Overstock.com CEO and chairman Patrick Byrne has taken an indefinite medical leave of absence from the company, a decision will be felt most among the worldwide community working to advance bitcoin and the bitcoin blockchain.
Byrne has a long history of medical problems after a long bout with cancer nearly 30 years ago. Due to the cancer and related heart problems, Byrne says, he has undergone more than 106 surgeries over the last three decades. And in the last year, he has battled a recurrence of Hepatitis C, which he first contracted on a visit to China in the early ’80s. “I’ve been really gutting it out over the past few months,” he says.
His decision to take a leave of absence from Overstock—a cut-rate online retailer based in Salt Lake City, Utah—will be felt most among the worldwide community working to advance bitcoin and the bitcoin blockchain, the vast digital ledger that underpins the digital currency. Guided by Byrne, Overstock was the first major retailer to accept payments in bitcoin, and perhaps more importantly, he led the creation of an Overstock subsidiary called TØ.com, which uses the blockchain and related technologies to build services that can track the exchange of financial securities.
In discussing his leave, Byrne expresses little worry over the health of Overstock, but shows considerable remorse because he is unable to continue his work with the blockchain, referring to its rise as an “extinction event” for the financial industry.
Running atop a network of independent machines spread across the globe, the blockchain was originally built to oversee the exchange of money, using cryptographic algorithms to verify transactions. But it can also track the exchange of anything else that carries value—including stocks, bonds, futures, and other financial securities—and thanks to those same cryptographic algorithms, it can do so without the oversight of any one central institution. Much as the blockchain can drive a money system outside the control of any one government, it can also juggle stock outside the control of any one bank.
“It provides a database that can be shared by multiple entities who have different economic or political agendas and therefore don’t necessary trust each other,” says Gideon Greenspan, the CEO and founder of Coin Sciences, another company that’s exploring blockchain applications that extend beyond bitcoin. “There’s no central gatekeeper checking all transactions that come in, saying what’s valid and what’s not.”
In many ways, Byrne has aimed to remake Wall Street.
Byrne and Overstock started work on their blockchain system almost two years ago, and this past December, after months of back and forth, the SEC approved the company’s plan to offer public shares via the blockchain. The idea is that the company can issue shares without the help of Wall Street. Byrne envisions other companies IPO-ing through the same system—going public in a more democratic way. But this system can handle other assets, too. Overstock has already issued private bonds on the system, and TØ has built a separate service that oversees stock loans.
Many others are exploring similar technology—even some within Wall Street establishment. Nasdaq OMX, the company behind the Nasdaq public exchange, is building a system that uses the blockchain to oversee the market for stock in companies that are still private. And a wide range of big-name banks and tech companies have put their weight behind an open-source project called the Open Ledger Project, or Hyperledger, which aims to build new software that operates much like the blockchain. But Byrne has long been out in front of this online revolution. In many ways, his efforts have aimed to remake Wall Street, and now, the big Wall Street names are trying to remake themselves before they get left behind.
Byrne has a long history of pushing for reform on Wall Street. Overstock was among the first companies that went public under what’s called a Dutch Auction, which lets the market set the price for an IPO, not some big Wall Street bank. In working to offer stock over the blockchain, the company is taking this idea even further.
His leave of absence casts some doubt over Overstock’s blockchain ambitions. But Byrne says he will recommend that general counsel Mitch Edwards, who had been closely involved with the development of TØ, now serve as the company’s interim CEO. Byrne feels a certain sadness that he will not be part of effort for the foreseeable future, but he’s adamant that Overstock’s effort will continue apace. “I’ve worked really hard,” he says, “to get this revolution going in the right direction.”
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