Overstock.com Plans To Accept Bitcoin

SonicSpike writes "Overstock plans to become the first big U.S. online retailer to accept Bitcoin, as Patrick Byrne, the company's libertarian chief executive, warms to the virtual currency as a refuge from government control. Mr Byrne told the Financial Times that Overstock planned to start accepting Bitcoin next year – possibly by the end of the second quarter – a decision that he said was driven mainly by his own political philosophy. 'I think a healthy monetary system at the end of the day isn't an upside down pyramid based on the whim of a government official, but is based on something that they can't control,' Mr Byrne said."

Comments

Guesses as to end effect?

[SuperKendall]

It will be really interesting if this creates any stability in the value of bitcoin, or if not how pricing will work with something that can fluctuate in value so wildly... will the company convert BTC to cash right away, or will it keep it for a while before conversion (if ever)?

Re:Guesses as to end effect?

[rudy_wayne]

.

I think a healthy monetary system . . . . is based on something that they can't control

As fashionable as it is to be anti-government or anti-establishment, or Let's Stick It to "The Man", a monetary system not under government control is not the answer and Mr. Byrne is full of Libertarian bullshit. The recent article "Why I want Bitcoin to die in a fire" says it perfectly. Our current monetary system sucks, but replacing it with Bitcoin would be even worse.

Yesterday I went to a store and bought some items. Today I went back to that store and everything was still the same price, and the dollars in my wallet were still worth exactly the same as they were yesterday, and the day before, and the week before and the month before. An unstable currency that changes value from one minute to the next is an unworkable mess.

Re:Guesses as to end effect?

[Anonymous Coward]

Same way they do at the moment. All BTC conversions would be subject to a known conversion rate to USD and tax would be charged as appropriate, i.e. so long as AMZN feel it is in their best interests to do so.

Re:Guesses as to end effect?

[MobSwatter]

Dollars to sense, the U.S. dollar value is controlled, and not by a particularly trustworthy element. The answer is the gold standard.

Re:Guesses as to end effect?

[mishehu]

Why yes, that's an even better idea. Let's all have the gov't hoard all sorts of gold that could actually be used for something useful instead... You'd love for your graphics card to triple in price because now the gold for the contacts and other components is all scarce now, wouldn't you? A gold standard has a big downfall in common with BTC... it's naturally deflationary. A modest rate of inflation is not necessarily a bad thing, but having to go from paying 1/4 of your net income on your mortgage now to 1/2 of your net income in 15 years doesn't sound so hot either does it?

Re:Guesses as to end effect?

[Sqr(twg)]

will the company convert BTC to cash right away, or will it keep it for a while before conversion (if ever)?

From TFA: "Mr Byrne said that if Bitcoin derivatives exist when Overstock starts to accept the currency it would "bank" Bitcoin and use them to hedge the risk of changes in its value. If such derivatives do not exist, he said Overstock would trade Bitcoin into dollars every day."

Bitcoin derivatives would require a major re-write of securities law. That's not going to happen. So he would have to sell the Bitcoin immediately,

So for those wondering what effect this will have on BTC exchange rate: It will create a selling pressure as people use stored BTC to buy from Ovestock, who immediately convert the BTC into USD.

Re:Guesses as to end effect?

[Anonymous Coward]

you're a retard.
the dollar is stable because it's backed by trillions in averaging commerce and billions in liquidity. huge fucking numbers.
bitcoin appears unstable because it has not yet reached that scale.
it has nothing to do with the base currency, be it bitcoin, dollars, or pigs.

Re:Guesses as to end effect?

[xQx]

Parent should be modded up.

Also, what is this "plans to accept" BS. There are heaps of online retailers who take bitcoin, and if they were serious they would have just used someone like coinjar.io to do the merchant service for them and convert it back to USD on the fly.

Slashdot - stuff that matters.... It will be news when Overstock.com ACCEPT bitcoin, not when they do nothing more than release a press release that they PLAN TO ACCEPT bitcoin some day in the future.

Thanks Slashdot for your thinly veiled Christmas advertising. Anyone wanna buy some Viagra?

Re:Guesses as to end effect?

[Patch86]

Yeah, because the value of gold is totally stable:
http://www.bullionvault.com/gold-price-chart.do

There's a reason why every country in the world abandoned gold/silver/commodity linked currencies, and it wasn't because of a global conspiracy- it was because they were a disaster.

Re:Guesses as to end effect?

[Patch86]

The inflation rate in the US is what, 2% per year? 3%? 4? And when was the last time it suffered serious deflation? The difference in value between what I can buy in a shop today and what I can buy in a shop in one month is likely to be a fraction of a percentage point different.

Whereas Bitcoin has inflated by literally thousands of percentage points over the last year, has recently deflated by about 200% in the last MONTH, and regularly moves 10% or more on a DAILY basis. I have literally no idea whether a Bitcoin in my metaphorical pocket will buy me 10x more or 10x less goods by value next month compared to this month. Unless that situation changes, that is simply not a workable situation. As a sort of grand online casino game Bitcoin is great, but as a currency it is an unworkable disaster.

Re:Guesses as to end effect?

[physicsphairy]

The value of a dollar can and does fluctuate wildly (consult any market crash) and certainly alters slowly over time. What makes it "stable" is the heavy inertia it enjoys from being tied to so many aspects of a large economy, particularly goods whose value are themselves stable. This makes it stable on average, but your analogy wouldn't work if instead of going into a store and buying an apple you went to the stock market, and it doesn't work if a major part of what the dollar is exchanged for comes under duress, such as the real estate market or the American government.

Bitcoin is fluctuating in value right now precisely because people are betting on its future usefulness as a currency. It's sort of like you are buying stock in the Bitcoin Digital Currency company, but the currency itself is being immediately exchanged for the stock. How is it supposed to have a stable value when the only thing it's good for is making bets on an uncertain future? If I had 10 bit coins right now, I really wouldn't know what to do with them, except for look up what they are selling for and get some dollars in trade.

But the simple progression of the future is going to make its more intrinsic value obvious, and once it's tied to companies like Overstock, the value will start to derive increasingly from the goods you can buy with it.

Hasn't bitcoin been specifically designed to have an investor-centric mining phase before plateauing?

Re:Guesses as to end effect?

[serviscope_minor]

I think that a very large retailer like that one takes a while to integrate a new payment system. They might also wish to do the trading themselves to avoid paying the fees to the other operators.

But anyway it does show that that the profile of bitcoin is going up.

Re:Guesses as to end effect?

[Pentium100]

A modest rate of inflation is not necessarily a bad thing, but having to go from paying 1/4 of your net income on your mortgage now to 1/2 of your net income in 15 years doesn't sound so hot either does it?

You know what would be better? Being able to actually save money for years to buy something and no having the money lose value until I save enough of it.

Re: Guesses as to end effect?

[XcepticZP]

Simply put, libertarians aren't serious. They're ideological.

We most certainly are serious, thank you very much. Not only that, but we pride ourselves on the consistent morals that back our ideology. We may not have the best solution in the world, but it most certainly is the only moral and workable solution to have a cooperative society. Meanwhile, statists like you find it perfectly reasonable to include theft, imprisonment, torture and kidnapping as part of your utilitarian ideology to solve problems. How about no thank you. I'll take my supposedly "failing libertarianism" over your "working" piece of shit state any day.

Re:Guesses as to end effect?

[thue]

> Excuse me if I'm just showing my ignorance but can we really determine what is changing in those graphs? Is it the value of the currencies to which it is measured against that changes or the value of the gold?

The prices in dollars of commodities in inflation indexes have been relatively stable. For example the price of gold doubled between 2009 and 2011 - do you remember the dollar-price of commodities doubling in the same time interval, as would be the case if it was just the dollar halving in value and gold being stable? No, obviously not.

There is no real doubt that it has been the price of gold which is unstable, and not the price of dollars.

Re:Guesses as to end effect?

[tompaulco]

The inflation rate in the US is what, 2% per year? 3%? 4?

Well, that is the government's stance. In reality, the cost of the everyday items that a consumer has to buy increases by much more than that. Utility costs have gone up by a 300% in the last decade, gasoline has doubled. The cost of hamburger has doubled or more in about a decade. A "case" of soda has gone up in price, while also going from 24 cans to 20. A "Family Size" bag of chips is smaller than it was just a few years ago. Many manufacturers are keeping the price the same, while slightly reducing the count, hoping no one will notice. The cost of the average new car has doubled in the last decade.
With compound interest, I guess that still comes down to only 7 or 8%, but that is still significantly more than any interest you will get from a bank, especially after taxes, and it is 7 or 8% more than the Cost of Living Adjustment or raise that the average employer gives.

Time to short OSTK

[Anonymous Coward]

Perfect timing! I'm always in need of new stock market ideas! Thanks Overstock.com...you made my day!

Re:Time to short OSTK

[Trepidity]

Maybe you're already referencing this, but shorting OSTK makes their CEO very angry.

Re:Time to short OSTK

[Trepidity]

It's also weird to oppose it if you're a libertarian, as Byrne claims to be. A "naked short" is just a contract written against a stock. Why should the government interfere to prevent people from writing such contracts? Requiring that short sellers have the underlying security as "cover" is just a government regulation.

Overstock.com still exists?

[Anonymous Coward]

Overstock.com still exists?..... Oooooh I see what they did there.

This press release brought to you by O.co, just a few days before Christmas!

Upside-down pyramids

[NoNonAlphaCharsHere]

Yikes. What this guy knows about monetary policy and central banking is - staggering. While national backing-free fiat currency may not be the most desirable way to do things, multiple entities issuing highly volatile (think internet speeds) banknotes of dubious value (CPU cycles? really?) is an insane step in the wrong direction.

Re:Upside-down pyramids

[Anonymous Coward]

multiple entities issuing highly volatile (think internet speeds) banknotes of dubious value (CPU cycles? really?) is an insane step in the wrong direction

I don't think you entirely understand bitcoin, or where the value of a currency comes from. First of all, there is only one issuer of bitcoin: the bitcoin network, acting in aggregate, according to a pre-agreed algorithm. Secondly, the value of almost any modern day currency is entirely a perceptual value caused by the notion that people will accept that currency at some approximately-known rate for payment for goods or services. The only reason bitcoin is highly volatile at the moment is that not many people are using it as a currency -- it is still far more popular as an investment vehicle than for its actual intended purpose. Only when more mainstream retailers start accepting it will we see its value reach long-term stability.

But how much will it cost?

[Animats]

But will it be cheaper or more expensive than using a credit card?

Accepting Bitcoins is surprisingly expensive. There's a volatility risk, and for a currency that can change by 10% in minutes, that's a real problem. Coinbase (which is a dealer, rather than an exchange) has a posted buying price, good for one minute, and some shopping cart systems use that. But that price is usually lower than the prices on the major exchanges; there's a conversion cost. So, as with retail money-changers, you pay a conversion fee. Also, like most money-changers, Coinbase will briefly stop buying during periods of high volatility or if they have trouble unloading their Bitcoins.

Then, of course, there's prying the money out of the Bitcoin broker or exchange. Overstock is probably in a strong enough position to demand a daily sweep into a real bank account, with serious penalties for failure to deliver.

If you look at the few Bitcoin-accepting businesses that sell real products with typical mail order retail markups, the Bitcoin price is usually significantly higher than the US$ price. Most of the stores that currently accept Bitcoin are selling T-shirts, posters, remaindered goods, and similar crap. Of course, that's what Overstock does, so it may be a good fit.

Re:But how much will it cost?

[rudy_wayne]

But will it be cheaper or more expensive than using a credit card?

Accepting Bitcoins is surprisingly expensive. There's a volatility risk, and for a currency that can change by 10% in minutes, that's a real problem. Coinbase (which is a dealer, rather than an exchange) has a posted buying price, good for one minute, and some shopping cart systems use that. But that price is usually lower than the prices on the major exchanges; there's a conversion cost. So, as with retail money-changers, you pay a conversion fee. Also, like most money-changers, Coinbase will briefly stop buying during periods of high volatility or if they have trouble unloading their Bitcoins.

And there's the problem. Bitcoins aren't real money. Before you can spend them you have to convert them into something (dollars, euros, whatever). Meanwhile, the paper in my wallet doesn't need any conversion.

Re:But how much will it cost?

[blackraven14250]

I'm not sold on the idea of Bitcoin, but that's not exactly a solid argument against Bitcoin over the long term. You'd have trouble converting any currency into goods before the currency became widely accepted. There's a lag time for adoption with any attempt at a currency, even ones mandated by law, so it's no surprise that a currency that's essentially discovered and adopted by word of mouth takes a long time to be truly useful in all situations.

Re:But how much will it cost?

[lexman098]

Meanwhile, the paper in my wallet doesn't need any conversion.

Try giving the paper in your wallet to Overstock.com

Re:But how much will it cost?

[SonicSpike]

Federal Reserve Notes (dollars) aren't real money either in case you haven't noticed. The difference between BTC and USD? One is centrally controlled by the government, the other is peer-to-peer.

Re:A bit off topic

[SuricouRaven]

Yes, in theory. But even long term it's high risk, because in the event it did grow to that level of popularity it would likely become subject to strict government regulation or outright prohibition. It wouldn't be stable in the same way as other currencies though - it's intentionally deflationary in nature, which has some serious economic implications. Good for savers, but it'd make obtaining credit near-impossible. Credit, though it can be a source of disaster when overused, is also essential for economic growth. If it did somehow take over, it wouldn't be an economic panacea. It'd just eliminate current problems and bring in new ones.

Re:The Slashdot of the past...

[DogDude]

The Slashdot of 1997-2002 would have loved Bitcoin. The Slashdot of 2013 hates it for some reason. I wonder what changed?

That's easy. Most of the Slashdot crowd has grown up.