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In a Quarter 3 conference call with investors, CEO of Overstock Patrick Byrne expanded on his plans to team up with Counterparty to create a decentralized stock exchange called Medici. Once developed, Byrne says Medici will be a “tollbooth” between the worlds of traditional finance and crypto finance.
Plans for this project go back to Byrne’s keynote speech at Bitcoin 2014 in Amsterdam, where he first mentioned the possibility of using the Blockchain to replace traditional methods of issuing securities. In the conference call, it was revealed that that speech was a strategic move to attract interested parties that could help Overstock achieve this goal. Following the speech, “thirteen different groups around the world” offered their services, with Counterparty being chosen after a vetting process.
Byrne said that Counterparty was selected for multiple reasons:
“It's an open-source movement that stays true to the bitcoin philosophy. It is transparent. It is built within Bitcoin rather than being a proprietary alternative to bitcoin. There's just all these aspects of it that made me think these were the right fellas to go with.”
The decision to develop Medici should come as no surprise to those who have follow Byrne’s career. As the man behind Deep Capture, he has long been railing against corruption on Wall Street and what he believes have been targeted attacks against his company’s stock using a strategy called naked short-selling. The team from Counterparty involved with Medici’s development told the Wall Street Journal in a conference call that the system’s design will prevent that specific tactic.
Unfortunately for those hoping to use Medici, there is no planned date for when it will be up and running. During the conference call Byrne said that “in the absence of there being a government,” the system could be up and running in three to four months, but because of the need for regulatory approval there is no way to predict the true timetable.
Mark Griffin, General Counsel for Overstock, chimed in to say that “initial discussions” with agencies have yet to take place and that, since this is a “paradigm shift” for regulatory agencies, it is hard to predict what the framework for implementation will look like. One thing is certain, current regulations necessitate that Medici feature a centralized clearing house. Merging this requirement with the project’s decentralized nature will be a key challenge.
During the conference call, the man who once told Wired that Bitcoin is the solution to our oncoming zombie problem also dropped some insight into why he is so passionate about capitalizing on Blockchain technology (beyond it’s ability to fight corruption and the undead).
It seems Byrne has regrets about missing out on previous trends:
“We were early in the game in mobile, so early that around 2002 nobody adopted and we eventually discontinued it. We had a great social media platform very early on. Again, the same story. So I kick myself about some -- about having stood just a foot away from some of the great technological innovations of the last 15 years and not really seized them correctly. That's not going to happen here. We, through some fluke, have ended up right in the crossroads of this emerging technology.”
While he hopes that Overstock is hopping on Bitcoin at the right time, there have been signs that they could be too far ahead of the curve once again. Commenting on international Bitcoin purchases, which were opened up about a month ago, Byrne commented that consumer response has been “quite a bit slower than (the) domestic program when it launched. I had expected something much bigger, but the international purchases -- I mean, they are happening, but they're -- it’s de minimis.”
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