Big US online retailer to accept Bitcoin

Barney Jopson and Stephen Foley

Overstock plans to become the first big U.S. online retailer to accept Bitcoin, as Patrick Byrne, the company's libertarian chief executive, warms to the virtual currency as a refuge from government control.

Mr Byrne told the Financial Times that Overstock planned to start accepting Bitcoin next year – possibly by the end of the second quarter – a decision that he said was driven mainly by his own political philosophy.

(Read more: Bitcoin goes big: Wall Street, Silicon Valley aboard)

"I think a healthy monetary system at the end of the day isn't an upside down pyramid based on the whim of a government official, but is based on something that they can't control," Mr Byrne said.

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Bitcoin fitted that bill. "There are a lot of virtual currencies, but this is the only one I know of that can't be created," he said.

There are currently 12.15 million Bitcoins in circulation and when the supply reaches 21 million no more will be created.

Mr Byrne described himself as a "small 'l' libertarian" and an adherent of the Austrian School of economics, which predicted that fiat currencies – created for governments by central banks – would destabilize the world economy.

(Read more: Cashless society: A huge threat to our freedom)

Nasdaq-listed Overstock, which sells a variety of general merchandis​e, had annual revenue of just over $1 billion last year.

The price of the currency has swung wildly in recent months with each perceived endorsement sending it sharply up and each regulatory setback sending it crashing.

The price of a single Bitcoin has yoyo-ed between $450 and $1,280 in December alone.

(Read more: Don't rule out a ban on virtual currencies: Peercoin)

Mr Byrne, who supported the libertarian Ron Paul in the 2012 U.S. presidential election, said he saw business benefits to accepting Bitcoin.

No need to panic over China bitcoin clampdown: BTC China

"If there's going to be some part of the population which adopts it . . . I think that we'll get that business. And the people who switch to it will respect that we started adopting it."

Sam Yagan, founder of OkCupid and a self-described "maths geek", has allowed Bitcoin payment on his dating site since April.

The People's Bank of China this month ruled that Chinese banks should not process Bitcoin transactions, effectively shutting that country's main Bitcoin exchange to renminbi users.

(Read more: Bitcoin crashes 20% on China clampdown fears)

In the U.S., regulators are insisting that Bitcoin processors install anti-money laundering checks, but have otherwise suggested they are content to let the experiment continue.

Mr Byrne said that if Bitcoin derivatives exist when Overstock starts to accept the currency it would "bank" Bitcoin and use them to hedge the risk of changes in its value. If such derivatives do not exist, he said Overstock would trade Bitcoin into dollars every day.

More from the Financial Times:

China bans new Bitcoin deposits
EM currencies under renewed pressure
Sterling could hinder recovery, says BoE

He said he did not own any Bitcoin, but did own gold. "I don't have any view right now on the value of Bitcoin versus dollars," he added.

He noted the currency's volatility and said: "That is going to happen for now. But once enough people are dealing with Bitcoins, the tide is going to turn and it will be just the opposite. It will be a currency that is stronger than government officials.

"But in the meantime it is going to be quite volatile and I am not making any bets one way or the other."