Overstock.com to Accept Bitcoin
Overstock.com has announced its plans to become the first major retail company in the US to accept Bitcoin.
Bitcoin is a peer-to-peer digital currency that is not backed by a government or central bank. According to Forbes, here is how the currency works:
To conduct a transaction, the buyer requests an update to a public transaction log within the blockchain. The blockchain is managed by a decentralized network that verifies and puts a time-stamp on payments. This network is maintained by Bitcoin “miners” that receive transaction fee rewards and new Bitcoins. There are around 12.1 million Bitcoins in circulation today with the total number being capped at 21 million.
As a young currency without government backing, the prices for Bitcoin are quite volatile, so Overstock plans to immediately liquidate any Bitcoin currency it brings in to US dollars. At the beginning of 2013, the value of a Bitcoin was $13 and eventually reached a peak of more than $1200, before dropping by half recently because the Chinese government banned its use within their country.
The move to accept Bitcoin makes a lot of sense from a profit-perspective, as it will help increase Overstock’s margins. Here’s Overstock.com CEO Patrick Byrne explaining the move to CoinDesk.com:
Byrne cited cost as a key driver for the Bitcoin move. “You’re getting rid of the interchange fees. We’re paying credit card companies around 2%. For a company whose margin is 1%, picking up 2% on that is quite attractive.”
Ocean Media has provided Overstock.com with media planning and media buying services for 10 years, helping them grow to become one of the leading shopping destinations on the web with more than $1 billion in revenue.