Overstock.com has announced that it will issue one digital token for every ten common shares held by an investor. This 10: 1 dividend is interesting because it creates a direct bridge between the traditional financial markets and the new blockchain-based financial market.
“Five years ago we wanted to create a new universe: a legal capital market based on blockchain. We succeeded in this, “said Patrick M. Byrne, founder and CEO of Overstock.com.
“A dividend of 3.7 million of these new digital shares will be issued to the approximately 40,000 holders of the currently outstanding 37 million shares of Overstock to trade in that new capital market.”
How does this work?
- All ordinary shareholders currently have traditional shares that can be traded on the NASDAQ.
- For every ten traditional shares that an investor holds, they receive a dividend from one digital share.
- This digital share can be traded on the alternative trading system of PRO Securities. This platform is owned by one of Overstock’s subsidiaries (tZERO).
- The digital shares are assessed and stored by Electronic Transaction Clearing and Computershare takes care of the transfer.
Why is this important?
A listed multi-million company has opted to pay a dividend in the form of a digital token. This token has the same advantages and disadvantages as a traditional share, such as voting rights and legal protection. Whether or not Overstock shareholders like it, they are slowly entering the digital token world. If this proves to be successful in the short term, it is likely that other large companies will follow.
Critical gaze leads to tokens
Owner Patrick M. Byrne has long been critical of the infrastructure of traditional capital markets, and that is why he has long been interested in bitcoin and tokenized shares.
This has led to Overstock and Byrne releasing digital tokens at high speed. Incidentally, they do issue these tokens within the framework of the law, without completely turning Wall Street upside down.
Many other crypto companies say they want to completely dismantle Wall Street and the old financial system. Overstock is now opting for the gradual approach. That seems to be a good choice, many successful companies are successful by acting within the existing rules and working together with large financial organizations.
These digital tokens are therefore not security tokens. They do not fall under the American securities route of 1933 and do not pay dividends.