Overstock is a huge household American ecommerce internet retailer that does over $2 billion yearly in revenue.
It was the first major retailer to join the Bitcoin market by accepting Bitcoin for payments on the site.
Patrick Byrne founded the company in 1997 and launched the company in 1999.
(BCNewsKorea): Hi, this is Blockchain News Korea. My name is Albert Kim and I’m here with Patrick Byrne, CEO of Overstock.com. Welcome to Korea.
(Byrne): Thank you Albert.
(BCNewsKorea): So Overstock is a common household name in America. Could you maybe explain yourself little bit to our Korean viewers?
(Byrne): Sure, Overstock, think of it like Amazon only with slightly lower prices and much better customer service. It’s an ecommerce with 6 million products and $2 billion a year in revenue.
(BCNewsKorea): Wow that sounds very impressive. And is there anything that brings you to Korea?
(Byrne): Yes, yes. We are involved in the crypto movement. In fact, four and a half years ago, the largest company in the world accepting bitcoin was a restaurant in Australia of $800,000 a year in revenue. We stepped up. We were a billion three ($1.3 billion), a billion four ($1.4 billion) at the time.
We stepped up and started taking bitcoin. But it was really to learn about blockchain and now we have made twelve blockchain investments across the world of blockchain.
And one of them that is very exciting is blockchain meets Wall Street, it’s called tZero. It’s a blockchain version of Wall Street and we’re over here both talking about it and talking to potential technology partners in Korea because we’d like to bring the technology here. And we’re also finishing up a security token offering.
(BCNewsKorea): Sure. You’re well known for getting into bitcoin back in 2014 and being very interested in the cryptocurrency space. What sort of brought you into the space in the first place?
(Byrne): Well, what got me interested in the first place was I did my PhD at Stanford and there I studied computation theory. And about five years ago when I was reading about bitcoin for the first time, I noticed it was based on the mathematics. I used to study the mathematics underlying cryptography. So that got me interested but then we really jumped in.
And I’m just excited about it because I think that for 6,000 years, humans, we’ve been creating these institutions so we can go about our daily business and strangers can’t trust each other but we all just learn to trust these institutions.
But what’s happening is it’s now possible using blockchain to do things to accomplish what we need to accomplish without those institutions because a lot of those institutions are about providing trust. And now we can get trust out of blockchain.
“In blockchain we trust.”
Which means it’s very disruptive to some of these institutions.
(BCNewsKorea): Right. So now you are affiliated with your latest project tZero. Could you explain that in a very simple way for our viewers here in Korea?
(Byrne): Yes. tZero is, we’ve created a blockchain version of Wall Street and all the functions you would expect in Wall Street, now can do within blockchain. And what I love about this is that it actually makes the regulators’ jobs easier for them.
All kinds of cheating that goes on in the normal Wall Street cannot go on in a blockchain version of Wall Street. And so we think it’s going to be possible to create a whole new version of Wall Street that all kinds of bad activity actually just become impossible to begin with.
(BCNewsKorea): Right. And do you foresee any sort of challenges with regards to tZero?
(Byrne): Well, we are taking on some of the biggest, most powerful moneybags in the world, so I expect they are not going to go down without a struggle.
(BCNewsKorea): Right. Absolutely. And regarding the blockchain, does your project use a blockchain and if so why would a blockchain be needed for tZero?
(Byrne): Yes, we do use a blockchain. At this point, it’s FlorinCoin (FLO) just because we like the settlement speeds and price for FlorinCoin. And why you want a blockchain is people always come out and when they see an application on the blockchain they say, “Oh that could have been done on a database.”
Well, the question is who owns the database? Is it a government? Is it a corporation?
The whole idea is to be able to build systems that we don’t have to trust anyone. You just have to trust mathematics because I think, what a decade ago, we had this big financial crisis in America and what came out of that is people saw that Wall Street has bought a lot of things, it bought some congressmen, it bought some senators, it bought some journalists, it bought all kinds of things.
But there’s one thing that Wall Street can’t buy and that’s the laws of mathematics. So if you build this system and it’s built on the laws of mathematics that govern cryptography, there’s no way for the big boys to cheat. I think that’s really quite revolutionary. We can return capital markets to being what capital markets are about.
So you know Paul Volcker, our great central banker, greatest central banker of my lifetime, he said in the crisis in ’08 that the last financial innovation that actually added value to society was the ATM machine and that was his quote meaning what he meant was that all these financial innovations, the very complicated instruments and complicated derivatives and all this stuff really didn’t add value.
So we’ve added all this very complicated stuff. It doesn’t make the stock market any better, it doesn’t make capital markets any better. It’s just a bunch of insanely complicated bets that guys with PhDs in math can do better than guys like me can do and take money from the public.
They don’t add any value so what blockchain is going to let us do is get back to a very simple, clear, clean capital market without cheating and that’s what capital markets are about. It’s for marrying up people with savings with entrepreneurs who need the savings and that’s what it’s supposed to be. It’s not supposed to be about who has the most mathematicians.
Too much value is being drained out of the U.S. capital market by Wall Street itself. And really the point of Wall Street wasn’t to make prop money, it’s to allocate capital so that other people can make money and now forty percent of all the profits made in America and corporations are made on Wall Street. That’s way too high.
(BCNewsKorea): Right. Absolutely. Such an impassioned response. So what excites you most about the tZero project?
(Byrne): What excites me the most is that we can, we have finished building out a lot of the ecosystem we are going to need. I’ll put it this away, the retired chairman of NASDAQ came out a few months ago and said 100% of the stocks and bonds being sold on Wall Street today could be tokenized and in 5 years, 100% of the stocks and bonds being sold on Wall Street today will be tokenized.
Well, if that’s true, we’ve built the system that they can all move to. We have built a full system that could support all of Wall Street. At this point, all of Wall Street could shift to tZero and we have the capacity to support it.
(BCNewsKorea): Wow that sounds pretty impressive. Now with regards to the cryptocurrency market in general, it seems like we’ve been in this correction for about four months or so. Do you have any future predictions on where prices might go, where the market might go in the short term future?
(Byrne): No, I don’t really have thoughts on that. But what I can say is that tZero has done something very interesting where we have built a connection from the American national market system where there are trillions of dollars.
We have built one over to the world of cryptocurrencies and coins. We have not yet turned it on but if we turn that on, this is what is going to happen.
There are 3 trillion dollars in hedge funds in the U.S. There’s 3 billion dollars of it that has moved into crypto and that’s because hedge funds do not want to deal with wallets and they are not going to do all that.
Well, we have built a pipe between these worlds. 3 trillion dollars can move in here and when that happens, I think it’s probably going to be good for the market.
(BCNewsKorea): Right, right. We definitely look forward to that. Do you have any final words maybe you’d like to give our viewers here in Korea? Anything you’d like to say.
(Byrne): Sure. I’m honored to be here in Korea and to have been received so well. Korea has a fantastic reputation. It’s the number one country for crypto per person. It’s number three to the U.S. and Japan, but really when you look at the usage per person, it’s the highest in the world.
So I really applaud Korea. You’re the most advanced in the world on this. The rest of the world is going to do what you’re doing. They will get the joke in a few years.
But you really are leading the way and have a wonderful reputation around the world for how advanced you are in blockchain.
(BCNewsKorea): Thank you so much for your time Patrick.
