
SEC Approves Plan to Issue Overstock.com Stock via Blockchain - muloka
http://www.wired.com/2015/12/sec-approves-plan-to-issue-company-stock-via-the-bitcoin-blockchain/
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jackgavigan
The Wired.com headline (but not the headline here at HN) is misleading. Per an
Overstock SEC filing, any securities they (or t0.com) issue "will not be
issued on the Bitcoin blockchain ... the ownership and transfer of such
digital securities will be recorded on a proprietary ledger that will be
publicly distributed."

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jabgrabdthrow
It's only misleading if you thing "blockchain" is not generic but means "The
Bitcoin Blockchain". Is this a common understanding?

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brighton36
How is this any better than a database?

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anilgulecha
Decentralized store and decentralized trust. The latter is hard with a
publically accessible & editable mysql.

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brighton36
Except that this isn't decentralized - its a controlled blockchain that's only
available for public download (which http does just fine) As does archive.org

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anilgulecha
I think you incorrectly understand how the blockchain can be updated.

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HappyTypist
One of the biggest advantages of blockchains is that you can create your own
private blockchain, and then hash the state of it every X interval and then
put the hash on the Bitcoin blockchain.

You get all the the security of a 6.6 billion network without the costs.

~~~
brighton36
Can't you just hash your mysql database instead of a blockchain? Where's the
efficiency in using a private blockchain?

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sanswork
You can have a shared log between multiple parties where no one entity
controls new entries with immutability and known entry ordering.

Private blockchains don't need to be as inefficient as cryptocurrencies either
because they can have a very small, specific use case and feature set.

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brighton36
Doesn't http do this just fine? If you trust each other - there's no need for
a blockchain.

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sanswork
How does http do this at all? Unless you're talking about each company running
an API? But then you run into difficulty with actually trading debt. Say you
owe me $10 and I owe Bank B $10 and they owe you $10. With a blockchain
situations like that are easy to spot and automatically resolve saving the
number of required settlements.

The point is that you don't have to trust each other since everything is in
the open and shared between participants.

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brighton36
> Ok and what does the html page do to solve the problem?

You should check out archive.org. You'd be amazed how much better a job it
does at retaining records than blockchain.

> You seem to be a pretty big fan of bitcoin. I've noticed a huge blindspot in
> bitcoin proponents when it comes to private chains almost like they are
> threatened by them.

Because blockchains are bad at this, and most of us are in a position to know
that.

> Bitcoin was never going to win the markets/use cases

Agreed

> private chains make sense in

Not compared to databases. Do you know when NYSE and Nasdaq will switch to a
blockchain? The answer is 'never'

> Bitcoin went the way of ultra generalisation which has resulted in it being
> pretty much worse than everything else for everything else.

Agreed.

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sanswork
Heads up but if you click on the timestamp you can reply before the button
appears.

I understand what archive.org can do I'm asking how it can help solve the
situation I described? You have your web page with what on it exactly? How
does that help cut down settlement requirements?

Also archive.org is centralized so all the participants would have to trust
them. The people investigating blockchain alternatives are looking for ways
around that.

>Because blockchains are bad at this, and most of us are in a position to know
that.

But they aren't. Bitcoin is bad at it but that doesn't mean blockchains have
to be it just means they will be if you go into the problem with bitcoin as
your only toolset. One you remove the need for PoW they are barely any more
inefficient than a master-master DB with the combination of immutability and
known entry ordering.

>Not compared to databases. Do you know when NYSE and Nasdaq will switch to a
blockchain? The answer is 'never'

Did I say it was better than databases for every usecase? The NYSE and Nasdaq
are already centally trusted figures. There is little benefit they would get
from a blockchain.

I gave you a use case a few posts ago.

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brighton36
> One you remove the need for PoW they are barely any more inefficient than a
> master-master DB with the combination of immutability and known entry
> ordering.

Once you remove the PoW - it's no longer a blockchain. That is what a
blockchain is. If you believe that blockchain's don't require PoW - then off
the bat you have major security problems. But in addition to that - your
definition of blockchains would mean that we've been using blockchains since
the 80's

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sanswork
So you don't consider PoS systems blockchains?

PoW literally has nothing to do with what the blockchain is only in deciding
who can add the next block and there are a lot of ways to do that when you
know all the participants.

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ryporter
Though it will surely be a (very) long process, I'm excited about the ways in
which blockchain technology can improve the efficiency of the financial
system. There's an amazing disconnect between the speeds with which we can
execute and settle trades. The former is on the time scale of milliseconds,
while the latter is on the time scale of days.

Even if we disagree on the merits of HFT, we can surely agree that settlement
is an unnecessarily slow and unreliable process. In September, 2011 (the most
recent date for which I could easily find data), there was a failure to
deliver $200M worth of stock per day! [1] In the Treasury market, the daily
average is currently $50B! [2] Blockchain technology has the potential to
solve this problem.

[1]
[https://en.wikipedia.org/wiki/Failure_to_deliver](https://en.wikipedia.org/wiki/Failure_to_deliver)

[2] [http://www.dtcc.com/charts/daily-total-us-treasury-trade-
fai...](http://www.dtcc.com/charts/daily-total-us-treasury-trade-fails)

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nivertech
Failure to deliver is mostly due to naked shorts and can be easily solved by a
corresponding regulation. It is completely orthogonal to the Blockchain
concept: one can implement settlement rules which require locating shares
prior to shorting them, another implementation wouldn't care about locating
shares as long as there is an obligation to cover naked short at the end of
the trading day.

Patrick Byrne from t0 will agree with you, but that's b/c he's against naked
shorts.

[1] [https://t0.com/](https://t0.com/)

~~~
rottyguy
Patrick is well known to be the CEO of Overstock, son of John Byrne (Geico
fame), and enemy #1 of the Naked Short sellers. What may be less known is his
unbelievable fight against cancer.

I read his speech from a charity event back several years back, periodically,
to keep perspective.

[http://www.pmc.org/blog/2015/9/17/pmc-threshold-moment-
billy...](http://www.pmc.org/blog/2015/9/17/pmc-threshold-moment-billy-starr)
(scroll down)

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murbard2
What happens if a malicious forks is introduced in the blockchain? I see two
possible outcomes, with the latter much more likely than the former:

a) The blockchain protocol is the final arbiter of ownership, and those who
purchased the stock in the other branch of the chain no longer own the stock.
Caveat emptor.

b) Courts rule in favor of the people who actually bought the stocks and marks
the attack branch as invalid. This is possible because the attack was
witnessed by so many people.

It's unlikely that a fork would be resolved with (a), but if it does, there
would be a lot of very pissed of investors and lawsuits. All it takes for such
a fork to happen is someone with the motive to do it and the means to lean on
a few mining pool operators.

It's more likely that we would see outcome (b), in which case, the courts are
the final authority and then what the heck is the point of using an expensive,
slow, poorly scalable, decentralized consensus system?

I totally see the value of a decentralized system despite the shortcomings,
but if you're coming to do away with that aspect, what on earth is the point?

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elliotec
I work for Overstock. Take a look at the company's stock trends over the last
year to see the affect this has on them.

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sanswork
How do the employees feel about the CEO constantly chasing one cryptocurrency
project to the next? From what I've seen it's just costing them a lot of money
with almost no success in any of the ventures but is the response positive
from inside?

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elliotec
The response is not positive, to say the least.

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junseth
How much longer do you think he's got?

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elliotec
If he's smart he'll sell the company within the next 2 years and retire pretty
nice on the exit. If that doesn't happen, I'd be shocked if they make it
another 5 before total collapse.

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ChuckMcM
I think this is a really interesting idea. If you could issue stock as a
million "units" on a block chain, then you could transact fractional units
easily. Assuming you trust the ledger it would mean you really wouldn't ever
have to split the stock. More units, more ownership, minimal brokerage
fees/control.

Of course stealing the private key of the hot wallet representing 10% of
Overstock.com, well that would be a very juicy target indeed.

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brighton36
Why is notarizing your database state on the blockchain noteworthy? Were there
many people censoring the database checksums of the NYSE or NASDAQ?

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wmf
Normally I'd agree with this, but in this case one may suspect that
Overstock's interest in blockchain technology is rooted in their war on naked
shorting, which I guess is not possible if shares are tracked on a blockchain.

~~~
brighton36
That's also not possible if Overstock itself managed it's issuance on a
centralized database.

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kobayashi
Does this mean that everyone using desktop wallets like Bitcoin Core will now
be downloading a slightly more bloated blockchain?

