to date, but that does not guarantee its success. Clearly the recent Mt. Gox situation did not help matters, but there have been similar shocks to the mainstream financial services industry (S&L crisis, 2008). At this stage, it is purely speculative to be engaged with Bitcoin, and we will simply have to see if it stands the test of time.


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