Overstock CEO On Bitcoins, Gold, Austrian Economics, And... Zombies

Tyler Durden's picture




 

Patrick Byrne, the embattled CEO of Overstock.com, had plenty to say in a recent Fortune interview. The outspoken CEO, whose company recently became the first US retailer to accept Bitcoin (beginning later next year) aligns his beliefs with Ron Paul, holds enough gold that if "zombies walked the Earth," he'd be taken care of. Byrne believes "the long-run value of all fiat money is zero," adding that,"we're not going to get rid of the Federal Reserve any time soon, so bitcoin is a step in the right direction."

Via Fortune,

Fortune: Do you own any bitcoins?

Patrick Byrne: No. I own gold.

Really, how much gold?

A lot. Let's just say enough that if zombies walked the Earth I will have enough gold that me and mine are taken care of.

I hope you're kidding about the zombies, but let's get back to bitcoin. Do you plan to buy any for yourself?

I'm not investing in bitcoin. I'm just saying we'll accept it. I don't have any opinions on its value, and I don't even know how one would go about finding that out beyond just looking it up everyday and what it's trading at. Overstock accepting bitcoin shouldn't be read as an endorsement or a view that the value of it is going to go up. We're not going to be holding any bitcoin -- it's just a medium of exchange.

But you're obviously a bitcoin fan. Why?

There are business and philosophical reasons. First, the business reason: I think there are a legitimate number of consumers who want to be able to shop with bitcoin. They like the anonymity of the currency. So far, the market has only served them with shady websites, like Silk Road. Also, it saves us about 2% from interchange fees. It's no secret that our net margin is about 2% now. And so the savings would be a very substantial improvement to our bottom line.

As far as the philosophical reason: I am from the Austrian School of Economics, which means we're the guys who hate fiat money. The long-run value of all fiat money is zero. If you believe in limited government, you want to have a monetary system that is based on something where no government mandarin can just create money with a stroke of a pen. Gold is a solution, we're not going to bring back the gold standard any time soon. We're not going to get rid of the Federal Reserve any time soon, so bitcoin is a step in the right direction.

Bitcoin has gotten a lot of attention. Would you say that accepting it at Overstock is just a marketing tool for your company?

Adoption of bitcoin is low, but I think once we and some other major guys start accepting it that could change very quickly.

In December alone, bitcoin fluctuated between $480 and $1,280. This is super volatile. Does that freak you out at all?

No. We're not going to be holding any bitcoin. It's just a medium of exchange. We're just going to be taking bitcoins as payment and converting them into U.S. dollars, at least initially. If we just do the conversion every day, the most risk would be the volatility it experiences in one day, which is still pretty high I know.

There aren't any derivative instruments out there yet to hedge that risk, but we anticipate they will be created in one way or another.

Any other risks you see?

I really don't see any. Plus a certain type of person is using bitcoin -- not just the guys shopping on Silk Road.  An increasing population distrusts the government's ability to manage the economy. This is a way of signaling to these people that we stand with them and we share their same doubts.

Washington has been holding Congressional hearings on Bitcoin? Have you talked to anyone about the currency?

I avoid discussions with anyone in Washington, but we have lawyers that talk to them, and they say that in Washington there are questions about bitcoin and how it's going to be regulated, if at all. The concern is primarily the Silk Road kind of crowd and money launderers. We certainly don't want to encourage or condone that kind of behavior and we'll do everything the law requires us to do.

Can the U.S. stop bitcoin from being adopted and used, especially by retailers and consumers?

I don't' see how they can. If anything, I think if usage gets widespread enough, it could have a beautiful effect for the United States. If our current system starts melting down or we start experiencing hyperinflation and systemic risks and all kinds of things we experienced in 2008, then it will provide a very convenient way for people to move to a safe store of value as they lose faith in the current government-run institutions.

A few bitcoin exchange start-ups have emerged. Who are you planning to use?

We're down to negotiating with three companies.

Which ones?

We haven't disclosed that yet.

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Sat, 12/28/2013 - 20:52 | 4282512 knukles
Sat, 12/28/2013 - 20:55 | 4282514 Dear Infinity
Sat, 12/28/2013 - 21:23 | 4282547 disabledvet
disabledvet's picture

there is no need for an "FOMC" or a "Wall Street" if the ten year "implodes." PERIOD. The latter relies on economic growth to lend into (non existent as they sit on cash and do nothing with it) and the former simply debates the merits of whether "free money" can fund a lifeguard in Evanston (for the summer of course.) If that can't be done then they no longer matter either. Any CEO, any politician relying on these two entities as "having their back" if that ten year blows out...will no longer have that as their backstop. And there is no fallback position since when you're dealing with the world largest energy producer in all of human history (the USA) "they have no need for either the FOMC or Wall Street." i have no crystal ball on the ten year...just a bet that have maintained even too today (with hopes that it is right)...all i can say is "i hope Bill Gross and El Arian are right." they're the ones with the "big bucks" as they say. "and the plan out there is to create solar cities and launch a meteor mining business." so far so good.

Sat, 12/28/2013 - 21:49 | 4282572 Stackers
Stackers's picture

From a guy that has seen a shorted share count of 107% of share float in his company's stock he is remarkably civil about "the system"

http://investors.overstock.com/phoenix.zhtml?c=131091&p=irol-newsArticle...

Sat, 12/28/2013 - 22:18 | 4282590 Pladizow
Pladizow's picture

And now we know why Goldman shorted in excess of 100% of the float!

Sat, 12/28/2013 - 22:44 | 4282614 Muppet Pimp
Muppet Pimp's picture

maybe another day

Sat, 12/28/2013 - 22:52 | 4282630 DoChenRollingBearing
DoChenRollingBearing's picture

Took my comment down too...

Sun, 12/29/2013 - 01:38 | 4282829 putaipan
putaipan's picture

2-3 years hangin' around here and the first words of mr. byrne's i've seen. thank you tylers.

Sat, 12/28/2013 - 21:00 | 4282522 A Lunatic
A Lunatic's picture

He'll be taken care of alright..........

Sat, 12/28/2013 - 21:03 | 4282523 ParkAveFlasher
ParkAveFlasher's picture

Overstock came through the dot.com bubble selling replacements for discontinued bridal sets.  They know scarcity.

Sat, 12/28/2013 - 21:06 | 4282528 RafterManFMJ
RafterManFMJ's picture

Sigh.

Well if I want a deal on 8000 thread count duvets I'd better buy some of them bitcoins.

Sat, 12/28/2013 - 21:08 | 4282531 seek
seek's picture

Didn't have a clue who he was until today, but I can tell I like him already.

Sat, 12/28/2013 - 21:17 | 4282540 Crawdaddy
Crawdaddy's picture

Patrick Byrne is a stand up guy. If he is new to you then please take a look at this:

http://www.deepcapture.com/

especially

http://www.deepcapturethemovie.com/

He has been calling the bullshitters out by name for years.

Sun, 12/29/2013 - 01:08 | 4282790 Scarlett
Scarlett's picture

Amazing.  Thank you.

Sun, 12/29/2013 - 10:45 | 4283045 TeMpTeK
TeMpTeK's picture

There isnt too many people id break bread with...  Patrick Byrne is one of them.

Sat, 12/28/2013 - 21:15 | 4282541 long-shorty
long-shorty's picture

I have to admit, this guy is smarter than I'd previously thought. He apparently knows that gold is a better bet than the stock of any company he is the CEO of.

Sat, 12/28/2013 - 21:27 | 4282551 disabledvet
disabledvet's picture

can't overstock gold apparently. http://en.wikipedia.org/wiki/USS_Princeton_(1843)

Mon, 12/30/2013 - 20:33 | 4286963 MeelionDollerBogus
MeelionDollerBogus's picture

and has the integrity to say so.

Sat, 12/28/2013 - 21:17 | 4282543 Seasmoke
Seasmoke's picture

I have never found anything I ever wanted to buy at Overstock. Since 2002 !!!

Sat, 12/28/2013 - 21:32 | 4282555 buzzsaw99
buzzsaw99's picture

friggin maggot

Sat, 12/28/2013 - 21:36 | 4282558 freedogger
freedogger's picture

I love this guy's attitude.

Sat, 12/28/2013 - 21:34 | 4282559 Dr Benway
Dr Benway's picture

"our net margin is about 2% now"

"the most risk would be the volatility it experiences in one day"

 

I see a problem here lol..

Sat, 12/28/2013 - 21:46 | 4282568 nmewn
nmewn's picture

Ya think?...ROTFL!!!

Sat, 12/28/2013 - 22:12 | 4282587 malikai
malikai's picture

Not really. The volume they'll be doing in BTC will be very small initially.

Also, they'll probably be flipping the coin for cash at time of sale ultimately.

Sat, 12/28/2013 - 22:24 | 4282605 nmewn
nmewn's picture

Malikai, first off, you and I will always be friends but we both know this is his attempt to butress his position with a currently popular...lets call it...venue.

No matter whether I agree with his "politics" or ideology, it is as you say, the amounts will be small and smacks of a certain desperation for "flow" to his corporation.

Sat, 12/28/2013 - 22:34 | 4282617 malikai
malikai's picture

I'm not sure..

He's got quite a bit of history being 'against the machine'.

I could be wrong, but I get the feeling that the whole thing is a political statement.

Sat, 12/28/2013 - 22:54 | 4282631 nmewn
nmewn's picture

I think the interview (the way I read it) speaks for itself.

He's accepting BitCoin as payment for his merchandise, while at the same time not investing in it. He's looking at BitCoin as a stawk, not necessarily money. Stawks can be treated as currency but not money, they always get converted to money.

However warped the concept of money has become, that is the reality and it wasn't the "hard money" people who did it.

/////////

Addendum, the above is not an admonition to not rage against the machine that has brought us to this point.

Sat, 12/28/2013 - 23:12 | 4282663 dark pools of soros
dark pools of soros's picture

oh you are so proud of yourself..  eveyone step back and clap.

 

But what you fail to disclose in your fantasy is the fact in that other recent article on ZH that gold is completely manipulated with the paper market to aid in transferring it out of the west to the east.

 

so instead of realizing gains from bitcoin now vs the dollar, you hope for the day America's dollar is dead so gold can be valued highly in a sea of despair.  Well..  EVERYTHING will be highly valued vs the dollar at that time so you are not going to GAIN anything

 

understand now?

 

 

 

 

 

 

Sat, 12/28/2013 - 23:14 | 4282672 nmewn
nmewn's picture

I don't know if its the triple spacing in your comment or the server farms in China mining BitCoin into fiat that makes me think you've become a raving lunatic.

Sun, 12/29/2013 - 07:14 | 4282950 malikai
malikai's picture

My (potentially biased) gut feeling is that his "reasons" for doing it were what it took for him to get the board to go along with him.

We have to remember that he most likely couldn't just do this without the board OK-ing the whole thing. Meaning that he had to provide a convincing enough argument. Therefore, he probably had to convince them that they would avoid FX risk (hence not holding a position). Meanwhile, it's an easy sale to any board that chargeback risk is eliminated with BTC. And the final winner with the board is the potential for 2% in savings.

All the while, he gets to give the finger to the FED all his buddies at the 'fractional reserve DTCC' and their conspirators.

Sun, 12/29/2013 - 10:46 | 4283048 odatruf
odatruf's picture

I doubt his board had a say in this. Corporate boards are not that hands on. It's no different than if they decided to take Amex or Discover, if they don't already. Purely an operational call even if it attracts attention from a small but engaged community.

Sun, 12/29/2013 - 10:27 | 4283034 SeattleBruce
SeattleBruce's picture

Nmewn - about raging against the machine - doesn't everyone have to start somewhere? And won't it be easier to invest in bitcoin down the road if he's got the facility in place to accept them?

Sun, 12/29/2013 - 11:49 | 4283110 nmewn
nmewn's picture

It is my opinion that in the BitCoin community there are two types of people...the purist & the speculator. I think anyone from the outside looking in can discern the motivations of both types.

The speculators are people like the Winklevoss twins, "Satoshi" himself, Jed McCaleb etc. (who got in on the ground floor) and now Goldmanites & smaller specs in all their forms. The purists need to realize the speculators motivations are not the same as the purist.

Just as long as the purists have their eyes wide open and think it though, its their choice.

But as for me (trying to think as a purist) nothing good can come from "a currency" born in the same place as the Feds monopoly money. It comes from the ether (admittedly without debt) but there are still those wealthy people in line ahead of the common man with this "new money" the purist supports. And no matter how secure the claim of it is, it is encumbered by its very nature being dependent on the net & devices & power making its true value and utility dubious.

I could be completely wrong but it smells like a ponzi to me.

Mon, 12/30/2013 - 16:56 | 4286397 aminorex
aminorex's picture

I would divide "speculator" into "speculator" and "investor" classes, and divide "purist" into anti-fiat and anti-fascist factions.  Speculators deal in price.  Investors deal in value.  Anti-fiat activists are generally Austrians.  Anti-fascists are motivated more by civil forfeiture and the NSA - issues of privacy and liberty, rather than political economics.

I, for example, would be an anti-fascist investor with Austrian leanings, willing to speculate when risk/reward is appealling, but motivated to deal in BTC by the quantity theory of money.

Sat, 12/28/2013 - 23:05 | 4282661 pipes
pipes's picture

They'll likely end up using a service like BitPay wich will effectively remove all danger of volatility. What little volatility occurs in the 10 minutes or so it takes for Bitpay to process will be borne by them (BitPay).

Sat, 12/28/2013 - 23:25 | 4282685 nmewn
nmewn's picture

Sounds like a solid short, if they ever get listed ;-)

Sun, 12/29/2013 - 01:12 | 4282793 Scarlett
Scarlett's picture

The Bill Gates of Asia, the richest guy of FUCKING ASIA, is backing them up.  

Good luck on your short

Sun, 12/29/2013 - 08:14 | 4282962 nmewn
nmewn's picture

I will assume "backing it" with something other than, BitCoin...lol.

Sun, 12/29/2013 - 08:45 | 4282974 i-dog
i-dog's picture

One doesn't short "Li the Cash"! He's also very well connected with the KKK Tribe.

Sun, 12/29/2013 - 08:54 | 4282979 nmewn
nmewn's picture

Certainly makes one wonder about long term objectives

I think you share my opinion in that regard, the aim is for an eventual world-wide cashless society, where money is what they say it is and is controlled (along with the people who use it) with a simple mouse click.

I guess we need to start collecting seashells...lol.

Sun, 12/29/2013 - 14:45 | 4283439 Nostradumbass
Nostradumbass's picture

"I guess we need to start collecting seashells...lol."

 

Better hurry up and get the perfectly formed shells before Fukushima mutations are all that is left - they'll be much more rare.

Sun, 12/29/2013 - 01:11 | 4282797 Clowns on Acid
Clowns on Acid's picture

I think BitPay takes more like a full day, and that depends on ther amount. If one wanted to do 10 to 20 coins ..it definitely could take 1 day before confirmation.

This is a real issue for BitCoin being used as a POS is that the 2-3% the business can save on the transaction can be wiped out begfore settlement.

It is still very early in the game for Bitcoin as a liquid means of exchange @ POS. 

Sun, 12/29/2013 - 10:32 | 4283038 SeattleBruce
SeattleBruce's picture

That's true. Some weeks it's much more stable than others.

Sun, 12/29/2013 - 10:48 | 4283047 malikai
malikai's picture

It may be the case with BitPay (I don't know how they work), but that's not the only way to do it.

After receipt of coin to a hot wallet, it can then be sent onwards to an exchange, where it can be sold off. That means you could be looking at as little as 1-2 hours exposure. Some exchanges, like Gox, allow you to handle POS transactions completely by receiving your coin to a Gox wallet, where you can then sell it off in as little as an hour or less.

There's many ways to do it, if you're willing and able to build the system to do it.

Sat, 12/28/2013 - 21:37 | 4282562 Son of Loki
Son of Loki's picture

Brilliant!

Sat, 12/28/2013 - 21:42 | 4282565 nmewn
nmewn's picture

"I'm not investing in bitcoin. I'm just saying we'll accept it."

Boink...lol.

Sun, 12/29/2013 - 03:52 | 4282877 SilverIsKing
SilverIsKing's picture

When the dollar blows up, he wants to be able to continue to sell shit.

Sat, 12/28/2013 - 21:58 | 4282577 One And Only
One And Only's picture

Fuck shit like food, clothing, shelter, and guns, zombies only barter with gold.

Sat, 12/28/2013 - 23:04 | 4282650 jimmytorpedo
jimmytorpedo's picture

I'm stocking up on brains.

The ultimate zombie barter medium.

And there are lots of them just walking around out there not being used, free for the taking!

Sat, 12/28/2013 - 21:59 | 4282580 One World Mafia
One World Mafia's picture

Running from the dollar to the digital NSA backdoored dollar.

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