Online retail giant Overstock announced it will issue public shares of company stock on its tØ blockchain platform at the 41st Annual International Futures Industry Conference today.
First unveiled in August 2015, the tØ blockchain platform ambitiously aims to revolutionize trade and settlement by issuing stocks and bonds as a digital, blockchain-based assets, thereby disrupting the T+3 settlement model currently operated by the DTTC.
Following the release, Overstock would have two versions of its stock, one available on traditional trading systems such as Nasdaq and another on tØ. Overstock cryptocurrency group general manager Judd Bagley indicated that its blockchain stock will be traded, settled and recorded “entirely on a decentralized ledger”.
Bagley told CoinDesk:
“We’ve proved the safety and security of the tech numerous times … enough for us to be confident in the capacity to make this work and ensure investors that we meet safety and security that SEC demands.”
Bagley pointed to Overstock’s sale of a $5m “cryptobond” in July of 2015, a trial that saw both Overstock CEO Patrick Byrne and FNY Managed Accounts, a New York-based trading firm, use the technology to show how financial instruments could be digitized and traded.
For its tØ stock, Bagley said Overstock is using a permissioned ledger to manage shares, but that transactions will be batched and hashed against the bitcoin blockchain for additional transparency.
In total, Overstock will issue 1 million blockchain preferred shares as part of the project, out of a total of 25.29 million shares.
“We settled on 1 million shares as a number that would provide enough liquidity to prove out this concept,” Bagley said. “This stock issuance is not about raising money, this is about proving this technology.”
Dual markets
Notably, the introduction of the blockchain stock would mean that Overstock shares will trade in two separate markets, potentially with two separate values.
For example, Bagley noted that there is no system that pegs the blockchain preferred stock to the traditional shares, meaning traders could trade both assets.
“We expect that arbitrage opportunities that people will find. If there are pricing discrepancies between blockchain shares and other shares that people will take advantage of that. The values will be determined by the market,” Bagley said.
Overstock did not provide a timeline for the proposed launch.
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