Bitcoin has been regarded as many different things of late: a new investment bubble in the making, the weapon of choice for online drug dealers or even just another Internet fad. But bitcoin got a serious shot of credibility recently when major online retailer Overstock.com announced that it would start taking payments in bitcoin, a development that will likely shake up the way a lot of people think about this currency.
Reports suggest that Overstock.com is the first major online retailer to take bitcoin as a form of payment for the various items—from clothes to furniture—that the site stocks. Interestingly, the first word about Overstock.com taking bitcoin as payment really only started back in December, when the company's chairman and CEO Patrick Byrne began engaging in projections that the company would take Bitcoin within the next six months, and indeed, that proved to be the case as only a few weeks later, bitcoin became part of Overstock.com's roster of online payments. Byrne was reportedly concerned that he had “tipped (his) hand” following first making the note that Overstock.com was set to add bitcoin to the roster, so rather than let another company beat it to the punch, Overstock.com rolled out the new payment plan a bit early.
Of course, Overstock.com isn't the first place that hard goods could have been purchased with bitcoin—dating site OKCupid accepts bitcoin, as does computer parts outlet Memorydealers and some brick-and-mortar outlets as well. But Overstock is really the first major operation to take bitcoin, and that in turn provides not only new potential uses for the currency, but also new credibility to it.
What's particularly interesting here is that Byrne reportedly even noted that bitcoin is more than just an ideological choice, but rather a full-fledged business move with bottom-line implications. In order for Overstock.com to take bitcoin payments, it pays a fee to Coinbase, who's currently handling bitcoin transactions as a payment processing system, essentially the PayPal (News - Alert) of bitcoin, so to speak. But Coinbase's fee is at last report much less than that of PayPal's, so Overstock.com saves money taking bitcoin transactions over the equivalent on PayPal.
Whether bitcoins are regarded as an investment vehicle or a potential replacement for modern currency issues really doesn't matter so much, but making the currency easier to both obtain and do business in is a great way to give it the kind of credibility previously only afforded to a country's currency issues. While much of the world does business in dollars, there's also an easy portability involved in converting dollars to Euros or pounds sterling or renminbi or yen. Bitcoins are also, however, substantially more volatile than nationally-released equivalents, so there's the possibility that paying for a $1,000 item in bitcoin might result in Overstock.com having just $750 in cash to show for it even hours after the purchase. Some, like University of Chicago professor Eric Posner, suggest however that the risk is at least similar to that faced by normal import and export firms.
While Overstock.com by itself may not be enough to change minds on the position of bitcoin in the normal online shopper's wallet, the idea that other companies will come along to take bitcoin and thus not be left out of a market is a distinct possibility. The bandwagon certainly could work to bitcoin's advantage here, and as more places take the currency, the more it may be viewed as a viable alternative.
Edited by Cassandra Tucker
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