Overstock.com CEO Exploring Sale To Fund Blockchain-Backed Global Property Venture

It’s fairly easy to categorize Patrick Byrne, the founder of Overstock.com, as a visionary, although he is usually described in less glowing terms in the mainstream media, a typical adjective being “controversial”. Byrne founded the $1.4 billion internet retailer of mainly “closeout” merchandise in 1997. In January 2014, Overstock became the first major online retailer to accept Bitcoin in payment for goods. Byrne explained how he became an advocate of cryptocurrencies in an interview with Adam Taggart of PeakProsperity.com.

In the 1980s, I was a graduate student at Stanford in philosophy, but with a heavy quantitative and logic approach. I studied the mathematics that underlies cryptography. It’s called computation theory. It was a fascinating field, probably the only religious experience I’ve ever had in my life. I felt like I was seeing the face of God -- I loved it. So, in about 2012, I was reading Fast Company or Wired, and I saw this blurb about this new form of money that no government was behind, based on cryptography. And, I realized, Gee, this is like an application of that math I’d studied 30 years earlier. Someday I want Overstock.com to be one of the first companies to take it.

In 2017, Overstock’s share price has more than doubled due to its blockchain investments rather than its online retailing activities, which have seen it categorised as a cryptocurrency “play”. Blockchain investments are contained in its Medici Ventures business and include a digital currency trading platform tZero. As the Financial Times notes.

Medici’s most closely watched bet is tZERO, a regulation compliant exchange geared towards initial coin offerings, which has been touted as Wall St meets blockchain. It will launch its own much-hyped initial coin offering to raise funds next week.

On Monday, Overstock’s share price surged 23% after Morgan Stanley Investment Management disclosed an 11.4% stake in the company. 

In an interview published in the Financial Times today, Byrne discussed how he’s planning on selling the online retailing business to develop a global blockchain business focused on the property sector. According to the FT.

Patrick Byrne, the controversial entrepreneur who runs Overstock.com, is exploring options to sell the online retailer, whose stock has soared amid this year’s cryptocurrency mania, to fund an ambitious attempt to make a global property registry on blockchain. Hernando de Soto, a well-known Peruvian economist who argues that formalising land rights is key to alleviating poverty, has joined forces with Mr Byrne in the latest attempt to leverage the distributed ledger technology to tackle social problems. Mr de Soto and Mr Byrne, a long-term cryptocurrency and blockchain enthusiast who waged a campaign against short selling, have formed a non-profit venture called De Soto, Inc. that intends to gather local informal ownership records into a blockchain database. A pilot is expected early 2018.

“One of the possibilities is I sell the (Overstock) business and we have all the capital we need” to fund the new venture, Mr Byrne told the Financial Times on Tuesday, adding that he would cherry-pick a dozen of Overstock’s top talent to take over to De Soto by late January. “I feel a great moral obligation to refocus my life around this,” he added.

You could be forgiven for getting confused between Hernando de Soto the Spanish conquistador who led the first European expedition deep into the modern United States (he was the first European to cross the Mississippi) and Hernando de Soto Polar, the economist and President of the Institute for Liberty and Democracy (ILD) in Lima. The ILD is credited with more than 400 initiatives, laws and regulations which have changed the Peruvian economy. On de Soto Polar, Wikipedia notes.

The main message of de Soto's work and writings is that no nation can have a strong market economy without adequate participation in an information framework that records ownership of property and other economic information. Unreported, unrecorded economic activity results in many small entrepreneurs who lack legal ownership of their property, making it difficult for them to obtain credit, sell the business, or expand. They cannot seek legal remedies to business conflicts in court, since they do not have legal ownership. Lack of information on income prevents governments from collecting taxes and acting for the public welfare.

In its special May 1999 issue, Time Magazine named de Soto as one of the “five leading innovators of the century” while Forbes’ 85th anniversary edition named him as one of the fifteen innovators “who will reinvent your future”.



In May 2015, de Soto attended the 1st Annual Block Chain Summit hosted by British billionaire, Richard Branson, at this private Caribbean residence, Necker Island. De Soto was one of three moderators along with a former WSJ columnist and an editor of The Economist.

Byrne, who owns 40% of Overstock’s equity with other family members, has committed himself for five years to set up the blockchain property registry. The FT reviews the three options for selling Overstock which Byrne is mulling.

One option is selling Overstock’s retail business to a bricks and mortar company seeking a strong online presence, to avoid disruption by Amazon. “Really, since this summer there’s a mass freak-out in corporate America,” Mr Byrne observed.

The second is for the entire company to be bought by or take a large investment from a multibillion-dollar investment fund that does not “want to cede the earth to Amazon”. Mr Byrne claimed that one such fund had approached the company two months ago. He would not name the fund, but hinted that interest from Asia was especially strong.

The third option is to be bought out by a large private equity firm, which would allow Mr Byrne to step away from Overstock to pursue the De Soto project. Mr de Soto, a recipient of the $500,000 Milton Friedman Prize from the Cato Institute, a conservative think-tank, was linked to a land registry blockchain project with the Republic of Georgia in April 2016. But he says that after the inauguration ceremony, he was not consulted further.

The combination of Byrne and de Soto could be powerful force for good, exploiting blockchain technology in a positive way for free market capitalism. However, they will no doubt have to contend with central planners and central bankers who will attempt to hijack the technology for collectivist purposes. This was Ronald Reagan’s view on de Soto’s work.

"De Soto and his colleagues have examined the only ladder for upward mobility. The free market is the other path to development and the one true path. It is the people's path… it leads somewhere. It works.”

 

Comments

HillaryOdor junction Wed, 12/13/2017 - 13:09 Permalink

I'll never understand these guys.  Freedom is more important than capitalism?  What are you even talking about?  How can you have freedom without capitalism?  How can you have freedom without private property?  How can you have freedom even when there are restrictions on the types of property you can have (i.e. means of production)?You have just redefined freedom, or rather undefined it, and left it as some vague nebulous collectivist concept.  Decoupled from any real theory on rights and liberty, the word's only remaining purpose is to serve as an emotional catalyst to generate support for your propaganda.  Social contracts?  How do people believe this crap?  How can you be free when you are implicitly bound to a contract since birth that you never signed or agreed to?  How is that freedom?

In reply to by junction

tion HillaryOdor Wed, 12/13/2017 - 13:31 Permalink

'Capitalism' is a word that has a lot of baggage, mischaracterization, and dogma attached to it.  Consider for a moment the unethical rhetoric hurled at people who would make a simple proclamation such as "All lives matter" and it becomes easier to see why someone would need to clarify that they stand for freedom.  'Capitalism' is being held up as a dirty and evil thing by those who would redefine it in the typical Orwellian-Alinskyist manner. There are presently issues of people not holding ownership of that which they own (or ought to own by all accounts), and an issue of our perverted financial system with its questionable accounting practices actually losing track of who owns what, with people who don't own jack shit using monkey business to accumulate tangible wealth.  These are not small issues, nor are they issues that can be remedied without transparency.  Imagine what impact such a transparent system would have if applied to the current paradigm of creation of 'money' on the books through issuance of debt, the hypothecation and rehypothecation of assets acquired through that debt to issue new debt money to have evermore assets to hypothecate, and a tangled mass of potentially quadrillions of dollars in derivatives.   I hope Hilary didn't discard her cloth, methinks there is plenty more that will need wiping. 

In reply to by HillaryOdor

a Smudge by an… YUNOSELL Thu, 12/14/2017 - 11:02 Permalink

What a great man. I challenged him to a fight once. Did I think I could beat him? HELLS NO he's a degreed blackbelt, he studied with the Gracies, he would have walked all over me. But I wanted the bragging rights. I actually wanted to say "Patrick Byrne kicked my ass" just because it would be so freaking HONORABLE. How much admiration does it take to actually want somebody to kick your ass? That's how much I admire him.Now I'm just plain too old to either kick or have my ass kicked so I resume my normal humility.

In reply to by YUNOSELL

balanced HillaryOdor Wed, 12/13/2017 - 13:32 Permalink

He wants to create a mechanism for allowing actual ownership of real assets. Currently, property ownership is entirely at the discretion of the state, meaning you only own it if the state says you own it. IRS encumberances aside, this usually works in most first world nations. But in many places around the world, this isn' the case. Money and power can influence the state's opinion on who owns what. This is what he is looking to remedy.This is a further move toward power to the people. Those able to zoom out to view the larger picture will recognize this trend as a positive.

In reply to by HillaryOdor

HillaryOdor balanced Wed, 12/13/2017 - 16:05 Permalink

Sounds like he's trying to implement capitalism then.Sounds like he is very confused.And no one has power except the state.  Power is force and the ability to get away with using force.  It is not money.  Money can influence, it cannot force.  It is not power.  The people should never have power.  No one should have power over others except parents over their children.

In reply to by balanced

a Smudge by an… HillaryOdor Thu, 12/14/2017 - 13:04 Permalink

Confused?There is a huge air-gap between confusion and uncertainty. Patrick understands the underlying math. The math is sound. We aren't confused about this at all. Guys like us can walk you through cryptography and we can write it on a bar napkin. It's not hocus-pokus. It's not magic, it's math.What we're UNCERTAIN about is how it's being implimented in real life. All I can say is "FRAUGHT WITH DANGER".That's why the poster tmoseley is one of my favorite guys on this planet. He's a bitcoin advocate and evangelist but he never stops pointing out the dangers of this new tech.

In reply to by HillaryOdor

Conscious Reviver Freddie Thu, 12/14/2017 - 08:33 Permalink

At one point, Overstock was being shorted into oblivion and Byrne responded with a brilliant expose on the pervasive corruption in the stock market. It all had to do with failures to deliver (FTDs)  which amounted to counterfeiting stock shares. That's why he is "controversial" and why listed companies never go bankrupt. Instead, like Lehman and Bear Sterns, they are taken over at steep discounts to conceal the fact that the books would never balance. Wall Street called off the shorts and Byrne put away the accusations and everybody lived happily ever after ... sort of. 

In reply to by Freddie

HRClinton Bill of Rights Wed, 12/13/2017 - 13:54 Permalink

Attention, all Hill Billies, Mountain Men, and Frontier fans:Do NOT buy cryptos. Buy guns & ammo. Buy TP, rice & beans. Buy fish antibiotics and colloidal silver. Buy a horse & buggy for the coming Polar Shift and solar flare EMPs. Be sure to build bunkers. These are all good allocation of your fiat capital, because you'll have a future in Primitivism.But do NOT buy BTC or Altcoins. They are bad allocation of your fiat capital, because tech has no future. 

In reply to by Bill of Rights

a Smudge by an… HRClinton Thu, 12/14/2017 - 11:36 Permalink

Respectfully disagree. Once you have your physical preps, why the heck not diversify a bit into bitcoin?It seems there's this tendency to assume that we're long bitcoin. I keep a bit in the game and just keep drawing down "profits". I quote that word because I don't associate profit with doing NOTHING. But if you want to argue against having a cash machine in your living room please by all means eat your textured soy protein. We're going to Golden Corral.In mirth,-SP

In reply to by HRClinton

JibjeResearch Wed, 12/13/2017 - 12:32 Permalink

Get cryptos..., the blockchain business is coming.The average Americans can get ahead.It's a great opportunity for everybody. You, We are marching straight to globalization, nationalism is a losing side.Best Wishes

roddy6667 Wed, 12/13/2017 - 12:39 Permalink

Blockchain, blockchain, blockchain. It's the mantra du jour.Now is the time to buy up some penny stock company and repurpose it with blockchain. It doesn't matter what they do or sell. It can be a clothespin factory or a gay porn studio. A convent for crippled nuns or a buggy whip manfacturer. Roll out the press releases! Unleash the boiler room callers! Crank up a billion spam emails! The stock will triple because of blockchain.It doesn't matter that nobody knows what blockchain is or why it's supposed to be a good thing. Nobody cares! It's blockchain!

Synoia Wed, 12/13/2017 - 12:39 Permalink

We've enjoyed "property rights" for thousands of years without energy intensive blockchains.It is a legal change, not a technology change.For thouse of you who "own" fee property  - you are renting the property from the state. The rent in the US is called "property taxes"

Jack's Raging … BennyBoy Wed, 12/13/2017 - 13:17 Permalink

There are many problems that can stem from tying property titles to a block chain. Platform support/transition, Divisibility, relative value, determination of initial ownership, additions to the chain for land not yet owned, etc. IOTAs tangle technology is a superior choice in all regards, but still has many of the same legal/conceptual problems.

In reply to by BennyBoy

The Wizard Synoia Wed, 12/13/2017 - 16:59 Permalink

If your land is registered it is not private property. It is property of the agency in which you registered it. Allodial title means it is free from encumbrance. A warranty deed is not free and clear title to the property. This is why it is called "real estate" or "personal property". You will never hear of one's land referred to in property legal documents as "private property". Why do you think you pay property taxes? We are paying the king for the privilege of having his property.Look up the word "real" in Ballentine's Law Dictionary: real - Regal; royal; pertaining to the crown; pertaining to realty. Not ficticious or a product of the imagination.How will blockchains help free land from governments encumbering itA statutory example: All real and personal estate conveyed by any form of conveyance to a county or [and} its inhabitants, or to any person for the use and benefit of a county or its inhabitants, shall be deemed to be the property thereof. The conveyances shall have the same force and effect as if made to the county by its corporate name.

In reply to by Synoia

HRClinton Synoia Wed, 12/13/2017 - 16:03 Permalink

Re "...you are renting the property from the state. The rent in the US is called "property taxes"To (((them))) you are tax vassals, debt slaves and share croppers on their Plantation.That's why US Law and the IRS officially call you US SUBJECTS.Saudis and Israelis do not pay Property Taxes. They are not sharecroppers, vassals or slaves.But it's not all bad. You're #1. Lulz.

In reply to by Synoia

Exponere Mendaces Wed, 12/13/2017 - 12:57 Permalink

Cryptocurrency and Blockchain could end the "naked shorting" happening on the equity markets, but no one in the ZH comment section has a fucking clue.Funny, isn't it?You'd think they would be on the side of a CEO that took on Wall Street and has the scars to prove it.But no, they're still barfing up the usual bullshit - while sucking from their underfunded pensions. 

GodSpeed_00 Wed, 12/13/2017 - 13:01 Permalink

This is actually a really good idea, no more paying a lawyer to do a title search. Unfortunately for Mr. Byrne there are a few cryptocurrency platforms already taking this idea on. One namely being NEO the Chinese developed "smart economy" contract platform. It is really interesting to see how the space is coming together and I will definitely be keeping an eye on this one. They can take they western market and NEO takes the east. Either way Lawyers and Accountants will be losing a lot of money and even are at the risk of being obsolete in the coming years.

adr GodSpeed_00 Wed, 12/13/2017 - 13:10 Permalink

If the government doesn't recognize your contract, you haven't transferred anything. Besides if the title was stored on the Bitcoin platform but then was transferred to the Versitium network, or thousands of others, imagine having to sift through thousands of networks and billions of tokens to find a single title. Blockchain ledgers only work if the entire system adopts a single version from top to bottom.I don't believe you should be forced to get a marriage license, but you aren't legally married without one and it has to be stamped by someone of authority to be legal.It doesn't matter if the license was typed up on a typewriter or transferred through the blockchain, unless a legal authority has authorized the contract, it isn't binding.

In reply to by GodSpeed_00

GodSpeed_00 adr Wed, 12/13/2017 - 13:38 Permalink

"Blockchain ledgers only work if the entire system adopts a single version from top to bottom."When the dust settles I'd say there is room for anywhere from 2 - 8 platforms operating on Land Registry globally. But even if there were "thousands" that people use you are not taking into account developments in AI that would be able to search the transactions through endless blockchains and give you results almost instantly. If it's a quantum computer given the task to find blockchain transactions then the results will be instant without even searching.When it takes off this is something people will demand as it is a much better method of keeping records than which exists currently. There is no reason for any government to fight against land registry on a decentralized blockchain.Land registry is just the start, Birth Registry, Marriage.. virtually all contracts will be on decentralized blockchains. THis technology is revolutionary and governments either jump on board or get left behind the countries that do.

In reply to by adr

adr Wed, 12/13/2017 - 13:13 Permalink

Let me guess. Get your 100 Acre Peruvian plot for 100 Byrne Coin, currently $1 each.Well until the speculators start running up the price of the coins, get in early or get priced out of your Peruvian plot forever.I guess the idea is to get poor Peruvian people to buy the coins first and let the speculators run up the value of Peruvian land, most of it owned by Byrne and his cohorts, so the llama herder can become a paper billionaire.

any_mouse Wed, 12/13/2017 - 13:37 Permalink

"Lack of information on income prevents governments from collecting taxes and acting for the public welfare."

The two by four and the carrot of the state. Collecting taxes to do "good".

India Stack is doing this as well, and makes the same statement about tax collection and public welfare. Using technology to control over a billion people more efficiently.

Block Chains.

Technology advances and increases.

Humans stay the same.

GreatUncle Wed, 12/13/2017 - 13:41 Permalink

Well if it is recorded, especially with blockchain technology we know who owns it. Guess what? It will not be one of you ...Reckon the 1% will own the whole world and the ordinary people will be slaves enabled by the tech.

giggler321 Wed, 12/13/2017 - 14:50 Permalink

>>exploiting blockchain technology in a positive way for free market capitalism...When someone has got to tell you it's for free market capitalism, it probably isn't

Able Ape Wed, 12/13/2017 - 16:30 Permalink

How can I possibly own property when IF i fail to pay the property tax, the state sweeps it up?  And if we start using blockchain for everything, where's the electrical power going to come from?

MaxThrust Wed, 12/13/2017 - 20:23 Permalink

Short selling has been allowed simply because it is a transparent way to steal money from the average Joe.By tranparent I meen it's legal, it's right in your face and yet you don't see the slight of hand.