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This is just ridiculous. If Overstock is the biggest retailer in the world accepting Bitcoin, and on their opening day they only manage $130,000 in sales (130 B

by jval 13y ago

This is just ridiculous. If Overstock is the biggest retailer in the world accepting Bitcoin, and on their opening day they only manage $130,000 in sales (130 BTC), what does that tell you about the volume of Bitcoin actually being used in trade and commerce rather than speculation? There are 12.5 Million BTC in circulation. I don't doubt that Bitcoin will become a revolutionary system of payments and money storage down the track, but the price of coins is outrageously inflated at the moment.

ye 13y ago
It tells you bitcoin is at the adoption stage. People are just finding out about it. Plus Overstock isn't exactly a hot retailer. If Amazon does this, it will be HUGE.
- kysol 13y ago
  Even bigger would be for Paypal to add BTC as a payment method . Stores wouldn't have to "accept BTC", Paypal would do the dirty work and send on the amount in fiat to the store. What would be better (from a branding point of view), Paypal to use PPC as "Paypal Coin". The masses wouldn't have a clue that it was actually named something else.
  - bwilliams18 13y ago
    Thats effectively whats going on here though–Coinbase is handling the bitcoin and sending USD to Overstock. So on the retailer side of things the only difference is Coinbase doesn't have the cache that PayPal does(or the baggage). They are backed by some solid VC though–so a worry about them disappearing is probably unwarranted.
    - intelliot 13y ago
      Perhaps you mean "cachet" instead of "cache"
RoboTeddy 13y ago
> I don't doubt that Bitcoin will become a revolutionary system of payments and money storage down the track, but the price of coins is outrageously inflated at the moment. Prices rise immediately in anticipation of positive future events.
- atmosx 13y ago
  Really? If that was the case the bust of DPR and the downfall of SR should drive the price of BTC down, to it's knees - since it was the only market where BTC was treated like a curency. This fact shows that either BTC is not as rational as one might think or that big players (or a small team of players) are trying to keep the price as high as possible (by not selling in bulk). Note that if A. Shamir's paper is correct, and we don't have proof of the opposite, than 98% of BTC is owned by 2% of portfolios. IF that's the case, then it's no wonder it's over-inflated. The sad thing is some people believe, that somehow this is more liberal while might complete driven, by a small team of unknown/anonymous players. NOTE: I'm not stating that this scenario is real, but to me seems not far fetched at all.
  - ok_craig 13y ago
    I don't see why the closing of silk road should have resulted in a drop of the price if "prices rise immediately in anticipation of positive future events." The closing of silk road lead people to anticipate that bitcoin would come to be associted with mostly legitimate purposes instead of nefarious ones in the future. So the price rose. (That was only part of it though; the senate hearings had a greater effect.)
    - ctrl 13y ago
      Because people != common sense. The closing of silk road put it in the news as a currency for bad things.
      - ok_craig 13y ago
        It was already widely known as a currency for bad things. The closing basically eliminated that argument.
CamperBob2 13y ago
Why would I want to spend Bitcoins that are increasing in value? I'll spend them on the way down, not up.
- ok_craig 13y ago
  1. They are not guaranteed to increase in value 2. Spending bitcoin helps the ecosystem, thereby increasing the value of your other coins in the long run. 3. Having things now is often more desirable than slightly more later. (You can't eat bitcoin. If bitcoin is all you have to spend, you will spend it on food, because food now is worth more than more valuable bitcoin later. If you also have dollars, then you'd just spend the dollars. If you have dollars and bitcoin, you can spend the bitcoin to help support the system, and replenish it immediately with your dollars.)
  - nofi3939 13y ago
    I would describe #3 more generally by saying that holding BTC creates an opportunity cost, unique to each person's circumstances. Some more reasons: 4. Lower transaction cost (especially for international transactions) 5. If you want to help out the merchant, he may get a lower transaction cost out of it too (if the alternative is credit card, for instance). Edit: Oh, and let's not forget the spend-and-replenish BTC strategy to keep your BTC holdings fixed.
  - jljljl 13y ago
    >> Spending bitcoin helps the ecosystem, thereby increasing the value of your other coins in the long run. One person spending Bitcoin has a negligible impact on helping the ecosystem, so the incentive for doing this is pretty small. You would likely gain a bigger benefit holding on to your BTC and letting other people help the ecosystem.
- aqme28 13y ago
  Why would I ever save dollars when they're always decreasing in value?
  - 13y ago
notdrunkatall 13y ago
It's the first day.
fragsworth 13y ago
Your implied assumption that Overstock is the only thing influencing the price isn't right.
olalonde 13y ago
It's not as small as you think. This is what Overstock's CEO had to say about it on Twitter: "#Bitcoin's first full day on @overstock.com was a huge success: 840 orders, $130,000 in sales. Almost all new customers. #stunned". https://twitter.com/OverstockCEO/statuses/421754592427139072 https://twitter.com/OverstockCEO/statuses/421754592427139072 130 BTC is 0.001% (130/12.5M) of all Bitcoin spent in one day at Overstock. Does Overstock typically receive 0.001% of all the USD money supply in one day (~30M$)? My math is probably a bit off but my point is that before calling 130 BTC ridiculous, you have to put it in perspective with regards to other currencies.
- judk 13y ago
  Alternatively, Overstock marketing department could spend $130k of BTC on itself (keeping most of the value due to self-dealing) and make the transaction costs back in PR advertising value.
- maxerickson 13y ago
  From a comment below, they do about $3 million in a day. But there has never been a day where excited dollar enthusiasts spent easy money on Overstock to help the dollar look better. Yes, I'm insinuating that at least some of that volume is bitcoin millionaires having a laugh.
  - jljljl 13y ago
    That "Almost all new customers" bit seems to emphasize your point. A lot of these people probably hadn't considered Overstock before they heard they were accepting BTC.
  - AJ007 13y ago
    There are also a lot of holders who want to convert their BTC in to something else without paying taxes. (some of whom will be billed, or jailed, for many years in to the future as tax authorities reverse the transactions paths.)
- toomim 13y ago
  We don't have to guess, we can calculate this precisely. The M1 supply of all USD is $2.1 Trillion [1]. Overstock has $1.1 Billion in revenue per year [2]. So they pull in .05% of US currency per year, or 0.00014% per day. The bitcoin money supply is $12.5 Billion [3]. Overstock pulled in $130,000 in a day, which is .001% of the bitcoin money supply. So they got 7 times the proportion of bitcoin than they get of USD. [1] http://en.wikipedia.org/wiki/Money_supply http://en.wikipedia.org/wiki/Money_supply [2] http://en.wikipedia.org/wiki/Overstock.com http://en.wikipedia.org/wiki/Overstock.com [3] https://blockchain.info/charts/market-cap https://blockchain.info/charts/market-cap
1qaz2wsx3edc 13y ago
On the value of bitcoins: There was another discussion on hacker news, where I commented on the fact that bitcoins should have a higher value due to lost coins: https://news.ycombinator.com/item?id=6859991 https://news.ycombinator.com/item?id=6859991 In that thread, @nl provides the most interesting look at bitcoins from the perspective of bitcoins as a part of GDP: https://news.ycombinator.com/item?id=6860024 https://news.ycombinator.com/item?id=6860024 Anywho, the value is largely speculative, but most indications seem to point to a long term growth.
- XorNot 13y ago
  What happens when the mining difficulty exceeds the cost of electricity to run the ASIC miners?
  - wmf 13y ago
    In theory, people will turn off miners and difficulty will reduce.
    - 1qaz2wsx3edc 13y ago
      Also, it puts the breaks on volume, which in theory should increase demand & become scarce commodity.
notdang 13y ago
It makes sense to buy from Overstock if you are in US, otherwise the shipping prices are ridiculously high. I assume that the majority of orders came from US, but Bitcoin is used all over the world.
greyman 13y ago
Why do you think the price is inflated? The whole market cap is only $11B.
drewblaisdell 13y ago
> the price of coins is outrageously inflated at the moment. I would love to listen to you justify this statement, or rather, explain how any store of value without intrinsic value can be over/undervalued. In attempting to do this, you will find that there are gaps in your understanding of how currencies work.
baddox 13y ago
Or perhaps not that many Bitcoin holders need an area rug right now? Most of my wealth is in USD, and yet in my entire life I've never bought anything from Overstock. I suspect there are millions of USD holders that can say the same. I don't think that says anything bad about the USD.
aaronpeck 13y ago
Yeah, a currency that has no transactional cost from a third party thus offering a 2-4% discount to either buyer, seller or split by both, that maintains one value globally, and isn't controlled buy a particular nations government, probably is of no interest to the retailers of the world and likely just inflated bits that will never become an actual system of payments down the road. If you believe that, I have a plethora of REAL investments to sale you.
- uniclaude 13y ago
  > I don't doubt that Bitcoin will become a revolutionary system of payments and money storage down the track The tone I get from your comment makes me wonder if you really understood what GP meant. You could be both right, as in BTC being very useful to a lot of people, but still overinflated.
  - aaronpeck 13y ago
    I hear you, but the author of the comment heavily edited his post. That's not what it initially said. Either way, we all have our views. With something like BTC the future is unknown and thus just fun to discuss. It's great to engage with you and everyone else here. Theres's obviously a pool of great minds in the HN community.
mrb 13y ago
You fail to realize that Overstock represents a tiny fraction of all the commerce done in bitcoins. Bitpay alone is seeing an exponential growth of Bitcoin transactions: they appear to be doing about $20-30 million/month at their current rate: http://blog.bitpay.com/2013/12/bitpay-drives-explosive-growth-in.html http://blog.bitpay.com/2013/12/bitpay-drives-explosive-growt... and http://blog.bitpay.com/2013/12/bitpay-exceeds-100000000-in-bitcoin.html http://blog.bitpay.com/2013/12/bitpay-exceeds-100000000-in-b...
- throwaway_yy2Di 13y ago
  That's still astronomically low compared to non-bullshit money. The US economy goes through its M1 money supply 7 times per quarter, or over twice per month [0]. If Bitcoin had that ratio, it would now be running $30 billion of meaningful transactions per month, not $30 million. [0] http://research.stlouisfed.org/fred2/series/M1V http://research.stlouisfed.org/fred2/series/M1V [Ctrl-F keyword: "velocity of money"]
  - saalweachter 13y ago
    Bitcoin actually isn't doing too bad, according to blockchain.info. They estimated a transaction volume of 82,659.87740705 BTC for the previous 24 hour period. Multiply that by 365 and divide by 12.5 million, and you get 2.4x. 2.4x is less than half 7x, but it really ain't bad. Of course, if you take the same stats, and divide the money which went to miners -- 4,811.59892633 BTC -- by the transaction volume, you get an effective transaction fee of 5.8% for that same period... EDIT: Whoops, mixed up quarters and years. BTC goes through its money supply 0.6x per quarter. I'm not sure if that's good -- "only" an order a magnitude off from USD -- or bad -- a "full" order of magnitude off from USD.
    - throwaway_yy2Di 13y ago
      Yes, but what fraction of that is "economic" stuff that goes into a GDP? With cryptocurrency you have clearly non-economic transactions that get registered in the global blockchain, like someone reorganizing their wallet internally, or a group shuffling bitcoins in circles as a money laundering method. Bitcoin transaction volume could be orders of magnitude higher than the Bitcoin "GDP'; it's not a measurement of it. "They estimated a transaction volume of 82,659.87740705 BTC for the previous 24 hour period. Multiply that by 365 and divide by 12.5 million, and you get 2.4x. 2.4x is less than half 7x, but it really ain't bad." I think that's off by a factor of four: the Fed uses financial quarters (3 months) as the time interval.

by jval 13y ago

ye 13y ago

It tells you bitcoin is at the adoption stage. People are just finding out about it. Plus Overstock isn't exactly a hot retailer. If Amazon does this, it will be HUGE.

kysol 13y ago
Even bigger would be for Paypal to add BTC as a payment method . Stores wouldn't have to "accept BTC", Paypal would do the dirty work and send on the amount in fiat to the store. What would be better (from a branding point of view), Paypal to use PPC as "Paypal Coin". The masses wouldn't have a clue that it was actually named something else.
- bwilliams18 13y ago
  Thats effectively whats going on here though–Coinbase is handling the bitcoin and sending USD to Overstock. So on the retailer side of things the only difference is Coinbase doesn't have the cache that PayPal does(or the baggage). They are backed by some solid VC though–so a worry about them disappearing is probably unwarranted.
  - intelliot 13y ago
    Perhaps you mean "cachet" instead of "cache"

RoboTeddy 13y ago

> I don't doubt that Bitcoin will become a revolutionary system of payments and money storage down the track, but the price of coins is outrageously inflated at the moment. Prices rise immediately in anticipation of positive future events.

atmosx 13y ago
Really? If that was the case the bust of DPR and the downfall of SR should drive the price of BTC down, to it's knees - since it was the only market where BTC was treated like a curency. This fact shows that either BTC is not as rational as one might think or that big players (or a small team of players) are trying to keep the price as high as possible (by not selling in bulk). Note that if A. Shamir's paper is correct, and we don't have proof of the opposite, than 98% of BTC is owned by 2% of portfolios. IF that's the case, then it's no wonder it's over-inflated. The sad thing is some people believe, that somehow this is more liberal while might complete driven, by a small team of unknown/anonymous players. NOTE: I'm not stating that this scenario is real, but to me seems not far fetched at all.
- ok_craig 13y ago
  I don't see why the closing of silk road should have resulted in a drop of the price if "prices rise immediately in anticipation of positive future events." The closing of silk road lead people to anticipate that bitcoin would come to be associted with mostly legitimate purposes instead of nefarious ones in the future. So the price rose. (That was only part of it though; the senate hearings had a greater effect.)
  - ctrl 13y ago
    Because people != common sense. The closing of silk road put it in the news as a currency for bad things.
    - ok_craig 13y ago
      It was already widely known as a currency for bad things. The closing basically eliminated that argument.

CamperBob2 13y ago

Why would I want to spend Bitcoins that are increasing in value? I'll spend them on the way down, not up.

ok_craig 13y ago
1. They are not guaranteed to increase in value 2. Spending bitcoin helps the ecosystem, thereby increasing the value of your other coins in the long run. 3. Having things now is often more desirable than slightly more later. (You can't eat bitcoin. If bitcoin is all you have to spend, you will spend it on food, because food now is worth more than more valuable bitcoin later. If you also have dollars, then you'd just spend the dollars. If you have dollars and bitcoin, you can spend the bitcoin to help support the system, and replenish it immediately with your dollars.)
- nofi3939 13y ago
  I would describe #3 more generally by saying that holding BTC creates an opportunity cost, unique to each person's circumstances. Some more reasons: 4. Lower transaction cost (especially for international transactions) 5. If you want to help out the merchant, he may get a lower transaction cost out of it too (if the alternative is credit card, for instance). Edit: Oh, and let's not forget the spend-and-replenish BTC strategy to keep your BTC holdings fixed.
- jljljl 13y ago
  >> Spending bitcoin helps the ecosystem, thereby increasing the value of your other coins in the long run. One person spending Bitcoin has a negligible impact on helping the ecosystem, so the incentive for doing this is pretty small. You would likely gain a bigger benefit holding on to your BTC and letting other people help the ecosystem.
aqme28 13y ago
Why would I ever save dollars when they're always decreasing in value?
- 13y ago

notdrunkatall 13y ago

It's the first day.

fragsworth 13y ago

Your implied assumption that Overstock is the only thing influencing the price isn't right.

olalonde 13y ago

It's not as small as you think. This is what Overstock's CEO had to say about it on Twitter: "#Bitcoin's first full day on @overstock.com was a huge success: 840 orders, $130,000 in sales. Almost all new customers. #stunned". https://twitter.com/OverstockCEO/statuses/421754592427139072 https://twitter.com/OverstockCEO/statuses/421754592427139072 130 BTC is 0.001% (130/12.5M) of all Bitcoin spent in one day at Overstock. Does Overstock typically receive 0.001% of all the USD money supply in one day (~30M$)? My math is probably a bit off but my point is that before calling 130 BTC ridiculous, you have to put it in perspective with regards to other currencies.

judk 13y ago
Alternatively, Overstock marketing department could spend $130k of BTC on itself (keeping most of the value due to self-dealing) and make the transaction costs back in PR advertising value.
maxerickson 13y ago
From a comment below, they do about $3 million in a day. But there has never been a day where excited dollar enthusiasts spent easy money on Overstock to help the dollar look better. Yes, I'm insinuating that at least some of that volume is bitcoin millionaires having a laugh.
- jljljl 13y ago
  That "Almost all new customers" bit seems to emphasize your point. A lot of these people probably hadn't considered Overstock before they heard they were accepting BTC.
- AJ007 13y ago
  There are also a lot of holders who want to convert their BTC in to something else without paying taxes. (some of whom will be billed, or jailed, for many years in to the future as tax authorities reverse the transactions paths.)
toomim 13y ago
We don't have to guess, we can calculate this precisely. The M1 supply of all USD is $2.1 Trillion [1]. Overstock has $1.1 Billion in revenue per year [2]. So they pull in .05% of US currency per year, or 0.00014% per day. The bitcoin money supply is $12.5 Billion [3]. Overstock pulled in $130,000 in a day, which is .001% of the bitcoin money supply. So they got 7 times the proportion of bitcoin than they get of USD. [1] http://en.wikipedia.org/wiki/Money_supply http://en.wikipedia.org/wiki/Money_supply [2] http://en.wikipedia.org/wiki/Overstock.com http://en.wikipedia.org/wiki/Overstock.com [3] https://blockchain.info/charts/market-cap https://blockchain.info/charts/market-cap

1qaz2wsx3edc 13y ago

On the value of bitcoins: There was another discussion on hacker news, where I commented on the fact that bitcoins should have a higher value due to lost coins: https://news.ycombinator.com/item?id=6859991 https://news.ycombinator.com/item?id=6859991 In that thread, @nl provides the most interesting look at bitcoins from the perspective of bitcoins as a part of GDP: https://news.ycombinator.com/item?id=6860024 https://news.ycombinator.com/item?id=6860024 Anywho, the value is largely speculative, but most indications seem to point to a long term growth.

XorNot 13y ago
What happens when the mining difficulty exceeds the cost of electricity to run the ASIC miners?
- wmf 13y ago
  In theory, people will turn off miners and difficulty will reduce.
  - 1qaz2wsx3edc 13y ago
    Also, it puts the breaks on volume, which in theory should increase demand & become scarce commodity.

notdang 13y ago

It makes sense to buy from Overstock if you are in US, otherwise the shipping prices are ridiculously high. I assume that the majority of orders came from US, but Bitcoin is used all over the world.

greyman 13y ago

Why do you think the price is inflated? The whole market cap is only $11B.

drewblaisdell 13y ago

> the price of coins is outrageously inflated at the moment. I would love to listen to you justify this statement, or rather, explain how any store of value without intrinsic value can be over/undervalued. In attempting to do this, you will find that there are gaps in your understanding of how currencies work.

baddox 13y ago

Or perhaps not that many Bitcoin holders need an area rug right now? Most of my wealth is in USD, and yet in my entire life I've never bought anything from Overstock. I suspect there are millions of USD holders that can say the same. I don't think that says anything bad about the USD.

aaronpeck 13y ago

Yeah, a currency that has no transactional cost from a third party thus offering a 2-4% discount to either buyer, seller or split by both, that maintains one value globally, and isn't controlled buy a particular nations government, probably is of no interest to the retailers of the world and likely just inflated bits that will never become an actual system of payments down the road. If you believe that, I have a plethora of REAL investments to sale you.

uniclaude 13y ago
> I don't doubt that Bitcoin will become a revolutionary system of payments and money storage down the track The tone I get from your comment makes me wonder if you really understood what GP meant. You could be both right, as in BTC being very useful to a lot of people, but still overinflated.
- aaronpeck 13y ago
  I hear you, but the author of the comment heavily edited his post. That's not what it initially said. Either way, we all have our views. With something like BTC the future is unknown and thus just fun to discuss. It's great to engage with you and everyone else here. Theres's obviously a pool of great minds in the HN community.

mrb 13y ago

You fail to realize that Overstock represents a tiny fraction of all the commerce done in bitcoins. Bitpay alone is seeing an exponential growth of Bitcoin transactions: they appear to be doing about $20-30 million/month at their current rate: http://blog.bitpay.com/2013/12/bitpay-drives-explosive-growth-in.html http://blog.bitpay.com/2013/12/bitpay-drives-explosive-growt... and http://blog.bitpay.com/2013/12/bitpay-exceeds-100000000-in-bitcoin.html http://blog.bitpay.com/2013/12/bitpay-exceeds-100000000-in-b...

throwaway_yy2Di 13y ago
That's still astronomically low compared to non-bullshit money. The US economy goes through its M1 money supply 7 times per quarter, or over twice per month [0]. If Bitcoin had that ratio, it would now be running $30 billion of meaningful transactions per month, not $30 million. [0] http://research.stlouisfed.org/fred2/series/M1V http://research.stlouisfed.org/fred2/series/M1V [Ctrl-F keyword: "velocity of money"]
- saalweachter 13y ago
  Bitcoin actually isn't doing too bad, according to blockchain.info. They estimated a transaction volume of 82,659.87740705 BTC for the previous 24 hour period. Multiply that by 365 and divide by 12.5 million, and you get 2.4x. 2.4x is less than half 7x, but it really ain't bad. Of course, if you take the same stats, and divide the money which went to miners -- 4,811.59892633 BTC -- by the transaction volume, you get an effective transaction fee of 5.8% for that same period... EDIT: Whoops, mixed up quarters and years. BTC goes through its money supply 0.6x per quarter. I'm not sure if that's good -- "only" an order a magnitude off from USD -- or bad -- a "full" order of magnitude off from USD.
  - throwaway_yy2Di 13y ago
    Yes, but what fraction of that is "economic" stuff that goes into a GDP? With cryptocurrency you have clearly non-economic transactions that get registered in the global blockchain, like someone reorganizing their wallet internally, or a group shuffling bitcoins in circles as a money laundering method. Bitcoin transaction volume could be orders of magnitude higher than the Bitcoin "GDP'; it's not a measurement of it. "They estimated a transaction volume of 82,659.87740705 BTC for the previous 24 hour period. Multiply that by 365 and divide by 12.5 million, and you get 2.4x. 2.4x is less than half 7x, but it really ain't bad." I think that's off by a factor of four: the Fed uses financial quarters (3 months) as the time interval.