Shares of Overstock (Nasdaq: OSTK) have skyrocketed this year…
Most recently surging up about 50% in December alone.
After all, Overstock’s retail e-commerce business is being crushed by Amazon.
One reason is that Morgan Stanley recently disclosed that it had acquired an 11.4% stake in OSTK. This sent shares up sharply.
Again… But… Why?
It may be because Overstock is increasingly being seen as a blockchain and/or Bitcoin play. The following are three possible reasons why the market is looking at OSTK as a blockchain and/or Bitcoin investment:
3 Reasons Why Overstock is Considered a Blockchain/Bitcoin Play
There are three primary reasons why Overstock is considered to be a blockchain and/or Bitcoin play.
- Medici Ventures: Overstock owns a company called Medici Ventures that invests in, and incubates, blockchain startup companies.
- Bitcoin E-Commerce: Because Overstock.com’s e-commerce business accepts Bitcoin from customers for purchases, and the company has accepted Bitcoin for some time.
- The tZero ICO: On December 18th (today), Overstock launched an initial coin offering (ICO) that will be treated as preferred equity in OSTK.
1. What is Medici Ventures?
Launched in 2014, Medici Ventures is a wholly owned subsidiary of Overstock.com, Inc.
Medici Ventures was created as an incubator of sorts for cryptocurrency ventures. Medici exists to manage and oversee investments in firms building solutions leveraging and servicing blockchain technologies with financial services applications.
Medici Ventures owns a growing portfolio of companies focused on financial applications for blockchain technology including:
- Identity Mind Global
- Blue Ocean
The top company within Medici Ventures investments may be t0.
t0 is a blockchain-based securities lending system designed to go head-to-head with Wall Street traders and middlemen, while providing savings for all parties through a direct blockchain solution for trading equities (stocks).
t0 is the platform for the tZERO initial coin offering (described below) which is being launched by Medici.
2. Overstock Accepting Bitcoin for E-Commerce Purchases
OSTK was the first public e-commerce company to accept Bitcoin for e-commerce purchases.
In 2014, Overstock partnered with Coinbase, the most popular cryptocurrency trading platform in the U.S. to promote the use of Bitcoin for e-commerce purchases.
Overstock has since expanded the list of cryptocurrencies they accept to include Ether, Monero, Litecoin and Dash.
According to the CEO of Medici Ventures, approximately 0.25% of Overstock.com’s sales are in Bitcoin.
Overstock retains approximately 50% of its Bitcoin related sales in Bitcoin and other cryptocurrencies. With the recent run up in valuations of cryptocurrencies, holding these currencies and treating them as assets could add value to the companies balance sheet.
3) tZERO Security ICO/Token Sale
OSTK has partnered with Alchemist, to launch a $250 million initial coin offering (ICO) called tZERO.
The tZERO ICO is unique in that it is perhaps the only ICO and alternative trading platform that is approved by the SEC (Securities and Exchange Commission) and FINRA (Financial Industry Regulatory Authority).
ICOs are increasingly popular and bubbly (possibly mania). This is because, even though cryptocurrencies, such as Bitcoin, have advantages as stores of value over, say, gold and silver, all cryptocurrencies are backed by nothing other than human psychology.
Indeed, it is believed that most ICOs are complete scams.
However, some people have speculated that initial coin offerings are starting to replace initial public offerings (IPOs). The number of IPOs is dropping because IPOs are becoming more difficult and expensive to pull off.
In contrast, it is relatively inexpensive to launch an ICO. By some estimates as little as $5,000.
This has led to a massive increase in ICOs in 2017.
The tZERO ICO launched by t0, an incubator company of Medici Ventures, which is owned by Overstock, purports to be a new trading platform for equities (stocks), other ICOs, and trading of all types, such as options.
Alchemist is a full service blockchain investment banking and advisory services company. Alchemist specializes in cryptocurrency/token sales, advising hedge funds, consulting on new capital formation and the end-to-end product development of novel blockchain applications.
Alchemist has been involved in 25 ICOs and, notably, was a co-creator of Ethereum and the Ether cryptocurrency.
Does this mean that the tZERO ICO will be a success?
I have no clue.
How to Invest in Overstock as a Cryptocurrency Play
- Buy OSTK: You can buy OSTK directly from any online or offline stock broker.
- Buy tZERO: To buy tZERO, you must be an accredited investor and register on the tZERO website.
- Invest in a Medici Ventures Portfolio Company: Research each company in the Medici portfolio listed above. Pick the company or companies that you find most compelling. Reach out to founders, etc. and/or venture partners and try to do a “tag along” investment in the next equity round. Or better yet, go work for them and get stock options.