Overstock is one of the oldest Bitcoin-accepting companies in the US. Its parent company is also looking for ways to embrace blockchain technology. Significant progress has been made despite not launching a commercialized product. Even so, Patrick Byrne wants his company to focus on blockchain, rather than selling products.
A Strategic Vision by Overstock
The blockchain-oriented venture by Overstock is nothing new. It was initially announced several years ago under the tZero banner. This project serves as a trading system, yet it has not received a commercial implementation to date. The funding associated with this venture is significant, thus it is effectively costing Overstock.com a fair bit of money.
For company CEO Patrick Byrne, that isn’t a big concern. He is willing to let tZero burns through millions a month. The vision for future success in the blockchain industry is stronger than money can buy. Following the initial acceptance of Bitcoin payments, venturing into blockchain was the next logical solution.
It is expected this technology will change the commerce landscape as a whole. Overstock will remain the same business, although big changes are on the horizon. Byrne seems to lean toward selling the retail business altogether. This has not been officially confirmed at this stage, yet it is a distinct possibility.
On the stock market, the decision by Overstock triggers initial excitement. The price per share has risen by over 20% following this blockchain-related announcement. It is not the first time companies’ shares benefit from the excitement surrounding this technology.
Mounting Losses Cause Some Concern
Despite the vision by Byrne, the blockchain arm of Overstock loses money at a significant rate. It is expected Medici Ventures, the blockchain unit of the parent company, lost over $61m in the past year and a half. Building and developing new projects is a costly manner. This “incubator” also houses many startups working on new use cases for distributed ledgers.
Furthermore, Overstock itself has lost $163.7 million in 2018, according to The Wall Street Journal. That is quite a steep amount, even for such a household name. Company shares are also down by a significant amount. The declining value of Bitcoin has hurt the company in this regard. Shares’ prices dropped from $87 to $17 in recent months. Despite the setback, Byrne is not inclined to change the current strategy.
This further confirms blockchain and cryptocurrencies are here to stay. Although the lack of commercialized products is a bit odd, the development of products continues. tZero Is still met with high expectations, despite not having any official timeline of development. Rather than chasing short-term revenue, Overstock is looking at a much bigger picture. What that picture entails exactly, remains a mystery, for the most part.
Do you think that dropping the retail arm of Overstock.com is a smart move on Byrne’s part? Let us know in the comments below.
Images courtesy of Shutterstock, Rutgers
