Global e-commerce giant Overstock.com has hired the developers behind peer-to-peer decentralized exchange Counterparty to develop a new stock market platform powered by cryptocurrency technology.
The developers will work on a platform called ‘Medici’, an evolution of Overstock’s previously announced ‘cryptosecurity’ offering that will allow not only Overstock, but other businesses, the ability to issue cryptosecurities to the investing public.
Overstock CEO Patrick Byrne made the official announcement at the Inside Bitcoins Las Vegas conference today during his keynote speech entitled ‘Cryptosecurities: the Next Digital Frontier’. The three-day conference began on 5th October and will run through 7th October at the Flamingo Hotel & Casino.
Speaking to CoinDesk, Byrne indicated that this latest move finds Overstock advancing beyond the exploratory phase with crypto 2.0 technologies.
Byrne told CoinDesk:
“We’re committed. We formed a business unit within Overstock, we have lawyers, we have developers, these guys have a multimillion-dollar budget and they have moved to Utah. We’re full speed ahead.”
With the announcement, Counterparty founders Robby Dermody and Evan Wager told CoinDesk that they have now turned their focus primarily to the Medici project, though this will entail work for Counterparty as Medici will be built on top of the Counterparty protocol. Dermody and Wagner are now working to find replacement candidates to cover their duties at Counterparty while working on Medici.
The developers will first work to create the software as part of the Overstock corporate entity, but they will eventually be allocated to a new company that will seek to monetize the platform and introduce new value-added services.
Launched in January, Counterparty quickly built itself into a market leader using a DIY approach, the bitcoin protocol and Counterparty’s own native currency XCP to facilitate digital asset exchange. Counterparty developer Adam Krellenstein will continue to work full-time on Counterparty following the announcement.
In addition to the Counterparty development team, Byrne told CoinDesk that the project will also involve Perkins Coie, the Seattle-based law firm that represents some 40 startups in the bitcoin space, including major players such as bitcoin wallet provider Xapo and digital currency exchanges Kraken and Coinsetter.
Byrne indicated that Perkins Coie will help the Medici project with what will perhaps be its toughest challenge, securing approval with the US Securities and Exchange Commission (SEC), the US federal regulator that enforces securities law and regulates that nation’s stock and options exchanges.
Byrne told CoinDesk:
“The technology is a hurdle we can quite comfortably clear. We don’t know yet how high the regulatory hurdle is, but we’ve jumped regulatory hurdles before and we don’t have reason to think this is insurmountable.”
Overstock first announced its intention to explore a cryptosecurity offering via a company wiki page in late July.
At the time, Byrne told CoinDesk that the move was, in part, an attempt to raise the issue of cryptosecurities with the SEC.
For the initial proposal, Overstock asked the bitcoin community to provide the company with information on asset trading platforms that might be able to host the offering, with BitShares, Counterparty, Ethereum and NXT all receiving attention among a wider field of competitors.
Byrne said that while he had considered other platforms, he ultimately felt that the Counterparty team and its underlying use of the bitcoin protocol provided the best opportunity to bring his ideas to light.
“The block chain has been pounded on by all these hackers around the world,” he said. “It’s the most secure.”
Byrne went on to laud Krellenstein, Dermody and Wager for their dedication to philosophy, math and computer science, as well as their decidedly non-Wall Street approach to finance.
“They’re true to the ethics of bitcoin, true to the open-source nature, they’re true to the principles,” Byrne added.
At press time, the value of XCP, Counterparty’s native currency has increased more than 150% on the news.
Dermody told CoinDesk that his team saw the Medici project as too big to ignore, given the effects its success could have on businesses and the wider economy.
Likewise, Wagner said Medici will go beyond previous asset exchange projects through its effort to ensure the technology meets the approval of US regulators.
“Medici will provide a comprehensive built-in digital asset exchange, [but] that’s very different when you’re going through a process of regulatory compliance,” he said. “This project is going to make that effort.”
Byrne said the name Medici was also chosen as a reflection of the project’s ambitious goals, as it takes the name of the famous 15th century Italian bank that made notable contributions to the fields of accounting and banking.
“It seemed like an appropriate tip of the hat,” Byrne said.
Hat tip to WIRED