Overstock's tZERO Wins Patent for Integrating Crypto With Legacy Trading Tech

Overstock's tZERO won a patent last week detailing how it would integrate digital asset trading with legacy trading systems.

AccessTimeIconJan 7, 2019 at 6:30 p.m. UTC
Updated Sep 13, 2021 at 8:44 a.m. UTC

Security token trading platform tZERO, a portfolio company of digital retail giant Overstock, has won a patent outlining how it may merge legacy trading systems with cryptocurrencies and digital asset tech.

by the U.S. Patent and Trademark Office, the patent describes a "Crypto Integration Platform" capable of combining market information from a variety of sources to determine best prices. The system would then "secure both the digital transactional items (i.e., the funds for a buy order and the digital assets or liabilities for a sell order)" before conducting the transaction.

These transactional items could include digital assets, liabilities, commodities, cryptocurrencies, tokens or cash.

According to the patent, the system will also sign the transactional items cryptographically prior to matching the orders.

The document further explains:

"The Crypto Integration Platform provides, among other things, an interface between legacy trading systems and crypto exchanges that trade digital transactional items. In doing so, the Crypto Integration Platform takes a protocol for trading and communication between broker-dealers, Alternative Trading Systems ("ATS"), and exchanges, and transforms the message so that the trade can be consummated using cryptographic techniques."

The patent explains that it uses the technology to verify the ownership of all items, as well as ensure that only available items can be exchanged.

TZERO also noted that the platform can be used to conduct initial public offerings (IPOs) or other public securities offerings, as well as in secondary market securities transactions (noting that these offerings would be registered through the U.S. Securities and Exchange Commission).

Perhaps the most notable aspect of the platform, however, is its focus on integrating crypto trading systems with legacy trading systems.

The patent notes that a number of processes are being introduced which ensure orders for digital assets are submitted through a legacy system; crypto trading orders entered into legacy systems are authorized by the right entity; and that matching cryptographic transactions are based on the proper private and public keys.

As part of the procedure to properly introduce these processes, tZERO may develop "special-purpose hardware," the document explains.

The trading platform is expected to launch sometime this year, after unveiling a prototype last April. The startup has already begun some operations, however, after being tasked with developing a security token to trade cobalt.

Interlocking gears image via Shutterstock


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