Why Invest In Bitcoin Shop Over Actual Bitcoins?
Samuel Rae | Mar 18, 2014 10:36AM ET
On January 9, 2014, online retailer Overstock.com, (OSTK) started accepting bitcoins. In justification of the decision, the company said it expected to generate close to $5M in bitcoin-transacted sales before the end of 2014. Within eight weeks, bitcoin holders had spent more than $1M on the platform, prompting CEO Patrick Byrne to non-financial metrics that offer insight into the company's performance. These are products sold, total products offered, site traffic and total registered users.
During Q32013, the Bitcoin Shop sold just 88 products, just shy of three a day. During Q4 2013, this grew 1,300% to 1,266 items. During the same period, the company grew its total product offering from 30,000 to 135,000.
Perhaps more importantly, between Q3 2013 and Q4 2013 the company grew unique visits to its platform and page views from 9,000 to 68,000 and 46,000 to 395,000 respectively. In addition, the platform's total registered users grew from 106 to 750 during the same period.
h3 Risks/h3Investors need realize that, at this stage, Bitcoin Shop is a risky investment candidate. With the company going public via reverse merger, there is no information available as to the company's performance aside from the non-financial metrics covered in the previous section. Without any concrete figures, investors must invest based solely on expectations of the concept's success. Of course, the company's stock reflects this fact.
In addition, while the company eliminates investors' exposure to the fluctuations in the value of bitcoin, it does not eliminate the risk that bitcoin will fail to gain mainstream acceptance. There is still a long way to go before the general ecommerce population migrates to the cryptocurrency, and since Bitcoin Shop only transacts using Bitcoin, the company relies heavily on this migration.
h3 Looking Forward/h3Bitcoin Shop is clearly in the very early stages of its development, as is the bitcoin currency. However, if the digital currency finds its place as an online method of exchange then early adopters of the concept will be the first to benefit. If Bitcoin Shop can continue to expand both its user base and goods offering, it could become a growth stock in a potentially huge, brand new industry.
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