From Paper Trading, To Contractual Rights, To Blockchain
26 February 2019 - 5:19AM
ADVFN Crypto NewsWire
Bitcoin Global News (BGN)
February 25, 2019 -- ADVFN Crypto NewsWire -- Overstock.com’s
investment subsidiary Medici Ventures has continually highlighted
CEO Patrick Bryne’s drive to forge their path in the new industry,
and help make drastic improvements to current financial systems.
Overstock.com was one of the early adopters for accepting
cryptocurrency payments, but now Patrick Byrne is moving his
interest entirely to the blockchain and cryptocurrency industries
with the tZero investment platform. He plans to sell Overstock.com
entirely, while working to onboard new businesses and new retail
investors into the fintech space.
Do you know what you
own?
Last week Patrick Byrne was the
keynote speaker for the topic of investing in blockchain at an
event hosted by Oppenheimer & Co. in New York City. For the
majority of people, even including those familiar with the
traditional investment world, blockchain technology and
cryptocurrencies are more or less a mystery. But rather than dive
into the details of this foreign technology, Byrne took a step back
to help the crowd reassess their understanding of the investment
model they currently feel comfortable with.
Paper
Trading
In the early 1900’s, stock
exchanges operated by literal paper trading. Pieces of paper that
represented actual shares of a company changed hands daily. These
certificates were then round up each day and transferred my
couriers to their new ownership. As world wide stock exchange
trading grew dramatically in the 1960’s this became a major issue.
In New York City, it reached a tipping point with the great “paper
blizzard” of 1970. The amount of physical paper was too much. The
NYSE attempted to dull the effects by switching to a four day week
with abbreviated trading hours, but it wasn’t enough.
Indirect
Ownership
The eventual fix to the problem was
that central depositories would hold the true certificates of
ownership, while the shares traded by investors would represent a
contractual agreement to the third party depository that they own
the share.
“All the corporate shares in America are owned by the company
called Cede & Co, and what you actually have is a contractual
claim against a corporation, that has a contractual claim against
another corporation, that has a contractual claim against DTCC,
that has a contractual claim against Cede & Co. What can go
wrong?” - Patrick Byrne
Blockchain
Transparency
Patrick Byrne continued to
highlight the aspects of blockchain technology that would improve
market structures and processes, such as full transaction and
ownership transparency along with removing the need for a third
party depository - “all kinds of systemic risks go away…
Imagine we have a magic ledger which is cryptographically
protected, public and transparent – no way to cheat.”
By: BGN Editorial Staff
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