With Bitcoin quadrupling its value this year alone, its volatility is making things hard for retailers who have backed off, despite its move to the mainstream. However, Overstock.com is not fussed as it has a plan for dealing with these changes.
Overstock’s policy with the Bitcoin it receives from their online store is to keep half, and turn the other half into dollars. This effectively gives them a reserve of Bitcoin as an investment, that is currently paying off quite nicely.
Hard to be a currency
Developed to be a currency, it is Bitcoin’s success that is hindering it in this department, as being a store of value is much more enticing for investors.
The desire to spend Bitcoin online is not strong, for the very reason that it may double its worth in less than a month. For retailers that is also a problem.
Fluctuating currency is a real thing, for fiat and retailers, but it is the violent swings that defines Bitcoin that is problematic.
Overstock.com has been one of the biggest believers and champions of Bitcoin in the retails space, ever since it started accepting the digital currency back in 2014.
At the start, Overstock would pocket 10 percent of a sale in Bitcoin and convert the rest to US dollars in order to facilitate the transaction. Overstock’s partnership with Coinbase saw them convert the digital currency in real-time.
However, that might have worked when Bitcoin was trading around $400, but since it has grown by 1000 percent in 2017, Overstock have changed their tune in order to take advantage of such exponential growth.
Overstock CEO Patrick Byrne explains:
“What we do now is 50 percent gets turned into US dollars and 50 percent gets held as Bitcoin. So we’re accumulating that Bitcoin.”
“Just by accumulating half, that just feels like the right number for now,” Byrne said.
In his view, the risk doesn’t lie as much in Bitcoin but in government currency.
Overstock announced in August it would be accepting nearly all major cryptocurrencies by partnering with ShapeShift, another exchange. However, alternate cryptocurrencies which the company will retain on its books will be converted into Bitcoin.