Why Would an Online Retailer Launch A Cryptocurrency Exchange?
By: Robin Bloor
Tags: Bitcoin, Cryptocurrency, ICO, Blockchain

The common perception is that cryptoexchanges are dangerous places to do business, alive with malevolent hackers who could make your treasured coins vanish irretrievably in the blink of an eye. Enter online retailer Overstock.com. Even if you’re not a customer you’ve probably heard of it. It specializes in furniture, home decor, housewares and a wide range of other products, including of course, closeout products.

If you are one of the cryptorati you’ll probably know it was the first online retailer to accept Bitcoin and that it now accepts payments in a variety of altcoins. If you’re an investor and you follow its stock, you will know it has risen about 300% in the past six months, giving it a market cap of over $1billion. If you’re thinking “that’s like a cryptocurrency,” you’re not wrong, and there’s a reason why.

In 2015, Overstock acquired a Wall Street trade routing securities firm, SpeedRoute which held an SEC license. It spent a couple of years modifying the trading system for trading blockchain shares and renamed it tZero. And now that it’s ready to roll, tZero has become a joint venture with experienced cyptocurrency firms Argon Group and RenGen LLC. that will together deliver a new cryptocurrency exchange, or as the company refers to it, a U.S. regulated Alternative Trading System (ATS).

So, tZero will not be just another cryptoexchange, of which there are over twenty around the world already. It will be the only one created in compliance with Securities Exchange Commission and Financial Industry Regulatory Authority guidelines. Complementing tZero’s technology, RenGen will provide electronic trading and market-making technology and skills. Argon Group will provide the vetting process for tokens listed on the exchange — similar to the vetting process for stocks to be listed on a stock exchange, except that it’s about what constitutes a ultility token, which tokens are in fact securities, and whether any given token is backed by a credible business.

tZero will be conducting a SAFT (Simple Agreement for Future Tokens) presale of tokens from November 15th through to December 31, 2017, on SAFTLaunch.com.The SAFT platform is run by RenGen (and is also being used for the Permission.io, formerly Algebraix, SAFT).

One of tZero’s innovations is that its cryptocurrency will pay quarterly dividends based on tZero’s profits — just like many stocks. It is hard to know what difference this will make to its popularity. But it’s worth pondering Overstock CEO, Patrick Byrne’s ideas about cryptocurrencies. He believes that all stock securities will eventually become tokens. Certainly it is far less expensive and far easier at the moment for companies to pre-sell tokens through SAFTs and sell them in ICOs than it is to conduct an IPO. And there’s no reason why the likes of Amazon, Microsoft and McDonald’s couldn’t issue security tokens like tZero. He also believes that the blockchain could cut the current cost of trading by 90%.

Now if you think forward a few years and assume that Byrne is right, it is possible to imagine tZero becoming a very large exchange indeed, much larger than the current crop of cryptoexchanges. So, it’s possible that tZero will provide a major boost to the whole cryptoeconomy. tZero will likely be perceived differently from existing cryptoexchanges, as a haven for the average U.S. investors who wants to step into the crypto world.

And interesting question then is, “what else is Patrick Byrne of Overstock planning?” Online retail is a tough business with all participants standing in the shadow of the mighty Amazon. Overstock has done well to carve out its own niche and thrive. It’s hard to imagine that Byrne is not thinking in terms of blockchain-retail — a place where no other online retailer has set foot.

Robin Bloor Ph D. is the Technology Evangelist for Permission.io, author of The “Common Sense” of Crypto Currency, cofounder of The Bloor Group and webmaster of TheDataRightsofMan.com.