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Overstock to issue $25m bond offering that utilizes the Bitcoin Blockchain
Overstock.com, Inc. is treading into new territory with the e-commerce giant announcing it will issue a $25 million bond offering that utilizes the Bitcoin Blockchain.
“The cryptorevolution has arrived on Wall Street,” Overstock Chief Executive Officer Patrick M. Byrne said in a statement. “We’re making it official by offering the world’s first cryptosecurity.”
The issuance will be powered by Overstock’s TØ.com technology based on the Blockchain, the name referring to the fact trades are settled the same day, as opposed to three days later with traditional trades.
Byrne added that issuing the TIGRcub bonds on the TØ.com platform proves that cryptotechnology can facilitate transparent and secure access to capital by emerging companies. The utilization of the Blockchain also allows buyers to track their ownership of the bonds.
The Securities and Exchange Commission (SEC) has not yet approved the plan, and one expert tells Wired that while the bond issue utilizing the technology is a novelty, it may not find that much support.
“Getting lots of stodgy fiduciaries to sign up is the hard part,” Professor of Finance at Georgetown University James Angle told the magazine. “People are very conservative about their money. We have a custodial system that pretty much works. The thinking is: If it ain’t broke, don’t fix it.”
Security first
While there may be some skepticism in the market around the use of the Blockchain for a bond offering like this, what it does do is provide additional security through its distributed ledger.
Byrne notes that issuing bonds on the TØ.com platform proves that cryptotechnology can facilitate transparency in a bond issue, before separately telling Wired that “There are all kinds of ways to rig the market…we want to make it un-rig-able.”
The key is its distribution: whereas centralized record keeping can be corrupted, distributed record keeping means that everyone has a copy of a trade, and with proper security across the Blockchain (such as 2fa and even 3fa) single players are unable to corrupt those records.
No date has yet been given on when the bond will be available.
Image credit: btckeychain/Flickr/CC by 2.0
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