Overstock.com has plans to become the first major U.S. retailer to accept bitcoin. In an interview with newsBTC, Overstock.com CEO and Chairman Patrick Byrne said that the company will start accepting the peer-to-peer digital currency in the second half of 2014.
Overstock.com is going to partner with bitcoin payment processors such as Coinbase or BitPay to handle the currency. Byrne acknowledged that bitcoin prices are volatile, which is why the online retailer will immediately liquidate the currency into dollars or find a market to hedge the risk.
What makes bitcoin unique is that it is not backed by any government or central bank. 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.
Overstock.com is not the first company to accept bitcoin for payments. Richard Branson, the billionaire founder of Virgin Group, announced in November that Virgin Galactic would let space tourist customers pay for flights with bitcoin. Dating website OKCupid.com accepts bitcoins for their premium subscription called “A-List.” Even a car dealership in California sold a Tesla Model S electric vehicle in exchange for bitcoins this month.
At the beginning of 2013, one bitcoin was valued at $13. The price of the digital currency has been surging throughout the year and even hit over $1,200 per bitcoin this month. However, that price was quickly dropped to half.
Why did bitcoin lose have their value this month? Right before the price drop, the Chinese government denied banks from accepting bitcoins as currency. Baidu.com, the Chinese equivalent of Google, said that they would no longer accept bitcoins for payment. The Chinese government also banned third-party payment companies from transacting with bitcoin exchanges. The Chinese economy was largely responsible for driving up the price of bitcoins, which is why there was a major drop following that news.
Overstock.com generated over $1 billion in revenues this year and made the decision to accept bitcoin a few weeks ago during a company review. What are your thoughts about companies accepting bitcoin?Let us know in the comment section below.