Patrick Byrne, CEO of Overstock, recently announced his plans to sell the company and go all in on the blockchain industry. He’s currently busy developing an innovative blockchain platform for capital markets, called tZero.
tZero raised $134 million in one of the first security token offerings (STO). The platform aims to make existing traditional markets more efficient, transparent, and liquid with the help of blockchain technology.
tZero’s Pending Launch
Participants in the STO will gain access to their wallets on January 10th, 2019. According to a press release by tZero, users should expect its platform launch for security token trading by Q1 2019.
In anticipation of the platform launch, Byrne has said that many security token projects are preparing to register on tZero. The reason that many securities projects hope to list on the platform is that the majority of digital exchanges don’t allow security tokens.
According to tZero, users can expect that the token will be listed on domestic and international securities exchanges.
The Impact of Security Tokens
Security tokens are gaining traction in the cryptocurrency space because they offer far more than utility tokens. Paired with blockchain technology, security tokens can completely revolutionize the traditional financial world.
Security tokens give participants rights to a company’s product or share. These tokens can act as a claim to the wealth generated by a company. Whereas utility tokens offer a subscription to a service, security tokens offer users a piece of the company.
The U.S securities market alone is valued at $30 billion. The current cryptocurrency market capitalization is a drop in the bucket when compared with the global securities market.
The list of assets that can be tokenized is vast, a few examples are equities, real estate, debt, and bonds. The gravity of this possibility becomes even heavier because each asset can break down into numerous pieces.
What are the Benefits of Security Tokens?
There are many benefits when it comes to security tokens on the blockchain. Significant advantages are market efficiency, transparency, lower fees, global participation, rapid settlement, and no intermediaries.
Assets such as real estate will be able to be fractionalized in a completely transparent way. Imagine a real estate property that is owned by not one individual, but thousands. Everything is viewable on the distributed ledger to show ownership.
Intermediaries will no longer be needed, increasing efficiency and reducing fees. Smart contracts can replace the need for lawyers and brokers, along with paperwork and the overall management of the securities.
Security tokens also decrease the barriers to participation. As long as an individual or group is within regulatory limits, exposure to a given security token can be completely global.
Byrne’s Security Token Bet
Although tZero has been burning through millions of dollars with each passing month, Byrne is confident that the security token platform will pay off. Byrne defiantly stated, “I don’t care whether tZero is losing $2 million a month. We think we’ve got cold fusion on the blockchain side.”