On the $1million Overstock made on bitcoins


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Meet Patrick Byrne: Bitcoin Messiah, CEO of Overstock,
Scourge of Wall Street


Enclosed, please find the Wired Magazine article, “Meet Patrick Byrne: Bitcoin Messiah, CEO of Overstock, Scourge of Wall Street”. It concerns the decade-long battle Overstock has waged to expose Wall Street mischief.


Byrne, the son of the man who built the GEICO insurance empire, Jack Byrne, and a protege of Warren Buffet, the most successful investor in the history of Wall Street. “Bitcoin is the solution.”

seven years into a lawsuit that accuses venerable investment banks Goldman Sachs and Merrill Lynch of a “massive, illegal stock market manipulation scheme.”


He’s not just an opinionated jerk, though it sometimes sounds that way,” says Bill Hambrecht, the investment banker who helped Byrne take Overstock public in 2002 using what’s called a Dutch auction, a method that loosens the influence of the big Wall Street banks, preventing them from taking their typically enormous cut of an IPO. “He puts us on a little bit, just to bring attention to the issues. But he has brought attention to them, and though he has made some wrong calculations, he’s hung in there, and he has built a really good business — something I don’t think he’s gotten proper credit for.”

Adopting bitcoin is the next step along this same road. As Overstock embraces the digital currency, Byrne predicts it will spur other big names to follow its lead, including rival Amazon, and push the world toward a future where bitcoin is a true alternative to the dollar. But, looking further down the road, as he is wont to do, he also believes that the very public, math-driven system that underpins bitcoin can remake Wall Street, eliminating the market loopholes he has railed against for so many years.

As a teenager, he would skip school to spend afternoons with Warren Buffet, his “Dutch uncle,” whose Berkshire Hathaway eventually purchased his father’s company. He studied Mandarin at Dartmouth and philosophy at Stanford, and after he finished his PhD, Buffet tapped him to run one of Berkshire’s many companies, a midwestern outfit that made uniforms for policeman, firefighters, and the military. “I was the only goy in the schmata trade,” Byrne remembers. And as the first wave of dot-coms went belly up, his new company used this to its advantage, turning many of those bankrupt dot-coms into suppliers by snapping up their inventory.

When BusinessWeek reporter Tim Mullaney sent him a list of questions — questions Byrne characterizes as the “are-you-still-beating-your-wife?” variety — the Overstock CEO promptly published both questions and answers on the web, effectively killing the magazine’s story. He planted someone inside a meeting of the Society of American Business Editors and Writers, recording what was said about him — that he needed to be stopped — and posting that online, too. He created a new company, staffed by his own journalists and web mavens, that would do nothing but fight his crusade, battling the traditional press through a website he called Deep Capture — a nod to Byrne’s claim that regulators had been “captured” by Wall Street, that there was a revolving door between the big banks and the top positions at the SEC.

After Bear Sterns and Lehman Brothers went under and Merrill Lynch was gobbled up by Bank of America, the SEC issued orders designed to curb the very thing that Byrne had crusaded against. As those financial houses struggled to stay afloat, it seemed, they too had been hit by naked short sellers.

According to James Angel, a professor of finance at Georgetown University and a visiting professor at the Wharton School of Business who specializes in the nuts and bolts of the economic system, Byrne’s warnings about naked short selling were nothing less than the naked truth. “Patrick Byrne was pilloried in the press, who made him look like a conspiracy-mongering lunatic,” Angel says. “But sometimes, even conspiracy-mongering lunatics are right.”

But, whatever side you come down on, the larger point is that Byrne is still fighting. Following the SEC’s new rules, naked short selling almost vanished. But the agency has since indicated that at least part of the problem still remains, and Byrne and others believe the practice has moved into other parts of the market, including what are called exchange traded funds. Once again, Byrne says, people are selling stuff they don’t really have.

(gold? lol)

Over the years, the Overstock CEO has cultivated a vast network of like-minded souls who believe in greater reform on Wall Street. He has a way of attracting Wall Street whistleblowers and then helping to push their stories into the public eye, via the courts and through reporters sympathetic to his cause. One of these whistleblowers is Mark Rosenblum, a former employee at Thomson Reuters who sued the news and business information firm, claiming he was fired for telling the FBI the firm was selling key economic data to certain traders before it was released to the rest of the market.

“I would not have had the courage or the necessary resources to come forward without Patrick,” Rosenblum says, explaining that Byrne has not only helped put him in touch with the right people but helped with his legal bills.

and he’s also struggled with his health,” says Robert Shapiro, a Harvard-trained macroeconomist who served as president Bill Clinton’s undersecretary of commerce and is now a consultant to companies that believe they’ve been victimized by abusive naked short selling, including Overstock. “People who come through those challenges, particularly when they’re young, have a very different view of the world. They are less concerned with the bullshit — and more concerned with larger things.”

Bitcoin is a currency, like the dollar or the euro, and it’s a money transmitter, like a credit card network or PayPal. But at the most basic level, the worldwide software system that underpins bitcoin is really just a means of instantly verifying that you’ve sent something to someone else. “It allows for the decentralized proof and thttp://imaginarymarkets.com/wp-admin/post-new.phpransfer of ownership,” says Fred Ehrsam, the co-founder of Coinbase, the outfit that handles bitcoin transactions on behalf of Overstock.

“You would have an instant, frictionless market, while having the added benefit of wiping out a whole parasitic class of society — that is, the whole financial industry.”

(he’s also previously said he hopes bitcoin will destroy central banking)



Some people even want to nominate him for the bitcoin foundation

(but that would be counterproductive)