Overstock.com Is Now Accepting Bitcoins
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It's a win win for Overstock.com, really, since they don't need to worry about the volatility and instability of bitcoin and only deal in USD but get to look forward-thinking by accepting bitcoin. Yes, they are accepting more risk because Coinbase.com could disappear overnight (FAR more likely than PayPal or Visa disappearing overnight), but they get some advantage for their risk.
Ah, that makes sense. I was wondering how Overstock could take such a risk bitcoin's volatility.
We all have to place our faith somewhere. Some of us choose to place faith in numbers, some of us choose to place faith in governement. I prefer numbers.
I realize I am throwing myself in the fire by offering up the whitehouse/nuke scenario. However, nobody has proposed a reason as to why the value could fall out from under Bitcoin completely tomorrow which I assume would be an equally unplausible scenario as a nuke hitting the whitehouse.
Somali currency is not worth much, but it was never worth much. What is interesting is that the government basically going away did not lead to worthless currency.
The bottom would fall out of bitcoin if X% of the users decided they didn't want to use bitcoin anymore. If that's the same X% as the dollar, that's far fewer people, and thus correspondingly more likely.
I'm still long on BTC, but please have no illusions. Don't put anything in that you can't afford to lose.
As a math nerd, I have lots of faith in numbers. Believing bitcoin to have value isn't about faith in numbers vs faith in governments. They're both about faith in people and what THEY choose to have faith in. If it's just about the numbers and the math, why do you and others have more "faith" and attach more value to bitcoin vs litecoin, etc? Did the others get the math wrong? Or is it about more than numbers?
Edit/offtopic: I just realized I was debating with the creator of a website that i ABSOLUTELY LOVE! Thank you for making portableapps.com - if it wasn't for that website, I wouldn't be doing what I do now. Long story, but thanks!
A handful of users asked for it, so I implemented it. It's only netted us $4 and I don't really expect it to go anywhere. But I do fire up the Bitcoin and Litecoin beta clients every few days and see where they're at. They're pretty resource hungry while syncing a few days backlog, so I only bring up em when I'm heading away from the PC.
And, for what it's worth, these are not strawman arguments. These are legitimate concerns I have as a businessman and as a consumer. Scan through my comment threads. My issues can be summed up as:
1. Chargebacks. Chargebacks are a biggy, I've had to use them in the last 2 months, and are a big reason why bitcoin (raw, sans a 3rd party allowing you to get your money back) are bad idea for consumers with respect to small businesses. Bitcoin advocates keep claiming that it can be the salvation of small businesses, but, as a consumer, it's these small businesses that are the MOST likely to not fulfill on the product I paid for. Not having any recourse would make me less likely to purchase.
2. Volatility/Risk. Risk of volatility is a big one, and why Overstock.com isn't taking it on themselves (they've pushed that risk to Coinbase). I'd never agree to sell a physical good at a given bitcoin price as it could be 50% of the value within hours on any day. And, yes, it is a risk that Coinbase could go out of business suddenly. The regularity with which bitcoin players get hacked and go under as a percentage of the players in the space has been a bit frightening the last year. True, it is due to poor security on their own systems, but this is a new space and folks haven't had to worry about money being stolen directly from an internet-connected server before. I'd wager a couple players will get it sorted.
3. Perceived Value. I understand the math behind bitcoin, but the value appears to be based on pure speculation and a dash of wishful thinking. Lots of bitcoin players say they have faith in the numbers, but then why does bitcoin have more value than litecoin, dogecoin, or the 100 other cryptocurrencies that have popped up, since those are based on the same or similar numbers. So, it's obviously not just faith in the numbers, it's something else. For some, it seems to be a bit of libertarian gung ho we can do it. For others, it seems to be a bit of technology can solve everything. For others, it seems to be about not having faith in governments. But none of those are really something to base a system of currency around. It needs to be numbers plus something else for me, and it's just not there. At least right now.
The more merchants that follow suit, the better.
Eventually there may be no need for Coinbase if a majority of merchants accepted Bitcoin.
This is yet another attempt to hand-wave off bitcoin without thinking.
Plus, bitcoin gives customers the OPTION to not be able to do charge-backs (99% of the time you know you don't need it); that saves money for the merchants, which can be passed on to consumers.
Sounds like how I can't chargeback dollar bills I use for a money order.
I don't imagine it will ever get to the point where people perform financial transactions with bitcoin using raw addresses. They will probably always use third party services like coinbase, which has a fractional commission, for the security, both in having a remote wallet (ie, bank) and providing chargebacks.
Presumably Overstock.com is a reputable company, and they would honor their guarantees, so I would feel safe sending them Bitcoin.
I wouldn't give my credit card information out to some untrusted third party that I was unsure of their sending me the products.
Just because the credit card industry has created a massive protection racket in North America doesn't mean it must continue to exist.
There are plenty of business' who cannot take credit card purchases because of possible chargebacks.
I had to do this recently with a site that I expected would be reliable. One that I'd enjoyed the free services of for the past 5 years and had no problem placing a $40 order to download some premium content from. They never bothered to deliver it and wouldn't respond to email, voicemail or twitter. So, I initiated a dispute via PayPal and got my money back. If I'd paid with bitcoin, I couldn't get my money back.
I run my own small business, have worked with many other small businesses, and have friends running all kinds of other small businesses. I don't know of ANY legitimate business that "cannot take credit card purchases because of possible chargebacks".
This is just the first step... far from perfect but 99% of people will be happy to use Overstock and their purchases will most likely go well.
Chargeback fraud is also a problem, especially for businesses selling digital goods who cannot present a tracking # or proof of delivery to Paypal.
I have both issued chargebacks for non delivered goods, and had chargebacks raised against me as a merchant. Generally fraudulent chargebacks are easy to defeat if you run your business well. Generally chargebacks are easy to win if you are a sensible consumer. The costs of chargebacks on consumers and vendors alike are vastly outweighed by their benefits.
Going to a commerce system where that layer of trust is removed is going to be more difficult to do.
The OP was posting that chargebacks can't be that important because they had never done one. That's not the right way to look at it.
For that, you pay a small surcharge to the escrow provider, and you are then protected against fraud:
But for all those transactions where you trust the merchant (ie, overstock.com), you don't have to pay for a service that you don't need.
[1] I'm using quotes because the way it works with multi-signature isn't an escrow, but escrow is commonly used when talking about something like this. There's some explanation about how multi-signature transactions works and why its not an escrow in Bitrated's FAQ, under "How does Bitcoin arbitration work?" and "Is this an escrow?" (https://www.bitrated.com/faq.html)
That being said, I do see the rational behind charging for every transaction and think that its going to be a popular choice too. I wrote some of the reasons for that here: http://www.reddit.com/r/BitcoinSerious/comments/1sqibz/bitra... (near the end, in the "Edit:")
(full disclosure: I'm Bitrated's creator)
People are not going to want to pay for more than the cost of an item when there is a dispute, yet it could cost many more times the value of the disputed item to conduct a proper investigation and produce a fair arbitration.
Great project, by the way. Thanks for releasing it open source!
But a random person trying to sell something on their own cannot take paypal because of possible chargebacks. And we're all paying a premium on the prices because businesses have to cover chargebacks in their pricing.
It's a huge problem for example in trading online game items; the current solution is to have reputation threads, where you have your previous trading partners vouch that you did not chargeback your paypal transaction / did provide the item as promised. Taking paypal from an unknown party is a huge risk.
The seller can still go first, if he's prepared to shoulder the risk. Then the buyer can send the money once they receive the item. This is the same as using paypal.
If neither party is willing to go first, they have to either use a trusted middleman (seller gives item to middleman, buyer sends money, seller confirms to middleman, middleman releases item), or multisig transactions (the same, except the middleman can't run away with the money/item)
To the extent its true (and, actually, money in most of its other historical forms doesn't work much like bitcoin, but yes there wasn't a widely used convenient equivalent to modern payment dispute resolution systems before credit cards), like computers and modern dentistry and all kinds of other modern developments, its not one of those things I'd like to give up having to go back to the way things used to work.
Also, what do you say to the populations of the ~40 countries that credit cards don't work in because charge back requests are too common there? Do you tell them to simply never make online purchases?
If you'd like to have an open and decentralized protocol for direct cash transactions in online commerce, then this is indeed fantastic news.
But if what you want from Bitcoin is a standalone currency that's immune to political manipulation, it's not such great news: in this and other similar recent stories, Bitcoin is being used merely as a proxy for dollar transactions. If this type of transaction ended up becoming dominant, Bitcoin would effectively be pegged to the dollar, nullifying its advantages as a non-fiat currency.
For Bitcoin to work as a standalone currency, there has to be a real economy with prices denominated in Bitcoin, not just a dollar-denominated economy with an instant spot exchange built into transactions.
The vast majority of companies only manage a single currency and have the payment processor or the bank make the conversion (and take the risk).
So in what way is it different than if they were accepting EUR?
For a business to accept and truly manage multiple currencies, it needs to have a complex infrastructure, with an accounting system that allows for mutlicurrency management. On top of that, it has to manage the risk of fluctuating exchange rates between currencies.
I guess that unless their own suppliers start accepting bitcoins (or EUR or CNY, etc), it doesn't make sense for most companies to manage that risk.
The important point here, is that if I have bitcoins, I can use them to pay for tangibles from a well-known retailer.
Whether they go with Coinbase, VISA or Mastercard or Paypal to process their payment and get USD instead of BTC, EUR, JPY isn't really a disavowal of bitcoin.
As I understand it I would have to record the value I paid for the bitcoin in 2013, calculate the value it appreciated between when I bought it and the amount I am using to buy the item. And then report this as capital gains on my 2014 tax return?
This sucks, this makes using bitcoin a lot more work than just paying with a credit card. Plus, it might mean having to hire an accountant instead of just using turbo tax?
Do you feel responsible for all negative consequences caused by your tax dollars?
I've got other political enemies as well. If by "negative consequences of my tax dollars", you mean "things our governments spend money on that I disagree with"...no, I don't feel wholly responsible for them, since I fight the proponents of those things, too.
Items purchased online in NYS are subject to sales tax at the time of the transaction, and the burden is on the vendor to collect it.
Therefore, an Overstock order in Bitcoins could be a 'red flag' that causes the IRS to look into your other tax arrangements.
...
" Is there a tax guide that would explain the consequences of me using some of the US Dollars I traded for in 2013 to buy an item on overstock this month?
As I understand it I would have to record the value I paid for the US Dollars in 2013, calculate the value it appreciated between when I bought it and the amount I am using to buy the item. And then report this as capital gains on my 2014 tax return?
This sucks, this makes using US Dollars a lot more work than just paying with a credit card. Plus, it might mean having to hire an accountant instead of just using turbo tax? "
[1]: See section (e) at http://www.law.cornell.edu/uscode/text/26/988
But thanks for reminding me of the word seigniorage, I'd been looking for it actually.
Another possibility is that you live in let's say France and you are trading Euro to USD and back. Now you don't owe any taxes to the US, but you do owe French taxes (whatever the laws are there for capital gains).
In either case you owe someone taxes.
http://www.reddit.com/r/Bitcoin/comments/1uccfz/i_am_a_tax_a...
Without which, evasion becomes trivial for the wealthy.
You can offset taxes paid in foreign jurisdictions through a deduction or credit. You just can't set up a mailing address in a no tax jurisdiction to launder your earnings.
Why would we want such an unfair regressive tax that hurts the poor and middle class?
Wrong measure; the correct question is on what percentage of your income will you pay taxes and by definition being rich means you're spending far less than you make so your taxes go down, massively. That they go up a tiny little bit when you spend some money on non-necessities is meaningless compared to tax free money you're now allowed to save which being rich means most of your money.
This is not necessarily true, and it's certainly not "by definition".
The idea that you have no money in the bank doesn't mean you're not wealthy. Maybe you spend it all on antique Ferraris.
2) What is the point of being rich and not use that wealth? Percentage-wise, a consumption-based tax could take more from the "poor and middle class". In absolute terms, not so much.
3) Incentives to saving - economically debatable for a government, but I'd guess that debt hurts "poor and middle class" more than any tax.
4) Good for the environment. Imagine if China actually had to start paying for things like carbon credits.
Because of the marginal utility of money and the burden of taxation. A 10% tax hurts someone living on the margin far more than someone living with excess and thus the burden is not shared fairly. Taxation of income is more fair than taxation of consumption because the burden is shared more equally. Not the "amount", the "burden".
> Percentage-wise, a consumption-based tax could take more from the "poor and middle class".
Which is what matters.
> In absolute terms, not so much.
Irrelevant, see above.
> Incentives to saving - economically debatable for a government
Not their job.
> Good for the environment. Imagine if China actually had to start paying for things like carbon credits.
Not on topic, this doesn't require consumption taxes.
Treating Bitcoin as an asset that has a basis and carries capital gains is a good way to make buying things with Bitcoin unpalatable. It would be like having to send your credit card statements to the IRS. (As if they don't already have those)
Credit card processors must report proceeds paid to merchant accounts, but with Bitcoin I could see someone like Coinbase eventually having to report both sides.
Why would someone choose to significantly complicate their tax return (or break the law by not declaring the capital gain) when they could simply pay in dollars?
This is a win for bitcoin but its a huge win for Coinbase. Their payment flow works well and I am sure Overstock accepting it will make it an easier sell for other merchants.
For Aaron: Aside from the 53 money transmission agent licenses both are required to hold, but only PayPal actually has.
Having a Bitcoin bank as a middleman is probably the best model for the majority of payments. But Bitcoin's appeal lies in its flexibility. Bitcoin is just a protocol: payments can go through a bank, but they don't have to.
One of the primary advantages of Bitcoin is its decentralization. I realize that Bitcoin != Coinbase and that Bitcoin provides a foundation for many potential services, but if everybody starts using Coinbase/<insert third-party name here> to handle their transactions, what's the difference? Where is the decentralization?
...Not that I think it's a bad thing if a bunch of Bitcoin transactions (especially microtransactions) go off the blockchain, I just wanted to point out that off-blockchain transactions weren't inherent to accepting Bitcoin through Coinbase.
So yes, there is actual bitcoin transaction going on if you don't have coinbase account.
You can't spend Bitcoin without the public knowing, and that goes for double spending as well.
However, you wouldn't want to, for example, run a gambling site that accepts and pays out bets immediately after they show up as 'unconfirmed' because you wouldn't have recourse if they managed to double spend.
Apparently, the process was so simple for you because both you (the buyer) and Overstock (the seller) operate via Coinbase. Clearly, the process would have been less smooth if you had had to use your own wallet.
Now suppose that for this reason, Coinbase (as a placeholder for any service like it) manages to establish itself as the go-to payment provider via BTC.
Then, one day, they decide that since they always have to convert back to USD for the merchant, maybe it would be interesting to allow their customers to just keep a USD balance with them. It reduces their exchange rate risk, and they could pass some of the savings on to you, making this a tempting offer.
Suddenly, BTC is not in the loop any more, though in the end all parties would still be better off (lower fees than in the current credit card system).
Such scenarios are why I'm doubtful that BTC will "take over the world" in the sense that many proponents think. I doubt it will become a predominant means of payment in any industrial nation, and there won't be a Bitcoin-standard (analogous to a gold standard) either.
Let me explicitly clarify: That does not mean that I believe BTC's value will necessarily drop to zero within the next 100 years. It might, but it might not.
If I go to Europe and buy something with my Visa debit card, my account is denominated in USD, but they do some forex and the merchant gets Euro.
If I go to Overstock and buy something with my Coinbase wallte, my account is denominated in BTC, but they do some trading and the merchant gets USD.
With any BTC payment service (including Coinbase), you also get the option to pay by QR code (if using a mobile wallet is easiest) or copy/pasting an address (if you're using a desktop/web client) which is at least as easy as redirecting to Coinbase, signing in (if you aren't already), and then redirecting back to the merchant's site.
Sure, anybody can run a web server and host their own site, but in reality millions of teenagers just use tumblr instead. Same with email.
The commoners will never be "decentralized." You'll always have Powerful Central Thing in the middle.
The world is naturally deflationary. The price of things falls over time with increases in production efficiency, economies of scale and return on investment from capital stock.
It's only with persistent antics of rulers and governments that the current case of persistent inflation is the lived experience of most people. Going back through history, many generations on earth lived in a time when 'things weren't cheaper back then', but then all the other generations have suffered through a time when rulers/governments have granted themselves a monopoly on the monetary system, usually for the purposes of waging war or building grand monuments to themselves.
What is different about bitcoin is that it is essentially un-monopolisable like gold, but much more suited to high frequency, remote transactions. I don't have a dog in the fight but I set fascinated on the sidelines.
No it isn't, you're forgetting that with deflation comes less wages as well. Deflation is the whole economy, not just a few sectors.
> Price deflation means that the value of your currency is rising as compared with goods you want to buy.
Which is meaningless when you're getting paid less as well.
> It's only with persistent antics of rulers and governments
Alright, tinfoil hat guy, we're done. I need no lessons in Bitcoin from you, I hold them and actively trade them, you don't know anything about them I don't already know.
A strange comment. I read a lot on the history of monetary systems and currencies, and I'm yet to come across an instance where widespread inflation (and a severe decline in economic activity and living standards) wasn't caused by a ruler or a government deciding to debase a currency to either fight a war or an attempt to fix mistakes they had already made with public spending. That was true 2,000 years ago, it's been true in most centuries since, and it's certainly true now. It would take a particularly odd view of history to conclude that rulers and governments manipulate currencies to help out their citizens, rather than to appropriate from them.
Note that I am interested in Bitcoin precisely because of this history, because it represents something genuinely new.
Your comment leads me to believe you confuse money with wealth. If inflation is stealing your savings, you're saving wrong. Cash is not for saving, it's for spending. Save assets, not cash.
Why would you get paid less? Deflation means the wage you get paid is worth more. Inflation means the wage you get paid is worth less.
> Why would you get paid less?
Because you are not an island, when an economy suffers from deflation the prices of goods and services have to be dropped and salaries get dropped as well because that's how business works. Your employer isn't going to sell his stuff for less but keep paying you more.
> Deflation means the wage you get paid is worth more. Inflation means the wage you get paid is worth less.
Yes, I know what the words mean. But the effects of inflation and deflation are far more complicated than just the meaning of the words.
Wow. Good job, overstock.com team for getting this done so quickly!
Sure, it's a nice milestone for bitcoin, but the importance seems, well, kinda overstated. I mean, a decade ago a bunch of big ecommerce sites took Flooz too, right?
But hey, I thought the iPod was too expensive and Twitter was useless when they launched, so what do I know.
> Like so many others, he believes bitcoin can free the world from the control of big banks and big government. “It helps us fight the machine,” he says.
I cringed reading this, mostly because normal people don't feel quite comfortable with sentiment like "fighting the machine."
Get outside and talk to some folks. Very few are friends of "the machine."
When you short a stock, you have to borrow the stock first, and then sell it. Obviously at some point you will buy back the stock, hopefully at a lower price so you make a profit, and then return the stock to the original owner.
When you naked short sell, you don't borrow the stock first, you just claim you do. Everybody trades pieces of paper without settling the trade. This might seem convenient but someone can abuse this.
For example, sell a billion shares in a stock which you don't own / have not borrowed, at a fire-sale price, thereby causing the share price of a company to crash because people start panicking once they see huge volumes being traded at a low price.
NYSE is owned by Intercontinentalexchange Group which is publicly listed.
It's really, really awesome.
Paypal is frustrating; I have to make an account, she has to make an account, I have to fund my account, and to top it all off, Paypal can (and does!) refuse to transfer money sometimes. Absurd!
This personal touch is the foundation of all that makes bitcoin worthwhile, in my opinion. The network is established and I can use it to send value to another individual or company, without going through any other intermediate. This is absolutely huge, in the same way that email is an easier way to send a message (instead of making a phone call) is absolutely huge (for email).
People may choose to use services (like Coinbase) to make it easier, but they don't have to.
Think the Internet, vs. all the proprietary networks at the same time (Microsoft, Compuserve...)
There are other issues that make it less convenient than amazon one-click (like funding that wallet). But Bitcoin-Qt really isn't the problem.
But your point stands re: digital goods. One use case I was thinking Bitcoin might be good for is micropayments of content. Replacing paywalls with a one-time fee to view the article or get access to the whole site for an hour/day/week. Cookie the browser with no registration. May be ideal for porn.
The challenge, aside from the lack of users that have Bitcoin, is that people don't like getting nickel and dimed. Sites may not adopt it because they can get more money from fewer users paying more on monthly subscriptions, versus more users paying less for one-time transactions.
Amazon's one-click is brilliantly easy because I've already done the work of adding my name, physical address, and credit card information into my Amazon profile, and I'm already logged-in. My browser (via LastPass/1Password) is saving my password, so the login page is almost no friction at all. With Amazon Payments, I can re-use this to quickly checkout at any number of places. Google and PayPal work similarly.
With Bitcoin everywhere as a 1-click, I still need to have my name and physical address put in, plus I probably need to create an account. Bitcoin doesn't make this process easier.
Maybe Coinbase can take this on and store my info. But isn't this just making Coinbase Checkout and almost identical to the other competing platforms? What makes it compelling to use Bitcoin? Keep in mind I'm no longer getting 1% cash back (which can be worth hundreds a year), and I'm SOL if the vendor screws me over. Plus, I might need to do the stored-value dance as Coinbase needs to ETF some additional funds from my checking account, and is just one more thing to keep track of.
Couldn't have been an easier process and can't wait to get my helicopter.
How big is this site? What is their angle? Are they just like a smaller amazon.com? Overstock sounds a little like lower priced articles from left over stocks or something...
In 2010 (Fiscal Year) they has $1.1 billion in revenue with 1600 employees. They are publicly traded with a market cap just under $750 million.
I have a few thousand usd in coinbase if I needed anything I'd buy something from Overstock in principle!!! I like Bitcoin
They also have TV commercials in the US they used to at least.
The initial reaction was simply confusion and a lot of "what the heck is bitcoin??? is it paypal??", so the rollout really was more of a educational session than anything else.
Then the next time they hear about bitcoin (like say, on the hit TV show Almost Human http://www.youtube.com/watch?v=k8LqlMzEe-I), they'll say, "oh, I've heard of that before, I wonder what it's about". And so on and so on. You're doing a service :)
But I'm definitely pleased to be educating millions of children about bitcoin. Actually it's all I expected when we began accepting it, but that is my way of showing my support. Just doing my part!
So is this US only?
"Returns and refunds on orders purchased with Bitcoins are eligible only for in-store credit, except in the case of cancelled or unfulfilled orders. Bitcoins can only be used for orders shipped to the United States."
which are free and disposable
Bitcoin. Divisible to 8 decimal places.
That said, semantically, coins aren't usually thought of as divisible things in a modern context-- they are pluralized, so bitcoin will probably be pluralized in the same way.
in case of gold it is in "kilograms" - still plural, even though it is divisible.
Also, where is the technology going? Seems to me it's already there. If there are any fatal flaws that pop up, it's a matter of flipping the "accept bitcoin" switch to "off" and calling it a day. I don't see the issue here.