Overstock's Stroke of Genius in Accepting Bitcoin

All of the benefits and none of the risk -- Overstock.com just threw down a master move.

Jan 23, 2014 at 9:13AM

Overstock.com (NASDAQ: OSTK) has found a way to safely swim in the same waters as retailing's biggest shark. The company, whose e-commerce website focuses on discounted brands, unbranded goods, and closeout items, separated itself from the pack and carved a niche that even the industry's 800-pound gorilla hasn't seemed to crush. Overstock.com's recent success is a combination of specialization, marketing, and most recently, strategic partnerships.

All-around win
The latest news from Overstock is its acceptance of Bitcoin -- the controversial crypto-currency that can't seem to get enough press (if the currency fails, it will have at least put food on the table for thousands of bloggers and journalists). While the ultimate success of the integration won't be determined for some time, Overstock immediately benefited from its decision.

For one thing, Overstock is the first Internet retailer to accept the currency. This is a very symbiotic relationship with Bitcoin, as it gives Overstock the image of being more forward-thinking and technologically advanced than Amazon, and it gives Bitcoin a feather in its cap as a legitimate form of payment. Overstock has effectively forced other retailers to open their doors (or, at least, strongly consider it) to Bitcoin, but only as followers of Overstock's lead. The company benefits from Bitcoin's near-endless news cycle. Now, as the first big retailer to step up, analysts and consumers alike will be itching to see who these Bitcoin holders are, and what they are buying. Even though it's an effectively anonymous currency, companies will still have plenty of data to digest from purchases made with the techno-dollars.

While this is genius PR, it could be a catch-22 for Overstock, if it then had to hold on to Bitcoin and endure the volatility that its early adopters so enjoy. The company will accept Bitcoin in lieu of traditional currency, but that doesn't mean it's hoarding the stuff.

Overstock's partner on this is Coinbase, which allows the company to do an instant exchange from Bitcoin into dollars. Overstock CEO Patrick Byrne is a self-declared "true believer" in Bitcoin, but he and his team obviously understand that it is not yet a desirable asset for a publicly traded company (unless you are a Winklevoss and starting a publicly traded Bitcoin ETF). With zero regulatory infrastructure and wildly fluctuating value, it just doesn't make sense for Overstock to hold on to Bitcoin for more than a nanosecond.

Cash, at least in the foreseeable future, will remain king.

So what Overstock has done is benefit from all of the noise surrounding Bitcoin, and immediately mitigate the risk of actually dealing with it. Your move, Amazon.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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