Overstock Makes History with Trading Its Shares Via the Blockchain Technology

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by Polina Chernykh · 3 min read
Overstock Makes History with Trading Its Shares Via the Blockchain Technology
Overstock's blockchain platform tØ integrates cryptographically secure distributed ledgers with existing market processes to reduce settlement time and costs, increase transparency, efficiency and auditability. Photo: Patrick Byrne/Twitter

Online retailer started selling company shares via its trading platform, thus becoming the first publicly traded company to issue securities on the blockchain.

Overstock has closed its latest funding round, raising nearly $10.9 million from existing shareholders. About $1.9 million of the received investments came from shares traded on the distributed ledger.

The financing round consisted of two series. Series A round was done via blockchain platform named developed by the Overstock’s subsidiary Medici. The retailer distributed over 126,000 company shares using blockchain for $15.68 per share.

Meantime, Series B round was realized via traditional technology, with more than 569,000 shares sold. Overstock originally planned to sell 2 million shares and achieve its investment target of $30 million. The company first announced its plans to trade stocks on its tØ platform at the Money 20/20 conference in October.

“This offering is historic in that we have successfully issued public securities that exist only on a blockchain,” Patrick Byrne, CEO of Overstock, told Finance Magnates.

“In doing so, we have demonstrated to the world that there is indeed a path toward applying blockchain technology to capital markets in a way that complies with regulatory requirements and is accessible and practical for both issuers and investors. In the process, we raised a meaningful amount of capital, which Overstock can use to continue fueling our growth.”

The company has been working on the new blockchain solution to facilitate trading of financial assets within the last two years.  In September, tØ partnered with Keystone Capital Corporation to offer brokerage services for investors seeking to trade blockchain equities via the tØ platform.

Byrne believes the technology has great potential and could significantly reduce the cost of trading securities. While traditional exchanges spend up to three days to settle transactions, the blockchain allows organizations to complete transactions almost instantly.

The US Securities and Exchange Commission (SEC) officially permitted Overstock to issue securities on the distributed ledger in December, 2015. Byrne stated the company spent more than $5 million in legal fees getting regulatory approval from the SEC and FINRA.

Overstock is also the first online retailer to start accepting payments in bitcoin. Overall, the adoption of digital currency continues to rise, with BitPay recording a significant growth in volume. Bitcoin price escalated by 79% since the beginning of 2016 and reached $778, its highest level in the last two years.

As Cryptocoinsnews reported, bitcoin payouts volume at BitPay increased by 1,800% between 2015 and 2016. The company attributes the growth to the wider adoption of bitcoin by affiliate networks, such as Google AdWords and Amazon. Moreover, the use of digital currency is now rising in developing countries because of the lack of an efficient banking infrastructure.

Bitcoin News, Blockchain News, Cryptocurrency News, News
Polina Chernykh

Polina is an undergraduate student at Belarusian State Economic University (BSEU) where she is studying at the faculty of International Business Communication for a degree specializing in Intercultural Communication. In her spare time she enjoys drawing, music and travelling.

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