Online merchants have been flocking to bitcoin over the last few weeks, with dozens of “look at me” announcements seemingly hitting the Web daily. Marquee names to take the plunge have included Overstock.com, Zynga, and the Sacramento Kings, among a litany of lesser known sellers. But conspicuously absent in this list have been the granddaddies of ecommerce: Amazon and eBay.
Amazon has been utterly mum on the subject, but eBay engaged in a more open dialogue around virtual currencies. Both eBay president John Donahoe and PayPal CEO David Marcus have each spoken positively about bitcoin.
Donahoe told the Financial Times that he could see a future where PayPal would accept digital currencies, calling it “a very powerful thing.” Marcus echoed this sentiment, saying in a CNet interview, “Whenever the regulatory framework is clearer, and the volatility comes down, then we’ll consider it.” Then, last week, Marcus sent a series of tweets ending in “We’re believers in BTC though.”
It seems that the executives are more than just talk as eBay recently took the first, albeit small, step toward embracing bitcoin. The company will be opening a new “Virtual Currency” category on its marketplace and allowing users to list bitcoins and other “altcoins” for sale. Notably, these listings will take the form of Classified Ads, rather than eBay’s more widely used Auction or Buy-it-Now formats. As a result, virtual currency listings will initially be little more than advertisements, along the lines of a Craigslist listing, and all transactions will need to take place outside of eBay.
The company sent an email to one of its merchants, first published on Reddit, outlining the new policy, which reads:
Please know that per our recent policy update, Virtual Currency (i.e. Bitcoin and Litecoin), whether digitally or physically delivered, cannot be listed in Auction-style or Buy-It-Now listing formats. eBay is opening a Virtual Currency category to allow the sale of virtual currency in Classified Ads format on February 10, 2014. We request that you do not list these items until that date. Please be informed that repeated breach of the policy may further jeopardize your account status. To avoid any inconvenience in future, we’d appreciated it if you go through our help pages or contact us before listing any such items.
In an email to Bitcoin blog CoinDesk, eBay Manager of Business Communications Ryan Moore writes:
To promote a trustworthy marketplace and ensure compliance with applicable regulations, eBay is currently updating its Currency Policy. The updated policy will clarify that listings for Bitcoin and other similar virtual currencies must be listed in the Virtual Currency Category in the Classified Ad format.
The Virtual Currency category is expected to be available on the UK site on February 10th.
Another eBay spokesperson told CoinDesk that its policies differ on a country-by-country basis, and that the policy change is limited to the UK site at this time.
Despite this stated launch date, there appear to be nearly three-dozen virtual currency listings on eBay today ranging in price from one bitcoin for $ 1,639.41 to 0.01 bitcoins for $ 12.00. Both listings would be considered above-market pricing, given that the average global price of one bitcoin is currently $ 878, according to the CoinDesk Price Index.
As bitcoin enthusiasts seek legitimacy in the world of commerce, this is a welcome first step on eBay’s part. But the decision to limit listings to the Classified Ads section makes this a wildly inefficient option for transacting bitcoin. The primary reason one would turn to an option like eBay, or alternatively person-to-person local exchanges like LocalBitcoins, is the promise of (near-)immediate liquidity – something that has plagued traditional bitcoin exchanges – and in some cases better exchange rates. But eBay seems the least well suited of all options to solve this problem, given it’s need to develop policies and communities that cater to the widest-possible audience, rather than those specifically tailored to a single use case like transacting in virtual currencies.
In the past, bitcoin sellers have sought to circumvent eBay’s listing guidelines by selling USB thumb drives or external hard drives containing the relevant virtual currency data. This method hasn’t been without its risks, as we reported in the past. Many bitcoin buyers found themselves on the wrong end of fraudulent listings in the early days of the recent crypto-currency boom – hopefully most people know better by this point.
It’s not just the sale of virtual currencies which has caused merchants to run afoul of eBay and PayPal policies. A recent discussion thread on Bitcointalk.org details the account of one merchant who had his account frozen multiple times for selling bitcoin mining hardware, aka specialized computers, via the marketplace – an experience that was echoed by numerous commenters. An eBay spokesperson told PandoDaily that the company doesn’t have a policy prohibiting selling bitcoin-related hardware, something Marcus later confirmed via a tweet.
Given this checkered history, today’s announcement is a positive development. The next and potentially more impactful step bitcoin bulls will be looking for is for eBay and, in parallel, PayPal to allow users to pay for transactions using virtual currencies, regardless of the products or services involved. That is, the ability to buy antiques, sporting goods, apparel, cars, homes, and anything else, and pay with bitcoin.
Accepting bitcoin proved to be a huge boon for Overstock, at least initially, as the company completed $ 130,000 worth of orders in its first day. More importantly, these sales came almost exclusively from new customers, according to a tweet by CEO Patrick Byrne. He went on to predict that Overstock’s success in adopting bitcoin would force the hand of Amazon and other large retailers.
For Overstock and Amazon, accepting bitcoin offers the potential to improve margin by eliminating costly payment processing fees. For eBay, which aims to funnel as much commerce through its payment subsidiary, PayPal, the motivations are less clear. Thus, the two companies may be tiptoeing around bitcoin due to this uncertainty, or, as Marcus alluded, due to the regulatory uncertainty and volatility that still plague it and other virtual currencies.
Bitcoin shows no sign of going away. The bigger the crypto-currency community grows, the more difficulty eBay and others will have ignoring it. Today’s news suggests that Donahoe and Marcus have begun to accept as much. It’s unlikely this will be the last such announcement from the two companies.
[Image via Thinkstock, defaced by Hallie Bateman]