Patrick Byrne, the CEO of Overstock, and longtime Bitcoin supporter, announced at the “Bitcoin in the Beltway” conference, in Washington DC, that Overstock will start using 3% of its Bitcoin profit to promote Bitcoin, and cryptocurrency in general. Overstock will take that 3% of their Bitcoin profit and donate it to several different advocacy groups, which work to spread awareness, and acceptance, of Bitcoin and other crypto-currencies. This allocation of 3% of Overstock’s Bitcoin profits to spreading crypto-currency awareness comes as an addition to the 10% of Bitcoin profit that the company already holds. Patrick Byrne keeps several million dollars of his personal money in Bitcoin as well. Coindesk reported that this decision from Overstock was very new and that its implementation would not happen until several months from now, and that an official announcement by Overstock as a whole company would not come until sometime in September.
Overstock is one of the largest, if not the largest, online retailers in the world that accepts Bitcoin as a legitimate means of payments. Much like Amazon, Overstock offers a wide range of products for sale, from books to household furniture, all of which can be purchased using Bitcoin. Being a direct competitor to Amazon, Overstock’s decision to accept Bitcoin several months ago brought a lot of pressure from Amazon’s customers to accept Bitcoin as well. However, Amazon so far has rejected any suggestions to accept Bitcoin. Thus, Overstock essentially has the digital currency market cornered so far as online general retail is concerned.
Being the largest online retailer that accepts Bitcoin, Overstock has received a substantial amount of Bitcoin profit, relative to the size of the Bitcoin economy. As of late May, Overstock has received $1.6 million in revenue from sales in Bitcoin. The company expects to make at least $10 million by the end of their first year of Bitcoin acceptance. If Overstock meets the $10 million in Bitcoin profits projection by the end of the year, that will mean that the company will donate $300 thousand to Bitcoin advocacy organizations. Depending on how much the Bitcoin value appreciates by the end of the year, that 3% could end up being worth even more than $300 thousand.
According to Patrick Byrne, over 4,300 customers have used Bitcoin since Overstock began accepting it as payment. Byrne also said that Bitcoin customers tend to make more expensive purchases than the average customer that uses fiat currency. Byrne made an additional announcement at the Bitcoin in the Beltway convention that Overstock plans to expand its Bitcoin profit gaining potential by expanding its Bitcoin acceptance to international customers, meaning customers outside of the United States, in the near future. This expansion of its Bitcoin acceptance to international customers will mean even more Bitcoin profits for Overstock, meaning that 3% that will go to Bitcoin advocacy groups will be an even larger amount of bitcoins.
Overstock’s Bitcoin Advocacy Program and the Impact on the Bitcoin Price
Being such a fresh announcement, any type of analysis on the impact that Overstock’s Bitcoin advocacy program may have on the Bitcoin price is pure speculation. However, such speculation over this announcement produces some very real possibilities. If Overstock’s program makes a difference, and leads to more businesses accepting Bitcoin as a means of payment, then the Bitcoin price could very well go up as a result.
Assume that Overstock does meet its projection of $10 million by the end of 2014. That $300 thousand donated to organizations dedicated solely to spreading Bitcoin awareness will make a substantial difference in the abilities of those organizations to advertise and reach out to potential Bitcoin acceptors. What if, in 2015, Overstock receives $15 million or $20 million in Bitcoin profit? Then even more will be donated to these organizations.
All the while, these organizations will be working diligently to get companies around the world to accept Bitcoin. As more companies accept Bitcoin, awareness and acceptance should continue to increase at an exponential rate, and demand will increase as a result. Thus, the Bitcoin price should go up substantially, depending on how successful these organizations are at utilizing Overstock’s donations to help spread cryptocurrency awareness, and Bitcoin acceptance. Of course, we will not find out how much Bitcoin profit Overstock will make until the end of the year. However, if the long-term upward trend in Bitcoin continues, we can expect to see Overstock’s Bitcoin profits continue to rise, and thus their contribution could become quite substantial.