E-commerce giant Overstock.com has become the first company to offer qualified buyers the option of purchasing corporate bonds that will trade using Bitcoin’s blockchain protocol.
In a speech last year at Inside Bitcoins Las Vegas, Overstock CEO Patrick Byrne announced a special partnership with Counterparty that led to the creation of a project known as Medici. The Medici project was designed to create a decentralized stock exchange within the Counterparty platform. Thus, the Medici project itself is based on blockchain technology.
The bonds will be sold privately and will sell for a combined total of $25 million.
“The cryptorevolution has arrived on Wall Street,” said Byrne. “We’re making it official by offering the world’s first ‘cryptosecurity.’”
Overstock’s cryptosecurities will be traded on a unique platform with much greater speed and reliability than traditional bond trading technology. Overstock’s cryptosecurities will be traded using custom-built TØ.com technology. TØ.com means that trades made with the system clear in the same day instead of the standard Wall Street technology, which traders call T+3, which clears and settles trades in three days.
Based on blockchain technology, TØ.com technology increases the reliability and speed of trades. In addition to the speed, buyers of the cryptosecurity will be able to track asset ownership directly on Bitcoin’s blockchain.
“Issuing the TIGRcub bonds on the TØ.com platform proves that cryptotechnology can facilitate transparent and secure access to capital by emerging companies,” Byrne said.
Information about the cryptosecurity offering was distributed to investors on June 1. The offering is being made only to institutional buyers that meet the legal definition of an accredited investor by rule 506(c) of Regulation D under the Securities Act of 1933.
By offering bonds while following regulations, Overstock.com is able to bring the world’s first security based on blockchain to investors. Decentralized trading systems have the ability to improve trading infrastructure in the future.Blockchain technology itself is drawing more attention; projects at Citibank’s EMEA Mobile Competition were named as ‘Top Innovations.’ Social media startup, GetGems, is to receive $400,000 from the Magma VC in recognition of their innovative platform that is based on top of Telegram.
Byrne has purchased the world’s first cryptobond for the sum of $500,000. This will reduce the available total of the bonds to $24.5 million.
“It’s not exactly Jonas Salk injecting himself with his polio vaccine, but I wanted to own the first cryptosecurity ever issued,” stated Byrne. “I intend to demonstrate my belief not just in Overstock, but in the TØ.com platform that we built and, indeed, in the cryptorevolution itself.”
The purchase of the first ever Cryptobond marks a successful start to the Medici project and the expansion of blockchain technology into Wall Street-based trades.
This post was updated with information about the first bond purchase at 3:44 EDT on June 8, 2015.