Originally posted on 5/24/2014 by Patrick Byrne
On May 23, 2014 PMNTS.com (“what’s next in payments and commerce”) published a piece (“Guess What Folks, Overstock.com Does Not Take Bitcoin”) by David S. Evans that is as remarkably poor an example of research and analysis as one is likely to see these days.
° “Patrick Bryne, Overstock’s CEO and ‘Bitcoin Messiah’, even gave the keynote at last week’s Bitcoin2014 conference in Amsterdam. If he’s not a believer, who is?” asks Mr. Evans in his opening paragraph (misspelling both my first name and last in a foreshadowing of the general shoddiness of his homework).
° In the next paragraph Evans falsely asserts about Overstock’s acceptance of Bitcoin, “To pay with the Bitcoin button you need a Coinbase wallet.” In this he is simply wrong: Anyone with Bitcoin can pay with that button (I suspect that this mistake is another expression of Evans’ unfamiliarity with Bitcoin and inattention to detail).
° Now jumping to the end (where Mr. Evans buries his lead), “In the end, in this bizarro world, even the Bitcoin Messiah wants greenbacks.” Actually, even the Bitcoin Messiah has to pay his suppliers, and since they want greenbacks, at some point the Bitcoins that customers spend at Overstock must be converted to greenbacks to pay for those goods and services. This basic truth has Mr. Evans so agitated that he sees the whole process as “smoke and mirrors.”
° In developing the previous point, Evans falsely asserts, “Overstock.com never takes possession of bitcoins or anything denominated in bitcoins.” This is also wrong: at checkout our customers’ Bitcoins are moved to our wallet, then Coinbase sells Bitcoins from that wallet back into the market in return for dollars on our behalf (however, we have stated publicly and accurately that we are accumulating Bitcoin reserves equal to 10% of all Bitcoin spent on our site).
° Another paragraph, another blithering idiocy: “It gets weirder. How did you get bitcoins in your wallet in the first place? You were asked to link your bank account to Coinbase.” Actually, there are a plethora of ways one may acquire Bitcoin that have nothing to do with Coinbase, and all of the Bitcoin thus acquired works with Overstock.
° “Overstock could have a bitcoin account, and pay people and vendors in bitcoin, regardless of whether people want to buy stuff from Overstock using their bitcoins.” Except that nobody (e.g., the IRS) has worked out the tax issues related to paying employees in Bitcoin (though I have on several occasions said publicly that we wish to be at the forefront of paying Bitcoin to employees and vendors who will accept it, and have publicly invited firms that work in those areas to contact me).
And so on and so forth. Nearly every paragraph of David Evans’ initial piece, and even in his back-spinning “clarification,” has errors that would make a college sophomore blush. That is quite an accomplishment for a man who bills himself as “ranked among the top 3 percent of economists in the world” (with, as one comes to expect from Mr. Evans, no explanation or citation).