Crypto Correction Hurts Investors in Overstock, Square, and Others

Companies and their investors who have jumped on the cryptocurrency and blockchain bandwagon are discovering the other side of aligning their image to digital currency. During the bullish 2017 market, firms who announced support for Bitcoin, or included blockchain in their branding or business models, experienced sharp rises in their stock price. However, following the news that a crypto clampdown might be soon underway in Asia, the fear and uncertainty surrounding the markets of Bitcoin and its close cousins has spread to traditional stocks associated with the emerging asset class.

Payment processing company Square integrated Bitcoin buying and selling functionality to their app late last year. Following the news, the price of their shares immediately shot up. However on Tuesday, as the price of Bitcoin plummeted to around $10,000, Twitter CEO Jack Dorsey’s company also lost $90 million in market value. Square ended regular trading with a valuation of $15.1 billion. This equates to a loss of around 5%.

Meanwhile, e-commerce company Overstock suffered a similar fate. They’ve been long time proponents of cryptocurrencies and were one of the earliest big names to allow their customers to pay in them. Following the sizeable correction experienced this week, the price of their stock fell 11%. They ended the trading day with a loss of around $200 million. This put their market capitalisation at $1.8 billion.

However, it’s not just these larger names that have been affected by the downturn in the price of cryptocurrencies. Examples like Riot Blockchain (formerly Bioptix), a once-biotech company who recently moved into the crypto space lost 17% of their market cap. Meanwhile Eastman Kodak, the camera manufacturing giant, recently announced that they would offer their own cryptocurrency known as Kodakcoin. The news sent their stock price soaring 60% on the day it was announced. However, yesterday they too suffered 8% losses.

Typically, the South Korean and Chinese cryptocurrency markets have been some of the planet’s largest. It’s therefore not surprising that fear of government hostility towards digital currencies there would create such a downturn across almost all blockchain-based coins. No doubt that cryptocurrency naysayers around the globe will be busy penning yet more Bitcoin obituaries to add to the ever-growing list of times that Bitcoin “died”.


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Overstock has always been a firm proponent of Bitcoin and cryptocurrency. The company has accepted BTC payments for several years now. Surprisingly, Alaska is the biggest state when it comes to cryptocurrency purchases. It is a rather interesting development, as no one expected this state at the top of the list. These rankings firmly indicate Overstock is still pretty popular among cryptocurrency enthusiasts.

Most Bitcoin users aware of what Overstock is and does. The company specializes in selling all kinds of goods over the internet. They were also one of the first major companies to take a gamble on Bitcoin. So far, this effort has worked out quite well. It is evident people can’t buy something with BTC on the website every single week, though. However, there are certain US states where this service is a lot more popular compared to the rest of the country. The current top five is pretty shocking, though, as no one expected any of these regions in the top five.

Overstock Benefits From Bitcoin Price Surge

With Alaska leading the charge, a very interesting precedent is created. Up until now, there has been little indication of BTC support in this state. Then again, residents of this state are more prone to financial disruption, by the look of things. It also confirms online shopping is pretty popular among residents. Delaware, Oregon, Wyoming, and Hawaii are also very popular states related to Overstock purchases. An interesting bunch of US states, to say the very least.

While people in Alaska may place more orders, the revenue isn’t coming from there. More specifically, California, New York, and Texas generate most of the cryptocurrency revenue for Overstock. Again, no real surprises here, as it is only to be expected people living there spend more money. In Alaska, using Overstock is done for different purchases compared to California. According to Overstock, the company processes around $300,000 worth of BTC payments every month. A pretty solid number, although nothing spectacular either.

How all of this will play out in the years to come, remains unknown. This year’s price increase for Bitcoin has made the currency a lot more popular. Services such as Overstock reap the rewards from this success as people are more eager to spend BTC. If this growth keeps up, the company should process close to $500,000 worth of transactions per month. Now is a good time for other major retailers to look into cryptocurrency. There is some good money to be made and enough people willing to spend it.

Header image courtesy of Shutterstock

Shares in Overstock.com, a somewhat unknown e-commerce website, have seen rapid price increases thanks to their expressed interest in the underlying technology behind Bitcoin, blockchain. The stock closed up over 11% yesterday hitting a four-year high. The company have been quietly looking into the potential of blockchain to streamline existing services. The revolutionary technology could elimate the necessity for intermediaries and middlemen. This is achieved via an immutable and public record of all transactions taking place within a network.

The surge in stock prices that the e-commerce site experienced coincided with the likes of JP Morgan Chase and IBM announcing independent blockchain-based initiatives. On Monday, the two stated that they’ll be working with banks to create a more efficient system to streamline global payments using blockchain tech as the basis. Tom Forte, an analyst at wealth management firm DA Davidson told CNBC:

It is encouraging to see legacy financial services acknowledging the potential of the blockchain to disrupt and transform the financial services industry. This is adding further fuel to the Overstock fire as investors [see the company’s] early stage investments in blockchain.

Overstock have been working on blockchain for a number of years now and even have a division within the organisation devoted to the technology. It’s known as Medici Ventures and was one of the deciding factors for Marc Cohodes, a long-term investor and trader to move into the stock.

CNBC reports that he visited Overstock CEO Patrick Byrne in June. Suitably impressed, he quickly took up a position. The short seller commented on the way blockchain could be beneficial for Overstock and similar company’s customers and in turn, the businesses themselves. He also made a surprisingly bullish prediction for the website’s share value:

You’re not paying anything for blockchain and you’re getting retail at a steep discount… I think the stock’s going to go to $100.

However, like existing blockchain-based investments (namely cryptocurrencies), the stock in Overstock are anything but stable. Just a week ago, the shares surged before crashing 16.4% from their session high. This remained the case until they began to rise again yesterday.

Image: FinanceMagnates 

 

Overstock, the leading online retailer known for its foray into the digital currency technology sector with T0.com saw its shares go up by  over 19%. The good news follows the company’s Q3 earning report, which has been disappointing at best. The earnings report, published on Thursday shows that the company has lost over $3.1 million in the last three months.

yahooAccording to reports, Overstock’s revenues in the third quarter has been around $441.6 million, but the losses were due to last minute fall in its share value. Overstock’s shares reached its lowest point in the past one year by losing 20%. At the same time, the company registered a growth of 13% during Q3.

The market seems to have corrected itself, as the company recovered most of the losses —  it gained almost 95% of the value in a day’s trading. While the initial drop was attributed to market conditions and dwindling investor confidence, the recovery may be influenced by the company’s revenue potential and its strategic investment into the future, which was around $ 3 million without immediate returns.

Overstock’s founder and CEO Patrick M Byrne was quoted in the company’s Q3 earning release saying, “The retail business is re-accelerating and is fundamentally sound. It had a pre-tax loss of ($0.9) million in Q3, which included $3.9 millions of impairment and bad debt expense related to an international minority investment. Our Medici business cost us $3.0 million pre-tax this quarter, but that was well worth it as we achieve real progress in our blockchain and fintech initiatives that others have yet to demonstrate.”

It is quite possible that the statement was instrumental in restoring faith as it shows that the company’s retail business is still sound and a majority of losses were from its investment into next-generation blockchain technology platforms.

The announcement follows the company’s latest success of its subsidiary, T0.com. Recently, the blockchain trading platform announced successful trials of its online trading platform after it managed to successfully record the evidence of compliance with US Securities Exchange Commission’s SHO. As Overstock continues to develop the platform, it has decided not to wait for other companies to come on board. Instead, it will start selling its own shares on T0.com while welcoming others to join.

READ MORE: T0.Com Successfully Tests Its Blockchain-Based Trading Platform

Ref: Overstock | Yahoo Finance | Chart: Yahoo Finance |ImageNewsBTC

Overstock, one of the leading e-commerce platforms has announced the plan to start trading its own stocks on its proprietary blockchain platform.

T0, as the platform is called, has been in development since over an year, and is expected to feature improved equity trading settlement services.

The announcement to start using T0 was made by the company’s communications director, Judd Bagley at the ongoing Money 2020 event in Las Vegas. Overstock’s decision comes weeks after the T0 platform started offering its services to Electronic Transaction Clearing, Inc. The California-based clearing and trading securities company has partnered with T0; to act as a custodian of shares for Overstock’s upcoming blockchain preferred share offering.

In the event, Bagley made it clear that the company’s decision to offer Overstock’s shares on the T0 platform is about more than just leveraging upon the advantages of distributed ledger technology. The move is also expected to influence other players to follow suit as the industry is not prepared to use blockchain technology as a mainstream solution, mostly due to fears of offending the conventional banking and financial institutions with whom they have a good working relationship.

He was quoted by a technology magazine saying,

“We’re from Utah. We don’t care. We’re really taking a ‘burn it down and start over’ approach.”

At the same time, he also clarified that T0 can’t be referred to as a stock exchange for various regulatory reasons, but as a trading widget for equities among many other things.

The discussion at Money 2020 saw many financial industry representatives agree to the importance of blockchain technology based solutions in trading and settlements. One of the main advantages of distributed ledger technology is the speed of operation, where trades can be settled in hours, if not minutes in comparison to the existing system that takes about 3 days.

Many global stock exchanges are already working on research, development, and implementation of blockchain technology into their operations. NASDAQ, Australian Securities Exchanges, DTCC, New York Stock Exchange are few such institutions pursuing the technology. We can expect more exchanges and institutions to do the same and influence mainstream adoption of distributed ledger technology in the near future.

Ref: VentureBeat | T0 Blog | Image: NewsBTC

Much of the time, cryptocurrency needs the help of others to get its name out.

In recent months, bitcoin experienced a heavy spike in price thanks to renewed interest in China. As a result, the price of everyone’s favorite digital currency rose and now stands near the $450 mark. Not a bad place considering it was less than $200 back in August. It’s quite amazing what a little international publicity can do in such a short while.

Factom’s cryptocurrency has recently “fallen victim” to similar circumstances. Ethereum capabilities were recently introduced to Microsoft’s Azure, a newly-formed service that according to its website is, “an open, flexible, enterprise-grade cloud computing platform.” Following Ethereum came the introduction of Ripple and now Factom, and the company’s digital currency has risen about 600 percent in price (nearing 0.002 bitcoins, roughly $0.90). The good news? The gains have managed to stand their ground, suggesting that this is not some temporary rise we’re witnessing, but one that’s striving to last. You don’t see that too often in the world of digital currency, nowadays.

More than $1 million worth of the currency was traded within a 24-hour period. It’s the third-highest cryptocurrency trade following bitcoin and litecoin, and apparently, this is just the beginning. Factom has a market cap of $5.5 million.

Something like this happened last year when Overstock partnered with Counterparty, spiking the company’s cryptocurrency into oblivion before it finally experienced a rapid decline. While the news regarding Factom is exciting, some can’t help but worry if it will follow in Counterparty’s footsteps… Or is it possible the cryptocurrency will grow for an extended period?

The fact that Microsoft is the largest company (with a market cap of nearly $450 billion) to accept and push digital currency (predominantly bitcoin) will likely help keep things going north.

Factom also managed to raise nearly $1.5 million in seed funding just last week, suggesting the company isn’t planning to just topple belly-up like so many others.

Source

According to a report from Wired, the Securities and Exchange Commission (SEC) has approved the online retail giant Overstock’s plan to issue securities via the Bitcoin blockchain. This is the first-of-its-kind approval from the regulatory authority that might completely alter the way how public securities are issued and traded in the future. Overstock had earlier issued private securities using the blockchain which did not require the authority’s approval.

The blockchain is a public ledger of transactions; however, it can also be used to record data of anything including stocks, real estate, etc. Overstock’s CEO Patrick Byrne, however, has not yet confirmed as to when the public securities will be issued, but in a conversation with Wired, he said, “You can assume its high on our list of priorities for 2016.

The approval is a significant boost for Overstock as it plans to offer the technology to other businesses, so that they too can issue cryptosecurities. A successful debut of this technology in the public domain might facilitate or compel other companies to adopt the blockchain platform to distribute securities. However, this does not eliminate the need for approval from the SEC.

Jeffrey Steiner of law firm Gibson Dunn had some concerns regarding the same. He said that since this is new territory, the complete case might not be as simple as is perceived to be. He said that many investors might flinch from immediately using this technology. The attitudinal change will come from the participation of more big exchanges like NASDAQ in using the blockchain technology.

The blockchain ledger can help in drastically cutting down the costs associated with the issuance, tracking, and trading of cryptosecurities. It provides a transparent, secure, cheap and speedy infrastructure in the financial markets. The Bitcoin tech may also prevent market manipulation, as automated systems replace the traditional systems which can be rigged easily.

Blockchain technology has garnered a lot of attention in the financial world, as the decentralized public ledger could transform the way the industry keeps records or handles transactions. Several banks all over the world are trying to explore the applications of blockchain technology in their internal operations while some forward-looking companies such as Overstock have experimented with the bitcoin-related technology in securities clearing.

For blockchain-based private security company Symbiont, blockchain technology could spell the future of Wall Street through ‘smart securities’ or ‘smart contracts’.

Blockchain Technology and Smart Securities

According to Symbiont CEO Mark Smith, the company plans to focus on private equity markets. He explained that many startups are avoiding public offerings and that a robust private securities market might shape the future of finance.

“You look at companies like Uber in Series K or Series N rounds, the allure of going public isn’t what it used to be,” Smith cited. “What can be done then is transfers to other securities. Because we did straight equity and debt, we demonstrated you can do a bond on the bitcoin blockchain and then you can do it on a permissioned ledger system.”

Aside from private equity, Smith also sees potential in the corporate bond market. He also said there is a future for blockchain technology in the syndicated loans marke where groups of lenders work to provide funds for single borrower, thereby spreading out the risk associated with a potential default.

For CTO Adam Krellenstein, ‘smart securities’ differ from blockchain assets in that Symbiont has been able to create its own”full-featured smart contract language” that works with bitcoin using embedded consensus, and that was built from the ground up to be transferable to other blockchains.

“We have a smart securities system, it’s a layer on top of bitcoin, it encodes execution data and publication data in transactions, publishing to the blockchain, so all the data is on the bitcoin blockchain,” Krellenstein said.

Online shopping retailer overstock.com recently announced the issue of a $25 million corporate bond on the Bitcoin’s underlying technology, the blockchain.

As indicated in its press release, the Nasdaq company plans to attract hedge funds, private equity groups and other potential investors towards purchasing the “first-ever” blockchain bond, roughly titled as cryptosecurity. With the launch, Overstock aims to settle Wall Street transactions on the same day of their inceptions. Presently, it takes a maximum of three days for securities to reach settlement, which most Wall Street people refers to as T+3.

Overstock Logo LG WD

Cryptosecurity, as explained by Overstock’s CEO Patrick Byrne, is traded on a a cryptographically-protected distributed ledger — based on their newly founded TØ.com technology — which can settle payments on the same day. Due to its distinctive approach, Byrne believes this technology to impact the capital markets in the same way internet impacted consumership.

He told Wired that Overstock is ready to issue the $25 million bond even before raising the sum, for they just want “to get it out the door.” This is probably due to the fact that other Wall Street firms are also heading towards incorporating the Bitcoin technology to their respective platforms. They include the Nasdaq OMX and Digital Assets Holdings, both of which are reportedly working on  creating their own blockchain-based systems.

Coincidentally (or not), Overstock’s announcement has also come right after Nasdaq’s very own decision to increase Bitcoin blockchain trials last month. Back then, the American stock exchange had decided to boost the aforementioned experiments in order to improve the sluggish settlement procedures of the US securities. Overstock, in its press release, has somewhat reworded the quotes by Nasdaq.

Online retail marketplace Overstock.com has purchased a 25 percent stake in PRO Securities, following its earlier announcement to offer a stock that works on the Bitcoin technology.

In April, the Patrick Byrne-led online retail giant had filed a prospectus with the Securities and Exchange Commission indicating that a stock offering may be in the offing using the technology behind the digital currency Bitcoin. The filing read,

We may decide to offer securities as digital securities….the ownership and transfer of which are recorded on a cryptographically-secured distributed ledger system using the technology similar to (or the same as) the distributed ledger technology used for trading digital currencies.

Interestingly, there was no mention of the New Jersey-based trading firm PRO Securities in the filing.

The Deal is a Winner for Overstock

Overstock.com is now all set to offer to a digital currency post its stake purchase in the trading company which is registered with the SEC and is linked with the National Market System – the network of exchanges and organizations overseeing stock trading in the United States.

Even though Overstock is awaiting approval from the securities regulatory body, it can still offer private securities because of its association with the registered firm.

Sounds new? Not really!

Overstock’s unconventional CEO might be hoping to reinvent or reform the financial markets utilizing the Bitcoin technology, but he has company in Nasdaq OMX, Digital Asset Holdings, and Symbiont. Digital Asset Holdings is already in the process of creating a blockchain-based system for securities trading.

The Hope

Leading companies intend to provide a vastly independent, extremely reliable and a highly transparent method of trading in the stock markets. However, it remains to be seen whether the developers involved can aptly apply the Bitcoin technology to the benefit of the financial market participants.