Overstock.com was the first major online retailer to embrace bitcoin, accepting payments in the digital currency here in the U.S. beginning in early January. And now, it’s the first to accommodate bitcoin across the globe.
Early this morning, the Salt Lake City-based company started accepting bitcoin payments in all foreign countries. Anyone anywhere can now use the digital currency to purchase anything offered by Overstock, from phone accessories to lawn furniture—though there are certain countries where the company doesn’t ship purchases. “As long as you can get on the internet, you can order and pay in bitcoin,” says Overstock founder and CEO Patrick Byrne. “You can order in North Korea if you want—as long as you’re having things delivered to, say, Singapore.”
Online retailers Newegg and TigerDirect already accept bitcoin in both the U.S. and Canada, and smaller operations use bitcoin for international transactions, but Overstock, a company with $1.3 billion in annual sales, is stretching the reach of the digital currency still farther. Many questions hover over the future of bitcoin, a new type of money overseen by software running on across a vast network of machines. It’s still unclear how the governments of the world will regulate use of the currency. But it continues to evolve.
Today, even bitcoin’s biggest supporters tend to hoard their bitcoin rather than spend them, seeing the digital currency, whose price is volatile, as more of an investment than anything else. But with Overstock expanding globally—and companies such as Dell considering similar arrangements—it’s getting easier to actually pay for stuff with bitcoin. “This seems to be great news,” says Roger Ver, one of bitcoin’s biggest supporters, whose computer-parts site, Memory Dealers, has accepted the digital currency for years.
The Byrne Crusade
Overstock’s move into the world of bitcoin is driven by Byrne. A libertarian with a PhD in philosophy, Byrne, like many others, sees bitcoin as a way to free our money system from the sometimes onerous and expensive control of big banks and big government. He recently vowed to take 4 percent of all Overstock bitcoin sales and donate it to non-profits working to further the cause of the digital currency, and he’s exploring ways the technology behind bitcoin could be used to issue stock in his company—without the help of traditional stock exchanges like the NASDAQ or the NYSE.
“We swim in assumptions about how things should work, and we don’t understand the assumptions,” Byrne says, in his typically highfalutin way. “We don’t understand the functions of governments, our legal and financial institutions. We don’t need them. We can use internet.”
Bitcoin is already an international technology. Part of the attraction has always been that the open source bitcoin network lets anyone transfer money across borders without paying hefty fees to traditional operations like Western Union. But in order to achieve mainstream acceptance, it must spread to a new breed of online service—easy-to-use services run by trusted businesses, as opposed to rather amateur operations run by the likes of the bankrupt bitcoin exchange Mt. Gox. Overstock’s move into bitcoin is a step along this road, and other notable businesses are helping to legitimize the digital currency in other ways.
As Overstock began accepting international payments in bitcoin, Coinbase—the San Francisco-based startup whose technology drives these payments for Byrne and company—expanded its operation into 13 countries in Europe, and this could spark greater bitcoin adoption among merchants based there. Backed by $25 million in funding from big-name Silicon Valley venture capital firm Andressen Horowitz, Coinbase already drives bitcoin payments for eight American retailers that boast over a billion dollars a year in sales. Another notable bitcoin payments processor, BitPay, is offering its own services in Europe, and according to Moe Levin, the company’s director of European business development, about 200 new merchants are adopting the company’s service each week, compared to 200 a month as of April.
At the sane time, Coinbase is now offering Europe a consumer service that lets individuals easily send, receive, and store their bitcoin. This can help drive bitcoin purchases from the other side of the equation, and as Coinbase founder and CEO Brian Armstrong points, that’s just as important to the evolution of the currency.
The Bottom Line
Bitcoin can potentially help consumers more easily and more cheaply store and spend money, but it can also provide a shot in the arm for merchants like Overstock. As Byrne points out, accepting credit card payments—particularly from foreign countries—is rather expensive, due to steep fees from third-party processors. “International credit cards are a real mess,” Byrne says. “If you’re taking cards from a place like Russia, there is a monster surcharge tacked on because so much credit card fraud comes from there.” Overstock still pays Coinbase to handle these transactions, but according to Byrne, these fees are significantly lower.
Bitcoin payments have accounted for about one quarter of one percent of Overstock’s sales since January, or between $12,000 and $15,000 a day. Byrne calls this “a little bit more than I expected,” and he believes that with the company opening up bitcoin payments worldwide, the digital currency could drive a total of $8 million in sales by the end of the year. That’s not exactly a huge portion of the company’s revenues, but Byrne also believes bitcoin can become a way to expand the reach of his site. “We’ve never had a strong international business,” Byrne says, “and this is a good first step towards building one.”
The rub is that government regulations—or just the threat of government regulations—could stunt the growth of bitcoin. Although the open source bitcoin system operates outside the control of governments and banks, some governments are working to strictly regulate the digital currency in their jurisdictions. New York state recently proposed the creation of a bitcoin license for businesses that would require them to report enormous amounts of information if operating in the state, and many believe this will prove too onerous for companies looking to deal in the digital currency. But Byrne is among those who believe regulators will find a way to accommodate the greater bitcoin movement. “Bitcoin has already become too big to fail,” he says. “This is not a genie they can put back into the bottle.”