As an online retailer, Overstock has been losing money in 2018, but as a cryptocurrency business and investor it has been gaining it. In fact, the 20-year old company has been a pioneer in the world of cryptocurrency: It was the first major retailer to accept Bitcoin. There is a reason for such betting on blockchain and cryptocurrencies.
“We pay a processing fee for credit cards, and we employ about 40 people in our fraud department. That’s the cost of doing business with credit cards. When we take cryptocurrency, we have a very small transaction fee with Coinbase, much smaller than our credit card processing fee, and we have no fraud prevention department,” said Jonathan Johnson, a member of Overstock’s board of directors.
In an address to the Heritage Foundation, Johnson revealed that Overstock has between $68,000 to $120,000 in cryptocurrency revenues weekly and emphasized that bitcoin payments comprise a steadily growing source of revenue for the company. But due to the volatility of cryptocurrency, the company’s stock have been riding the bitcoin’s wave up and down for the past year. It has soared 130% over the past 12 months, but plunged nearly 30% in 2018.
Five years after launching its bitcoin support in 2013, today the company generates from $68,000 to $120,000 in cryptocurrency revenues weekly. That is roughly “0.2 percent of our revenue,” Mr. Byrne said in a NYT interview.
Since 2014, the company, through its subsidiary, Medici Ventures, is investing heavily in the blockchain technology. Between 2014 and 2017, Medici has invested an undisclosed amount in 13 blockchain companies, among them Tzero, Bitt, and Voatz.
Right now, Overstock is selling off its retail business and concentrating on the blockchain technology. Mr. Byrne thinks there’s a bigger future in using the blockchain for trading in capital markets, voting, protecting property rights and more. Now, “it’s a logical time to sell our e-commerce business — to cash in my chips and do this crypto stuff on my own.”
Mr. Byrne recently stated that the company is looking for a buyer of the retail business, and that “discussions with potential buyers have progressed.” The company has already sold 10% of his retail stocks worth about $20 mln in September this year.
On image: Patrick Byrne. Credit: George Frey, Bloomberg
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