American online retailer Overstock.com has become quite popular with bitcoin as the company’s CEO, Patrick Byrne, announced this year that the website would begin allowing payments in the peer-to-peer decentralized virtual currency. The key question is, though: how many bitcoins does the company keep?
In an Ask Me Anything (AMA) event on Reddit on Saturday, Byrne answered a wide variety of questions from bitcoiners, including what percentage the company keeps in bitcoins from its income in the digital currency.
“Thanks for doing this Mr. Byrne. I was curious if overstock held a small % of the btc from purchases or is it all automatically sold on the market?” asked Reddit user coare. Byrne responded: “10%.”
This means that Overstock.com converts 90 percent of all of its transactions immediately into fiat money. At the present time, according to Byrne, bitcoin purchases on Overstock.com amount to less than 0.1 percent of all total transactions.
The practice for most retailers who have adopted bitcoin is to accept bitcoins from customers and then immediately cash out into dollars, euros or whatever the national currency is. Experts say it suggests that businesses only accept bitcoins for the low costs involved and the publicity that it garners rather than trying to create a new legitimate currency to take down the United States dollar.
Other Answers from Byrne
It was revealed by Byrne that the retailer is working on offering support for international customers who want to pay for their merchandise in bitcoin. It should be implemented by the end of this summer.
Byrne was asked what he would say to other CEOs who are “hesitant” in accepting bitcoins. The head of Overstock.com responded by noting that it would really depend on what their hesitancy is.
“There are business reasons to do it: save on transaction fees, eliminate fraud and charebacks, etc. There may be business reasons not to do it as well, such as the risk of volatility (but this concern can be obviated by trading out of Bitcoin immediately upon receipt, a service that the firms like Bitpay, Coinapult, and Coinbase all offer, I believe),” said Byrne. “But if they are pro-freedom, they should want to get behind it on principle alone. Ghandi said, ‘Be the change you wish to see in the world.’”
Overstock.com has yet to offer its employees a percentage of their salaries in bitcoins, but Byrne did note that “there is always the year-end bonus to consider!”
On the topic of the economy, Byrne doesn’t think the United States is in a recovery but rather the country has just “re-inflated a bubble and called it a recovery.”
“The government lies to us about the stats. Think of it this way: assume Alleged GDP (that is, “Nominal GDP”) is growing at 3%. Inflation is calcualted to be 2%. So Real GDP is growing 3% – 2% = 1%. That is the basic equation. However, what if they are lying about inflation? Imagine it were really 5%? Then the truth, God’s-eye-only view would be 3% – 5% = -2%. That is, if inflation is understated, then growth is overstated. I think this is likely the case. I think we are in a shallow dive that they are trying to make look like a level or small climb. See John Williams’ site Shadow Government Statistics for more,” wrote Byrne.
“The Fed’s policies are all about driving up asset prices (homes, stocks) in order to create a wealth effect. Your 401k goes from being worth $300,000 to $500,000. You think, “Gosh I made $200,000! I’ll go out and spend $50,000 of it.”
In the end, the best way to promote bitcoin to the general public is to do what Ho Chi Minh said: make it a war of the ants against the elephants.
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