Why Overstock Chose Bitcoin, and How it’s Working Out for Them
Not many people even know what Bitcoin is, but that didn’t stop Patrick Byrne from wanting in on the action. As the CEO of Overstock, Byrne envisioned the currency opening up a wider segment of shoppers. So he took steps toward ensuring his website could accept it.
Bitcoin uses peer-to-peer networks, much like a torrent. Bitcoin works by using publicly available information to track when money is spent. So, when you order a pizza or purchase new socks with Bitcoin, that transaction is recorded in a public ledger that shows how much money was spent. The systems connect with servers that host software applications to process the payment. So, when you pay one bitcoin for your pizza, the application on the server receives the payment from you, verifies the coin is real, validates the amount deducted from your wallet, then pushes the currency to the pizza man’s wallet.
This all happens on a digital ledger that anyone can view. Since there are a limited number of bitcoins in circulation at any given moment, this ledger serves as a public account of what is held. The transaction details tend not to include any personally identifiable information, which is part of the draw for privacy advocates. However, the ledger can be used to track a transaction from the individual to the seller, and several world jurisdictions require bitcoin exchanges where people can trade the currency much like gold or silver.
Before the conference room became a domicile, Byrne was carefully following the developments of Bitcoin. As a philosophy graduate from Stanford, and a lover of computation theory, the leader of Overstock was completely sold on the idea of Bitcoin. Despite its legal limbo, he appreciated the decentralized nature of the currency and thought the systems behind it were solid.
He made a zealous announcement to the press that he would accept Bitcoins within 6 months. With the clock ticking, Byrne began fielding offers from various organizations looking to help him implement the systems he needed. Provider after provider promised varying degrees of integration, deals on fees, but the one who beat out all others was a San Francisco based company called Coinbase. It promised Overstock it would fly talent out to their headquarters to personally oversee the integration.
With the deadline inching closer, Byrne was beginning to show concern over the length of time the integration was taking. So he took matters into his own hands, “On January 1st,” Byrne recalled in an interview with Forbes, “Our people said they could do it within ten days if we gave them enough people.” So Byrne handpicked a team of 40, and integration was completed within the ten days.
How it Works
The company’s first Bitcoin purchase was a $2700 patio set, an inconsequential buy that would kick off a half-million dollars worth of sales within six months. In fact, Overstock claims to have received 150 orders that used Bitcoin within the first 90 minutes of accepting the currency. Within 21 hours, Byrne himself reported $127,000 in sales using the cryptocurrency.
Among the top products customers are buying with the currency:
- Bed sheets
- Cell Phone accessories and parts
- Audio/Visual Parts
- Home Appliances
- Computer Parts
Overstock has not gone back on its promise to accept the currency, and more companies online are following suit. You really can order a pizza with digital currency, but you can also buy just about anything else around the Web. Bitcoin isn’t a universally recognized currency yet, but it might find steady circulation as more retailers opt to accept it.
Featured image credit: BitCoin on Metal Padlock/ShutterStock