Overstock expresses interest in exploring the “cryptosecurity”, acknowledges challenges

As elaborated upon by Wired, Overstock.com unveiled a wiki page titled “How to issue a cryptosecurity”. Such a financial instrument

As elaborated upon by Wired, Overstock.com unveiled a wiki page titled “How to issue a cryptosecurity”. Such a financial instrument would be traded from person-to-person (p2p), obviating the need for a centralized venue such as the New York Stock Exchange (NYSE) or NASDAQ.

Overstock CEO Patrick Byrne has long been a fan of Bitcoin and cryptocurrency. His company started accepting Bitcoin for payment in January. Since then, Byrne and the company have maintained a high profile in the Bitcoin sphere, updating the public on their Bitcoin-related performance, initiatives and perks.

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Rather than vocally calling for cryptosecurities and bashing the conventional markets establishment, the posting welcomes public opinion and feedback on the matter. It acknowledges that such a concept faces many challenges and has a long ways to go before becoming a reality. Multiple issues are openly mentioned, including legal, risk, issuance, shareholder rights and classes of stock.

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Several cryptocurrencies are proposed as platforms: Bitshares, Counterparty, Ethereum, Mastercoin and Nxt. The pros and cons of each are outlined.

Byrne was explicit about his interest in forming p2p capital markets during a reddit AMA session in May. Nxt was mentioned as a candidate. Byrne said that:

“I do not know NXT, but I am interested in finding (and even potentially investing in) efforts to create a peer-to-peer capital market. In fact, if a good solution emerges, you might even see Overstock be the first issuer of a stock or bond in such a market, just to help things get going! (Incidentally, we were the first to do a Dutch auction IPO, for precisely that reason.)”

Part of the motivation can undoubtedly be traced to Byrne’s aversion to the naked short selling of stocks. Years ago, he launched legal actions against several Wall Street institutions for shorting his company’s shares and proceedings are still ongoing. With his “cryptosecurity”, shorting can be removed from the equation.

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