tZero, the blockchain subsidiary of Overstock.com, has announced the release of a demo version of the highly-anticipated prototype of its security token trading software. This demo video was released today, which demonstrates how security tokens may be traded on the platform.
Overstock’s CEO Patrick Byrne — a longtime advocate for cryptocurrencies and associated blockchain technology — is behind the move. According to Byrne, tZero’s trading platform has been developed to compete with traditional stock exchanges by integrating cryptographically-secured distributed ledgers with existing market processes to reduce settlement time and costs, and increase transparency and efficiency.
Byrne believes that eliminating brokerage fees and commissions to execute a trade, while replacing it with a robust and immutable system that is 80-90% cheaper, is the way forward. He added:
“Most importantly all kinds of mischief that goes on on Wall Street can’t go on here.”
tZero is a wholly-owned subsidiary of Overstock.com that focuses on the development and commercialization of financial technology, fintech, with blockchain technology. In doing so, tZero hopes to bring greater efficiency and transparency to capital markets.
According to tZero’s President Joe Cammarata, the firm is delaying the launch of the final version of the trading platform due to regulatory compliances. However, tZero’s team is very optimistic about the new platform and its prototype.
“Technologically speaking, we anticipate the security token trading software will be ready to trade security tokens in May, subject to developing further regulatory clarity,” said Cammarata. “We have been working hard on getting this prototype right and look forward to user feedback.”
Earlier this year, tZero was chosen to provide advisory services to WENN Digital to ease the token offering of KODAKCoin. In addition, its role includes encryption of accounts, price quoting, clearing and reconciliation services, anti-money laundering (AML) services, and know-your-customer (KYC) verification. KODAKCoin, whose offering began in late January, was the first third-party security token on the tZero platform.
Though best known as an e-retailer, Overstock has been investing in blockchain and cryptocurrency startups for several years through Medici Ventures, its wholly-owned subsidiary. Medici has more than a dozen portfolio companies, including Factom, Ripio, and tZero — which is in the middle of an initial coin offering (ICO) that Overstock expects will raise $250 million.
Earlier this year, Overstock revealed that the U.S. Securities and Exchange Commission (SEC) was investigating tZero’s ICO as part of its broad inquiry into the nascent fundraising model. Byrne has stated that the firm was not issued a subpoena – as many ICO operators were – but has been submitting documents voluntarily. He has also maintained that tZero’s offering complies with federal securities laws.
Due to its involvement in the blockchain space, Overstock has been characterized by some analysts as a “proxy stock” for cryptocurrencies. Its share price, unsurprisingly, has behaved accordingly, rising and falling along with the cryptocurrency market at large.