While cryptocurrency has been around for more than 20 years, few places in North America accept it for payment.
Online shopping site Overstock.com has accepted cryptocurrency since 2014. Its CEO, Jonathan Johnson, is bullish on the digital currency and its underlying blockchain technology. He also leads the company’s blockchain incubator arm, Medici Ventures, which has ownership interests in nearly 20 interconnected companies, from mobile wallets to mobile voting applications. When he thinks What the Future, he’s betting that cryptocurrency will make shopping easier and cheaper and help democratize capital for all.
WTF: If anyone can create a digital currency, what might happen if multiple currencies are available?
Jonathan Johnson: I think people will use different digital currencies based on their desired use. One may be more like a savings account, a store of value that might be bitcoin. Another might be something like a checking account with a cheaper cost of use and lower transaction fees.
WTF: Will that help people have more control over their wallets?
Johnson: That’s a really interesting question, because so much of the world has no control over their money at all. The unbanked or the underbanked — meaning they’re using payday lenders and the like — just to give those people any kind of wallet creates control they don’t have today.
WTF: How might that allow people to manage risk, given that cryptocurrency is very volatile?
Johnson: Cryptocurrency is certainly volatile compared to the U.S. dollar. I do think over time as more retailers accept cryptocurrency and as some people elect to be paid in cryptocurrency, that it will become less volatile. The volatility would decrease because there would be more cryptocurrency in circulation because people would be spending it rather than holding it as an investment.
WTF: As a shopper, can I get more value out of what I buy by using certain types of cryptocurrency?
Johnson: I think over time the answer will be yes, because a cryptocurrency transaction is much more akin to a cash transaction than the credit card transaction. That’s because there is
no or a very minimal processing fee when you purchase something using cryptocurrency. On Overstock, we don’t have to run a purchase made with bitcoin through a credit card processor. And because it’s akin to a cash transaction, we’re not worried about fraud. You own your bitcoin. We know it’s you. Over time, as cryptocurrencies become used more broadly, the cost of fraud that retailers have will go down, and fraud prevention costs will also go down. Those cost savings will do one of two things: go to companies’ bottom lines and help shareholders or be passed back to consumers.
WTF: While it’s convenient to shop online, I still want to see stores on my Main Street. Is there a way that crypto can help protect and preserve the retail industry?
Johnson: That’s an interesting question to a pure play e-commerce CEO! I like having stores and restaurants to go to close to my house. Those stores and restaurants operate on the thinnest of margins. We’ve all been to gas stations or stores where there’s a cash price versus a credit card price. What’s the difference there? It’s the credit card processing fee. Cryptocurrency can do away with that and really help Main Street businesses retain more profits.
WTF: Some people believe that cryptocurrencies will allow for easier global retailing. Will that change how people shop globally?
Johnson: Cryptocurrencies may become the equivalent of the de facto global currency, and they will be less expensive to deal with than the current system of money exchange. Cryptocurrency’s ease of use helps it cross borders a lot more simply.
WTF: Is there one main lesson that would help the average retailer understand how cryptocurrencies might change how people shop?
Johnson: Cryptocurrency purchasers tend to be very loyal. I haven’t looked at the data recently, but last time I looked at it, the average order size for a cryptocurrency purchase on our site was twice as large as the credit card purchase.
WTF: In the survey results, was there anything that looked validating or counterintuitive to what you’ve seen?
Johnson: In America, cryptocurrency adoption is going to be slower than it will be in other parts of the world because people have digital currency today and most of us participate in the 21st century economy through bank credit and debit cards. In developing parts of the world where people are unbanked, these questions are going to be really different.
WTF: Do you think we’ll ever see the end of cash?
Johnson: I don’t know that there will be the end of it, but I think we’ll see less and less of it. We’re already seeing a shortage of coins through the pandemic. I like to have cash in my pocket, but I find that I go to the ATM maybe once a quarter because I almost never spend it. The money I carry around in my pocket is almost like carrying around my handkerchief—seldom used, but there for an emergency.