Overstock CEO Patrick Byrne has long criticized Wall Street, calling the system “rigged.” He announced at Inside Bitcoins in Las Vegas that he was going to do something about it.
Retailer Overstock partnered up with Counterparty to develop a next-generation stock exchange called Medici, a transparent alternative that would repair the flaws of current financial institutions.
In an interview with TheProtocol.TV, he dug to the roots of this project. His goal, in summary, is “to take Wall Street behind the barn and kill it with an ax.” He wants to give people a chance at having property rights over their stock, which he claims is not the case today.
When asked what crypto-equity was, he answered the question in a peculiar way:
“Remember that these institutions that we have in society, like Wall Street, like government. They didn't come to us chiseled on stone from the mountaintop. They're just institutions that we set up to accomplish certain ends.”
“Well, now we can accomplish those same ends using the technology of the crypto revolution,” he said.
According to Byrne, the U.S. is “well on its way to an advanced state of oligarchy.” He claims that they “abhor anything that's peer-to-peer” because they can't control it. While the comments sound hyperbolic, keep in mind that last year a Princeton study called the U.S. a, um, well, “oligarchy.”
In more Bitcoin-esque terms, crypto-equity is a way to distribute company equity shares in “coins.” It entitles the owner to an “equal amount of equity percentage in the company.”
The Alternative System
“We're building the platform that will let companies issue a crypto-equity,” Byrne said. Overstock will be the first to issue them over Medici. Each coin will represent a share of stock.
It's a new frontier, which means there are plenty of expected legal hurdles. The team is working with a “big law firm” to get approval from regulators. They're asking how to handle all these things. “Once we do all that, it will be open to other companies,” Byrne said.
The Overstock CEO thinks that the blockchain, by using its transparent ledger, will slash the possibilities for manipulation. Secondly, by embedding securities in the blockchain, stock owners will have secure property rights over their stocks, which is not the case today. Rather, right now, “you have a daisy chain of contractual rights against someone else who actually owns that property,” said Byrne.
“We're creating an alternative parallel universe where everything's true. You'll really have your property rights. Trading will be peer-to-peer. It's not immobilized by some central institution that's owned by the guys who benefit from there being slop in the system.
“People in 10 years are going to wonder: How did we ever think it was OK to operate that way?”