One of the major announcements in terms of merchants accepting Bitcoin payments came when Overstock.com Patrick Byrne broke the news. To make that announcement even better, Overstock.com would keep 10% of every Bitcoin transaction in BTC, while converting the rest to fiat currency. The stage was set for a fruitful partnership to take Bitcoin to the next level.
A Healthy Portfolio of Cryptocurrency Holdings
Despite the risk associated with keeping a portion of each transaction in BTC, Overstock.com felt confident they would be boosting the Bitcoin economy in doing so. After all, most merchants accept Bitcoin and convert the full amount to fiat currency, creating sell pressure on Bitcoin exchanges.
Even though most of the funds would still be “dumped” on exchanges, that 10% per amount could mean a great deal for the Bitcoin economy. Someone has to be the first company to give Bitcoin a vote of confidence in terms of long-term holdings. Other than Bitcoin exchanges or wallet services charging a small fee per transaction, no other company but Overstock.com is holding transaction value in BTC right now.
At the end of December 2014, Overstock.com announced the total value of their cryptocurrency holdings. In total, these holdings represented a US$340,000 value, which is a significant amount in a short amount of time. And with that amount at the end of a volatile price period for Bitcoin, things were looking quite positive.
It is important to note that, while Overstock.com is a firm believer in digital currency, they also hold a large portfolio of precious metals. According to the information we have received, the company holds as much as US$10m in gold and silver, as well as various other investments. Eventually, Overstock.com plans to create a decentralized stock market.
Dwindling Value Cause For Concern?
Fast forward to just a few days ago, when Overstock.com reported the value of their digital currency holdings had dropped to US$233,000. Not all of this has to do with a further decline in the Bitcoin price, but also the investment in several altcoins, not all of which turned out to be a success.
Furthermore, Overstock.com also uses their Bitcoin reserves as a way to pay for as many services as they possibly can. Considering the company is a member in the Chamber of Digital Commerce, they prefer to pay that fee in BTC. Other than that, the company invested some of their Bitcoin holdings in “other commodities”, without disclosing which ones exactly.
“In the future, we may transact in cryptocurrency directly or increase our cryptocurrency holdings. This will subject us to additional exchange risk and other risks as described above, which may have an adverse effect on our results.”
Source: SEC Filing
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