Though it went unnoticed by many, Monday June 8, 2015 is a date that will go down in financial history. For on this date, the first cryptosecurity was created.
It happened on Overstock.com’s new T0.com (that’s the letter T and number zero) cryptosecurity trading platform. Specifically, the first piece of a $25-million digital bond issued by Overstock.com exclusively on the bitcoin blockchain. This bond is composed of 25-million digital tokens, each worth U$1.00. Today, Overstock.com CEO Patrick Byrne purchased 500,000 of these tokens, which exist solely as bitcoin-like exchangeable entities. If and when Byrne decides to trade these tokens, he will do so on the blockchain, and the validity of the trade will be established by the same legion of independent computers (the bitcoin miners) that also work to validate the thousands of bitcoin transactions occurring daily.
Of course these miners were originally conceived of as solely bitcoin transaction-focused. But along the way, bright minds came to realize that the application of the blockchain stretched far beyond these peer-to-peer trades. Indeed, the capacity for the bitcoin protocol to serve as a mere platform for a myriad of applications came to be recognized. The most commonly used metaphor is that of the TCP/IP protocols and how they have come to serve as the foundation for the internet and everything related to it. This secondary set of bitcoin applications has come to be known as bitcoin 2.0, and its evolutionary development has and will continue to serve as a key theme of this blog.
So, to extend the internet metaphor, if you were to compare today’s cryptobond sale to something, it would likely be the first item sold online and shipped to the new owner. The identity of whoever made that purchase is sadly lost to history, but we have the benefit of extensive documentation of the circumstances surrounding the sale of the first cryptosecurity, and some day it will likely be the answer to a business trivia question. So you might want to write it down.
By way of full disclosure, I work full time on T0.com and intend to use this blog in part to document the progress we make as we work out way through this brave new world of finance.