Overstock’s brash CEO and chairman Patrick Byrne proclaimed that, with the online retailer's move to accept bitcoin payments, his company had ushered in a brave new world that even the likes of Amazon would soon be compelled to join. 

In a month when Target Corporation announced that its colossal credit card breach was even worse than first estimated and luxury retailer Neiman Marcus revealed its own large-scale credit card hack, it was tempting to think that bitcoins' anti-establishment, anti-bank, anti-credit card, libertarian, pseudonymous users were pretty smart. And that Overstock was smart in turn for offering customers a taste at the bitcoin apple.

But has the bitcoin revolution really started, and, if so, what does it mean for retail?  

No, the revolution hasn’t quite begun. Overstock’s $1.3 billion in annual sales surely makes it the largest retailer to accept bitcoin, but it’s unclear how many payments it will be processing once the novelty wears off. Or how many synthetic area rugs the average bitcoin user shops for. Financial institutions haven’t even decided if bitcoin is a currency or just another payment system, ala PayPal. In fact, Patrick Byrne’s libertarian bent may have more to do with Overstock’s move than his strategic ideas about reaching customers.

“Byrne sees an even bigger picture — one in which bitcoin provides new freedoms for the world at large, separating us from the whims and the flaws and the self-interests of banks and governments,” Wired’s Cade Metz wrote this week.

Bitcoin is still a bit player. “Bitcoin will only be considered ‘mainstream’ when 95% of consumers are aware of what it is,” writes ZipZap Inc. CEO Alan Safahi. “It took gift cards about a decade to reach this level of consumer awareness.” Given its current growth rate, Safahi believes, bitcoin may reach a similar level of popularity in less than five years. That’s pretty soon, yet major obstacles remain in the way, including its value volatility and difficulty of use.

Consumers, not retailers, will likely drive any bitcoin revolution. Remember, during the 1980s or so, when gas stations offered discounts for cash payments? Retailers could similarly steer customers toward using bitcoin, simultaneously escaping the traditional merchant fees of other payment systems, by offering savings on bitcoin purchases, explained George Mason University professor and bitcoin expert Jerry Brito on Reihan Salam’s VICE podcast last week.

Many smaller retailers and franchises have experimented with bitcoin payments for a while, and have indeed enticed bitcoin-paying customers with small targeted discounts. Overstock’s Byrne himself seemed eager to escape those fees and thereby punch up the company’s bottom line. But gas stations don’t offer discounts on cash payments anymore, and cash is even more anonymous than bitcoin. Would vast numbers of retail customers ever trade the easy refund-and-return and fraud protections of credit cards for the not-quite-complete anonymity of bitcoin? Right now, it’s hard to see why they would.

Serious monetary issues remain before bitcoin can get serious. Economists and pundits are having a field day over the many practical and monetary issues that plague the crypto-currency. There are its deflation bias, price volatility and problems in China, to name a few. As bitcoin moves into the mainstream,  the Internal Revenue Service has to clarify if it will treat it as a capital asset or currency, law enforcement agencies like the Federal Bureau of Investigation have to figure out how to limit its usefulness to evildoers (thereby perhaps limiting its usefulness), major retailers and other big companies will want mechanisms that smooth out bitcoin’s fluctuations, and investors will want a derivatives market. Bitcoin’s early fans will then have to decide how all that mainstreaming affects the crypto-aspects of their beloved crypto-currency.

After all of that and more, if bitcoin works for consumers, it may work for retailers, too.

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