In an address to the Heritage Foundation think tank in Washington D.C., Overstock.com board member, Jonathan Johnson had some surprising news. Johnson was quoted stating:
“We have somewhere between $68,000 and $120,000 a week in cryptocurrency revenues; people buying sheets and toasters using bitcoin or ethereum or other coins.”
With these figures in mind, Johnson also explains that the centralized nature of credit card networks and their built-in buyer protection, refunds and payment cancellations potentially create legal snags and complex issues for both companies and credit card networks. He explains that Overstock.com currently needs 40 employees running their fraud department, their main job involves the oversight of credit card payments and any potential problems that may happen from both buyers and credit card companies, alike. Johnson gives credit (no pun intended) to Bitcoin and Ether (both accepted at overstock.com), citing that because the use of API with major digital currency exchanges (overstock.com works with Coinbase), makes accepting these currencies both cheaper and significantly easier. (From experience, I can tell you that Bitcoin refunds on Overstock.com go directly to your Coinbase account, and take a mere couple of minutes to complete, from beginning to end.) He goes on to state:
“We pay a processing fee for credit cards, and we employ about 40 people in our fraud department. That’s a 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. It’s like a cash transaction. For us, that is a much cheaper way of doing business.”
Johnson also happens to be the president of Medici Ventures, which handles the digital currency investment field for Overstock. He is convinced that most retail investors find it difficult to participate in capital markets and heavily regulated sectors as most of these opportunities are limited to accredited investors. However, digital currency markets have now given opportunities to allow for more investor participation; thanks to the full transparency and liquidity associated with these markets. While we applaud Overstock for blazing the trail for retail giants to explore these options, we also are confident that it is a matter of time before other large companies also decide to make the move down this path.