Overstock Drops E-Commerce and Shifts Toward Blockchain

Written by John Butler
Posted November 27, 2018 at 10:57AM

I recently purchased a house. Nothing fancy, just a rancher out in the suburbs.

For the past few weeks, I’ve been working on the property, doing stuff like cleaning, minor handiwork, and getting furniture.

Actually, when it came to the furniture, I had no idea where to buy. It seems like no matter where you are, there’s about a half-dozen nearby furniture shops with an Everything Must Go window banner.

During conversation at Thanksgiving dinner, my fiancée’s mother advised us to check out Overstock.com (NASDAQ: OSTK). Apparently they’ve been around since 1999 and have good deals on furniture. My fiancée flashed me items on their site in between my seconds, thirds, and desserts.

I was a little shocked when we ended up finding stuff at a good price. I was even more shocked from what I learned after researching Overstock (while eating leftovers) over the weekend.

The company’s CEO, Patrick Byrne, plans to sell the whole e-commerce portion of Overstock and focus more on blockchain and crypto startups.

This week, I’ll let you know exactly what Byrne has planned for Overstock and what its implications are going to be.

What’s Going On?

This is basically what’s happening with Overstock: The company’s CEO, Patrick Byrne, has been a supporter of blockchain and crypto for years. To that end, he has decided to sell the e-commerce portion of Overstock to a buyer and direct the company exclusively toward blockchain advancement and assimilation.

Purportedly, he’s planned on this big move since 2017.

Overstock already owns a subsidiary, Medici Ventures, that’s devoted to “change the world by advancing blockchain technology.” Medici was started in 2014 and invests in blockchain and crypto startups. Overstock’s put over $170 million into Medici.

Now, unfortunately, Medici hasn’t yet lived up to Overstock’s expectations. It’s been bleeding money over the past year.

tZero is one of the projects being worked on by Overstock’s Medici Ventures. It’s a trading system, but it hasn’t been launched for commercial use yet. It’s just spending money, not earning any of it back.

Patrick Byrne doesn’t care.

According to Byrne, “I don’t care whether tZero is losing $2 million a month. We think we’ve got cold fusion on the blockchain side.”

Overstock’s Medici is also involved with Voatz, a blockchain-based app that allows electronic voting. Coincidently, a few weeks ago, I wrote a piece on Token Authority that delved briefly into Voatz.

While Byrne and Overstock are excited for blockchain’s future successes, they aren’t expecting as much from cryptocurrency. This is reflected in the fact that the company does not hold much Bitcoin.

Regardless of the company’s stance on cryptocurrency, Overstock’s share price appears to correlate with Bitcoin’s market performance.

Byrne expects the e-commerce sale to be completed in February 2019. He has not stated who potential buyers are.

Implications?

Overstock completely selling its e-commerce portion has several implications. First, it affected the company’s stock.

On Friday, November 23rd, when the pivot toward blockchain was announced, Overstock’s share price jumped over 25%. It went from $18 a share to close the day at almost $21. On Monday afternoon, however, the company showed a loss.

Keep in mind that the company hasn’t done too well this year. It’s down more than 60% for the entire year.

Second, Medici’s investments are going to get more support. Since Overstock will no longer be divided between operating its e-commerce segment and investing in blockchain, the latter will get all the attention and will certainly result in increased funding.

Last, I think this move with Overstock has ramifications for the blockchain and crypto industry — in a good way.

Overstock.com is one of the world’s first online retailers, being in business for decades, and it wants to put all its chips in the blockchain and crypto industry. It shows that big businesses are paying attention to cryptocurrency and blockchain’s benefits and subsequent advancement, and they want to be involved in the next biggest thing.

This could be a substantial gain for Overstock. I mean, Overstock was one of the companies that hopped on the 1990s internet wave. Medici’s projects could prove successful while also helping to improve and assimilate blockchain technology within society.

Perhaps Byrne is onto something and we’re witnessing the ripple of another wave... a wave where blockchain is widely used and other companies pivot toward the technology.

Happy investing,

John Butler, Jr.
Contributing Editor, The Token Authority

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