Overstock.com will now sell its jewelry, clothes and furniture in exchange for the controversial online currency bitcoin as well as traditional payment methods, according to reports.
Overstock's chief executive and chairman, Patrick Byrne, told CNBC about the reasons for his decision. First, he wants to cater to largely ignored bitcoin holders, and secondly, he really likes limited government. "I believe limited government is a better business model for our nation than is unlimited government (and limited government has the additional benefit of being consistent with our Constitution)," he wrote.
Overstock is handling bitcoin payments through San Francisco startup Coinbase, and Byrne hopes the bitcoin payments will raise revenue.
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Bitcoin was created in 2008 by a computer programmer known as Satoshi Nakamoto, who may or may not be really one person or a group of people. Nakamoto's identity has been kept a mystery but the invention -- an Internet currency without government regulation -- has been taking hold. Anyone can use bitcoin to pay for items on several websites or buy food from restaurants but large online retailers shied away from the infamous currency, according to Wired.
Perhaps the fact that it's trading around $1,000 per bitcoin is the reason, or enough people have bitcoin to make it lucrative. Either way, Overstock's decision is a unique one and may stay that way. China's e-commerce giant Alibaba has barred bitcoin, and major retailers don't accept the currency. Without government regulation, many merchants worry about the currency's volatility.
Overstock plans to reduce volatility by having Coinbase set the exchange rate and immediately convert bitcoin to dollars. In this way, Overstock's risk is little to nothing, while most of the risk will be on Coinbase. Great business plan for a startup? We're not so sure, but Coinbase has $25 million in VC funds, so it can hang on for a while.