Back in May, Overstock.com invested in government-regulated trading firm PRO securities and announced their plans for a “digital security” offering: a bitcoin-based stock offering for the company.
Fast forward to yesterday morning when the first “real trade” occurred on this new platform service, where the companies stocks are able to be traded and actually borrowed. This is actually what the hedge fund known as “Clique Fund” did and marked a beginning of a new era in stock trading and also bitcoin tech.
How did they do this? With OverStock.com’s new website, T0.com, of course. T0.com is the brainchild of Patrick Byrne, Overstock.com CEO. The site allows users to issue, buy, sell, and yes, even borrow stocks and bonds on the blockchain.
T0 aims to close the delay time on stock purchases which can be up to 4 days in some cases, and Byrne thinks that quicker trades will lead to cleaner trades. He believes that it can particularly benefit the stock loan market which is dominated currently by large prime brokers such as Goldman Sachs ad well as what is know as “agent lenders” such as BNY Mellon Wealth Management. These ‘instant’ trades coupled with easier access to the securities are what Byrne and T0 hope will revolutionize the industry while providing a more accurate, transparent and secure ledger.
Byrne believes that this type of system will enable access to stocks in a system which is normally swamped by loopholes and middlemen. He also believes that this will help to combat the well-known market scheme known as naked short selling, which is the the practice of short-selling a tradable asset without first borrowing the security and has caused financial ruin in many cases including the infamous Lehman Brothers case.
The blockchain technology should also provide a more accurate and easier to use record of stock transactions and holdings as it is already designed to do something almost identical to that: maintain record of value.
But they are not alone.. NASDAQ is developing their own system for monitoring trades in private markets and believes that this technology could eventually be used for public trading.