If you don’t like Bitcoin, you may still have to use blockchain to buy securities in the future

There has been a lot of news about Bitcoin recently. The controversy over an Australian man being the founder of Bitcoin has just subsided, and another piece of heavy news has arrived. According to Wired , the US Securities and Exchange Commission (SEC) has officially approved the online securities issuer Overstock's Internet securities issuance plan based on blockchain technology.

Overstock is a company that is very active in the application of Bitcoin and related technologies. The official approval documents displayed by Overstock include the use of improved blockchain technology to achieve a more secure public issuance of securities.

In order to study the relevant technology, Overstock has also established a subsidiary, TØ.com, and is also applying blockchain-based digital security technology to other fields. The process of expanding into other fields is also subject to SEC supervision, but if Overstock can use its own platform to help third parties issue stocks, then it does not need to report to the SEC.

Overstock CEO Patrick Byrne will announce the plan at a Bitcoin conference in San Diego around 10 p.m. Beijing time tonight, but the exact time of implementation is unclear. In an interview with Wired, he said:

“This project is our highest priority for 2016.”

Blockchain is about to change our financial system

As I wrote before in Let’s Talk About Bitcoin Again: Microsoft Is Joining the Game :

Maybe it will never become a currency, but it will change a lot of things.

Blockchain, which evolved from a set of rigorous encryption algorithms, is itself an overall solution technology based on information storage and verification encryption. This is a relatively convenient solution to transaction data transmission and security issues in securities transactions.

In addition to the issuance plan approved by the SEC, Overstock has actually taken the next step. They have acquired 25% of the shares of a securities company called PRO Securities, and the next issuance system will also be built through it. And it is entirely possible to evolve into an "alternative" financial trading system. It is conceivable that it will replace the traditional stock exchange, but it will still take time.

Because of the blockchain technology, Overstock can not only issue private bonds, but also implement corporate lending business. This part of the business has long been controlled by middlemen, and the size of the US market alone is around $954 billion . But for now, according to the report approved by the SEC, Overstock only plans to test the waters with a $500 million stock securities issuance.

Overstock also said that some hedge funds and other service companies have tested the system and have directly expressed their hope to apply blockchain technology to other markets. Steiner also said:

“This is an overall trend we can already see, and of course there are a series of problems waiting for us to solve. But I am sure that in addition to Overstock, more and more people will invest in this direction.”

Safer and more convenient, but how to regulate is a problem

Although we have not seen actual products yet, the actual performance of Bitcoin has proved to us that blockchain technology is safe and convenient, and its strict transaction structure has greatly reduced the possibility of loopholes being maliciously exploited. Fully public accounts also make it easier to track liquidity.

Of course, there are many problems, and the most pressing one is regulation. Because "decentralization" has always been one of the most important features of Bitcoin, and the latter is the most important product of blockchain. If blockchain technology is to be applied to the securities market, it must be regulated by government financial institutions. What kind of rules and methods can be combined with blockchain technology to better achieve this should be the key to the problem.

Jeffrey Steiner, a lawyer from Gibson Dunn International Law Firm, who has long focused on the Bitcoin field, believes that this is a good time to show what blockchain technology can do for this market. He also said:

“This not only ensures the security of transactions, but also records transactions across the entire market. In this way, transparency can be further increased, costs can be reduced, and the existence of middlemen is no longer necessary. Traditional exchanges and brokers can also be eliminated.”