Overstock’s Blockchain Startup Trades Diversified Crypto Assets – Private Equities, Public Securities, “Short Tokens”
The new venture is fully utilizing blockchain technology to offer customized private digital assets, public securities and short-selling tokens.
Using the Bitcoin Blockchain as a ledger, t0 provides a platform for companies to issue cryptographically tradable assets for the purpose of raising capital. This capability was demonstrated only weeks ago by Overstock when it sold a $5 million digital security or “cryptobond” to First New York Managed Accounts LLC, an affiliate of FNY Capital. The sale acted as a proof-of-concept exchanging financial instruments via a cryptographically secured platform.
Collaborating with Pro Securities LLC, t0 also offers a public securities platform that is blockchain-agnostic and utilizes a technology comprised of multiple copies of a synchronized ledger separately maintained through a distributed ledger network.
Overstock.com’s Director of Communications Judd Bagley informed AllCoinsNews:
Our private debt equity (bond) trading platform uses the Bitcoin Blockchain as its ledger, while our public equities trading platform is built to be Blockchain-agnostic. So some trading will happen on the Bitcoin Blockchain, some will happen on other sidechains, and still other will happen on proprietary blockchains.
The cryptoequities platform accommodates much more trading volume and faster trading times than are required to trade digital bonds.
The startup also has a short selling service that utilizes cryptographic tokens to short any underlying stock in day as many times as the investor wants, as long as the short position never exceeds the quantity allowed by the “Short Token.”
Short Token moves the opaque world of stock lending out of the shadows and into the sunshine. It places all market participants on a level playing field, such that a random retail investor will have just as much access to shorting as will a multi-billion-dollar bank. The combination of open auctions and the transparency of the Blockchain will ensure that shorting is a fair, legal and egalitarian market tool.
Enthusiastically driven by its CEO Patrick Byrne, Overstock has rapidly advanced into the blockchain tech space since it became the largest e-retailer to accept bitcoin in January 2014. More significantly, the ambition of the retailer’s Project Medici to develop a blockchain-based stock exchange was revealed in the middle of 2015.
It is not clear whether Medici will actually build an entire stock exchange but Bagley noted:
Medici is the name applied to all of our cryptotechnology initiatives. t0 is the brand name assigned to the cryptoequities trading platform we’ve developed under the Medici umbrella.
Medici Inc. owns 100% of t0 and is itself a majority owned subsidiary of Overstock.com .
In 2014, Overstock also briefly collaborated with the founders of Bitcoin Blockchain-based protocol Counterparty but that arrangement ended before it really got anywhere. Bagley indicated:
We’ve decided to approach this project in such a way that the Counterparty technology is insufficient to handle, so we’ve settled on a set of Blockchain-agnostic technologies.
The founders of Counterparty went on to establish Symbiont, a blockchain tech firm that also does not purely rely on Counterparty.
Asked about how Medici and t0 fit into Overstock’s massive e-commerce business, Bagley answered:
Overstock.com has been moving into the financial services space for some time. We sell insurance on the site and offer financing options for making retail purchases, as well. This is an extension of that financial services component of the company, albeit not one most retailers are willing to get into. Medici and t0 will remain part of the Overstock.com corporate structure for the foreseeable future.
A big part of the retailer’s move into the financial services space is acquiring financial technology. Indeed, Overstock announced this week that it was in the process of acquiring a group of fintech companies, closing acquisition of Speedroute, a company that routes approximately 2.5 percent of U.S. equity order flow.