Overstock: Cryptocurrency’s Reverse Merger?

in cryptocurrency •  5 months ago

My journey into cryptocurrency began when I bought one Bitcoin after reading about it. I forgot about that BTC for a while and when I checked it again, the thing had greatly increased in value. Since then, I have gone on to lose and gain and lose and gain with other cryptocurrency projects. But considering that I’m financially comfortable, my quest is less about the money and more about what we can achieve with Steem and other cryptocurrencies.

Overstock was one of the first major companies to engage in cryptocurrency. Patrick Byrne, its founder and CEO, is a huge crypto advocate. He announced several years ago that Overstock would accept Bitcoin (one of the first major businesses to do so) and later announced its interest in creating an asset exchange. Overstock also has pursued plans for an ICO, which would allow people to own some of its value in the form of its cryptocurrency. In addition, through its Medici Ventures subsidiary, Overstock has other investments in the crypto space.


In early August 2018, the company announced that Hong Kong private equity fund GSR Capital was making a major investment. Part of GSR’s investment is in tZERO tokens; GSR expressed excitement at participating in Overstock's plans for a tZERO asset exchange.

According to CNN Money, Overstock essentially has become a crypto company.


Fading Retail Business, Growing Cryptocurrency Business

I’ve never purchased anything from Overstock. I wanted to support what they were doing, but after looking at the retail site a few times, I couldn’t find anything I really wanted to buy there (perhaps because I don't have any pressing needs). And in general, I don’t like using Bitcoin for purchases because it’s a first-generation prototype that can take too long to confirm a transaction. Other cryptocurrencies, such as Steem (which is virtually instant and free to send) seem better suited as a medium of transaction. Bitcoin itself is more of an investment in the future of this sector.


Apparently, I’m not alone in not being able to find anything to buy at Overstock. The company’s retail business has been declining along with its stock price. Keeping up with the Amazons is tough business. But it continues to make investments in the cryptocurrency space, which show much more promise. In effect, Overstock seems to be focusing more on the cryptocurrency space and less on the retail business that once was its core.

Over time, it is easy to imagine that the retail business may fade further while Overstock essentially becomes a cryptocurrency VC fund and exchange.


Going Where No U.S. Public Company Has Gone Before

There’s one major problem with this, which Patrick Byrne seems to view more as an opportunity. Overstock remains a public company in the United States. Translation: every move it makes is heavily regulated. Short of applying to sell alcohol or become a bank, it’s hard to imagine any sphere with more paperwork and regulatory hurdles than public companies face in the United States.

Have you ever heard of the term ‘reverse merger’? It’s when a private business takes over the shell of an older company that already has a stock trading symbol. For example, there might be an old oil drilling company that has experienced tough times and basically has become a failing business. At the same time, there is a new gold mining company with a promising claim. The gold company would love to make its stock available to mainstream investors, but it does not want to face the long, difficult process of getting on an exchange and issuing an IPO.


So what does it do? It merges with the older shell of a company, taking over its name and having a ready-made ability to offer stock. That is known as a reverse merger. Most mergers occur when one company wants to join another which has some successful ingredients. In the reverse merger, it’s the smaller company coming in to take on the older, existing one, perhaps for the sole reason that it can use that company’s trading.

Taking Some Hits for the Team

Every trailblazer in the cryptocurrency space uses its own money to fight battles and win precedents that will benefit this entire sector. Several years ago, for example, Coinbase and Bitpay hired their own lobbyists in Washington, DC to help explain cryptocurrency to members of Congress and of the federal agencies. When a damaging bill is killed or the government creates a new law that is supportive, we partly have these private companies to thank.


Similarly, as another example, the CEO of Binance has travelled the world to seek governments that are friendly for his cryptocurrency exchange. At a surface level, the work may be in his own best interest. But he also has helped the entire sector by devoting his time, energy, and money to explaining cryptocurrency to these governments and serving as a bright spokesman for it.


Patrick Byrne and Overstock also have suffered some blows on behalf of the larger team. We probably have not heard about most of them because they have taken place in private conversations and negotiations with regulatory agencies. In pushing for an ICO of a public company, Overstock has gone where no company has gone before. And even if it has not yet succeeded in getting the government to allow what it wants, it has succeeded in educating government leaders and learning a lot more about what is possible under the present regulatory scheme. Progress takes time and it is not always visible.

Why on earth would anyone CHOOSE to use a public company for an ICO? Instead, they could create a shell company in some offshore tax haven and run their experiments somewhere that does not have so much regulatory scrutiny, giving them a much freer hand to do things their own way. But Byrne and his crew are trailblazers. They invite the regulatory scrutiny that intimidates others. They aim to address the doubts, answer the questions, educate the officials involved, and perhaps over time transform that same regulatory scheme so that it is more accommodating to the needs of average people and entrepreneurs.


As CNN Money noted recently, Overstock is basically becoming a cryptocurrency company. And if that’s true, then it’s something of a reverse merger for the cryptocurrency sphere. GSR Capital's recent venture capital investment into Overstock and its crypto business indicates that some investors like what they see. Overstock has the public company status and the stock trading symbol (and goes through the regulatory headaches). Meanwhile, cryptocurrency projects provide the main driver of value. Doing so as a public company will not be easy, but to paraphrase Charles Dickens, it’s a far, far better thing that Overstock does (than it could be doing).




Disclaimers: Are not needed because I do not own stock or tokens in this company. But I enjoy following its crypto transformation. All images are public domain, except for top photo, which is from CNBC.com.

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It's quite important to him, yes. Time will tell if he's a genius or not. He certainly seems more forward-thinking than a lot of his corporate peers.

Over time, it is easy to imagine that the retail business may fade further while Overstock essentially becomes a cryptocurrency VC fund and exchange.

@donkeypong, I never heard before about Overstock platform like as Amazon site. Your post received a good interpretation of what this platform is going to be used in the future. I buying some goods only using from Amazon.com through internet payment. Can you give me some idea for me overstock bigger than amazon from trade margin?

Have you ever heard of the term ‘reverse merger’?

Nope...It's new concept to mine and need to studying more. With merge small company with top rated companies can be better mix up. Probably those businesses would be gonna higher. Finally make opportunity to offer stock. Thanks for your informative blog.


Amazon is much bigger and more pervasive; that's one reason that other retail companies have had business problems in recent years.

The world of cryptocurrency is currently being attracted by the world community now ... I don't understand about this but I read to learn about bitcoin or steem, thanks to this potential @donkeypong

@donkeypong I think it is lovely they are shifting base more and more to crypto. They obviously would not be Amazon to their game, so this opportunity of becoming pioneers in a space with huuugggeee potential must not slip by


It does seem like a special moment in history for both technology and economics, but we will see how things develop.

Great post. I have a hard time finding things on Overstock as well, but have made one purchase on there using bitcoin. Once the order was placed, I had about 20 mins to transfer the btc. Once transferred, I received an order complete-type email within 30 mins. It was actually pretty smooth and I was surprised how easy it was (sent from Bittrex wallet). I wouldn’t do it again right now though... btc is headed higher and now is a great time to add btc and steem!


It's good to know the process works well. Thanks!

Wow!! This is a really a bold step by Overstock, I hope they are ready for the war that comes with it.. But if they eventually succeed, it will make way for other crypto currency and entrepreneurs that are involved in Crypto..

Very insightful. It's nice to jnow those companies and individuals that are championing the cryptocurrency course and taking big risk to see its worldwide adaptation and penetration. Over stock seem to be making headway. Regardless of the stringent rules in the United States, they've been to maintain their stand, but the questiin now is: for how long?


The question is how long it will take the government(s) to realize that some of the future lies with crypto. They'll probably be the last ones to do so.


I think the do realise that the future lies in crypto and the see the potential threat it poses to their already worked out system. Until they find a way to pervert the system, they will continue to resist.

This is a great subject that makes you wonder... What if Overstock were to accept other cryptos that are much faster (steem, eos, stellar...) and switched their stock to what people resonate with and purchase...

Do you think that could revive the original model and make it succeed?


If they get their asset exchange working, there's no reason for them not to effectively accept payments in those various currencies or have a seamless Shapeshift/Blocktrades type conversion available for anyone making payments.

I have honestly forgotten all about that company. I wonder if they just start accepting more cryptocurrencies what that would do for them in the long run. I don’t recall ever wanting anything either from that site.

I was once told if you want a local store to sell your product have customers come forward and contact them asking if they have such and such item. When that store has to keep telling the customers “no we do not have that item.” It might just open the doors if they think there is enough demand to make it worthwhile.

Perhaps that is our problem with Steem, not enough direct lobbying toward companies to accept it. By having possibly buyers keep asking “do you accept Steem a 0% transaction fee cryptocurrency that is fast.” They just know BTC. People can shout all they want on twitter it would not be the first time they stop something from trending or shadow banned it so others don’t hear it.

When it comes down to though companies don’t like missing if there is a sudden demand for it. Which requires being more direct towards them. Seems like this platform already has a solution that might make it easier for them to do business if they don't already accept Steem.


Yes, I had forgotten about them for a while also, but was reminded by that news article about the Hong Kong venture capital infusion they received recently. They're still working on these plans.

Much respect to Overstock, instead of fighting reality, they are embracing the change and adapting with it which will no doubt result in dividends (no pun intended in the future.

Back in Decemeber 2017,I came to know about BTC and then I entered the Cryptoworld to know more about it closely. To be very honest till today I am little bit down and hoping for the best.
Well, @@@donkeypong I did not know much about the reverse merger technically but now i fully understand the concept.

It merges with the older shell of a company, taking over its name and having a ready-made ability to offer stock. That is known as a reverse merger.

I am pretty convinced that #overtock has gained the popularity all over the way reverse merger works.

Thank you so much for this wonderful research based blog, Great work @donkeypong :)

It's weird, I though Hong Kong has a pretty light government, surprisingly they still registered as a US company. Overstock isn't that popular as online retail website, but good to hear they'd like to adopt crypto payment.

I agree with you, Bitcoin is not ideal for payment, not as fast. Maybe BCH, or steem even better. When can we finally use Steem to make some real life purchase?


As the development comes closer to maturing, hopefully we'll be able to get a lot more sites and apps to use Steem and its SMTs.


Would certainly be cool! Can’t wait. 👊

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Holy sh@t this is incredibly encouraging to see such a powerful man adopt the IMPT. of crypto with a Comapny like Overstock.

I truly believe we got on board with this in the very early stages. And will be rewarded highly in the next 5 to 10 years.

Like I said exciting times and thanks for sharing @donkeypong. I do see where you talk about some challenges with this Overstock in taking on this . But wouldn't it be cool if Bezos starts seeing the value in all this. Talk about a Game changer lol

Resteemed this post


5-10 years is a good outlook period. A lot of people are looking for a quicker return than that, but by then things will be quite well developed. It's hard to predict 5 months ahead in crypto, much less 5 years!

Thank you for that post, it was interesting to read, also I have to mention it was easy to understand. Cryptocurrency is a hot topic nowadays, I remember my 71 year old mother asked me recently what is cryptocurrency and if it worth to buy Bitcoin for her pension. That means now it is a right time to learn more about and to understand what is going on on cryptomarkets, if even pensioners discussing that in their friends circles.

I can understand that it is a good deal for some companies to get a "reverse merger", again have never heard before but that sounds very clever, as governmental structure is so complicated and being just at the beginning of business that can make people frustrated, but with "reverse merger" I believe both side would benefit. Enjoyed reading and found quite interesting facts @donkeypong.

He has a Warhol portrait of Mao Tse Tung, names a cat Che Guevara, and water skis in Nicaragua. I don't think an Austrian School economist would support a crypto currency which is already being marketed in a futures market. This is a ponzi scheme that will collapse. He (and others) skim a lot of profit off the top before it does.


He's already worth tens of millions. Anything is possible in crypto, but that would be quite dumb for the leader of a public company, since it would put him in jail for a very long time.

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What a ridiculous waste. I have never sold upvotes in my life. And I do not return the donations that come with spam requests because I think it sets a bad precedent of giving them some status. It also would be a big time waster. I ignore them completely. Just this once, I will upvote your comment here to a similar amount of money, so that others can learn this lesson also. In the future, I will downvote such comments, which are irrelevant to the topic of my post.


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Even though Patrick doesn't achieve what he set of for. He'll leave us closer to it

Overstock being involved in a reverse merger would be quite interesting. I hadn't thought about that possibility before. Though perhaps that is the route they end up going if regulatory hurdles get in the way of becoming a crypto exchange etc.

excellent write up, emailed it to a few buddies

a very useful program,i support and agree the program,success is always my brother,@donkeypong

Yeah you're right in 2015, Overstock.com became the primary company to simply accept the cryptocurrency as payment. Byrne still runs the retail web site, however he poured his time and profits into funding blockchain-based start-ups, together with a different exchange. And he is attracted a following of crypto fans UN agency share his vision for a future oil-fired by blockchain.

VICE News stayed with Byrne at a celebration in Miami, at buy in headquarters in UT, and at his closelipped ski house to search out out why he is gambling huge on the technology behind bitcoin.

However, i think cyptocurrencies and Bitcoin is not only our future but it's revolutionizing the financial world as we know it. "80-90%" savings from the present model.Sustainability is possible with the Right Tools and Marketing for those who want to capitalize on Crypto! So inspiring!

Actually this man Byrne is more of a visionary and philosopher than an entrepreneur or a businessman. He does not go for easy cheesy and cheap ways to start something at once and ending it even quicker. Talking about why he chose to use a public company for an ICO is because he wants to educate and explain cryptocurrency and the technology that drives it to the members of congress and other federal agencies and make them understand that what he is doing is a far, far better thing than what he could be doing. I would like to personally convey him that myself and all my countrymen warmly wishes him good luck and invite him to educate the regulatory and governing body of our country who put a blanket ban on Bitcoin and other cryptocurrency. Welcome to India.

Bitcoin has become another way of controlling the economy just like Wall Street, albeit easier to control because of the relatively lower $$ needed to turn the market into someone's favour

Bitcoin and cryptocurrencies are possibly the biggest bubble out there right now. The reason why cryptocurrencies have all been rising very high is all due to speculations that someday the mass adoption of these currencies will increase. In a recent poll (reported by CNBC I think) they did state that majority of people around the world don't see cryptocurrencies as alternatives at all since they are happy with the current (fiat) currencies that they are using. Let's just give it a few years and I may be right or wrong. But my predictions are that cryptocurrencies will go back down to $0 and no one will care about them anymore causing the value of these coins to decline rapidly. But Blockchain may have the opportunity to disrupt some industries although Blockchain is only being put in test recently and many firms haven't concluded whether blockchain can be helpful. These are just hypes right now but we will see what the future holds regarding cryptocurrencies and the Blockchain technology.

Cryptocurrencies and Bitcoin is not only our future but it's revolutionizing the financial world as we know it. "80-90%" savings from the present model.Sustainability is possible with the Right Tools and Marketing for those who want to capitalize on Crypto!

this man i genius very cool superb

It shows that cryptocarbonation is more than a fad. Now in the year 2017, cryptocarrency is forming an emerging market (despite its advantages and disadvantages) will continue for a long time.

Patrick Byrne also invested millions into Ravencoin when it was launched, one of the most solid new coins out there. https://cointelegraph.com/news/overstock-ceo-puts-millions-of-dollars-into-unknown-coin-compares-to-bitcoin


He's supported a number of crypto ventures.

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This is a very good thought, thank you @donkeypong

with this subject can develop something great, I really agree with this program

The world of cryptos came to stay and remove everything that opposes. The Overstock vision I like.

@Donkeypong It's absolutely true. Cryptocurrency can not be of bitcoin anymore. There are 2 different. The funny thing is that based on 2th of now everyone is getting confident in #steem. Anyway, it's very cool. It was very good to post. Thank you very much

The world of cryptocurrency is revolutionizing and it is one of the best ways to invest our money, I do not know much about this, but I really like reading to learn more about this fascinating world. Thanks for your information

I hope that the vision of Overstock gets to the point of competing and defeating Amazon's.


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what other cryptocurrency are you holding right now sir @donkeypong?

I mean it seems like the logical step is to transform your shares into crypto although I can imagine it is not an easy thing to do from a legal standpoint .
But if this catches on in the immediate future... oh boy, we would be in for a wild ride

I am new in the online world, I hope to learn less about my cryptocurrency, I can learn about cryptocurrency through you.your post realy great

Hello sir I am new in this platform . So please help me . Just follow me back please. Regards

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Amazon is a great site. It has become our work to all. It's the man's courage to use.

It is an awesome idea and the writer focused on some important factors. I like it.

@donkeypong your post always lovely and i hold some cryptocurrency and waiting for bull run....

Since I have a bit knowledge about crypto,
I found here I can learn a lot from your post, You are really very talented @Donkeypong . Thank You.