Over the past two days, I was assigned the duty to preview Overstock.com’s (NASDAQ:OSTK) second-quarter earnings report, as well as to cover the actual results. The overriding sentiment is positive, with many market observers regarding Overstock’s blockchain venture as a resounding success.
As you may know, Overstock has transitioned from its e-commerce platform to a blockchain-centered business; specifically, its tZERO cryptocurrency. The main idea is that tZERO will springboard a crypto trading platform that finally meets regulatory approval.
The blockchain markets have suffered significantly when the SEC rejected the latest bitcoin ETF proposal over fears of price manipulation. It’s ironic that the SEC made that specific rebuttal as it approved a gold ETF years ago.
Overstock CEO Patrick Byrne, who has become a cryptocurrency evangelist, is determined to success where so many others have failed. With tZERO as the springboard, he envisions his platform as the one winning SEC approval.
That, in my humble opinion, is a long shot.
When listening to Byrne ramble on about the blockchain, I can’t help but think he is less a crypto proponent and more a used-car salesman. I hear plenty of marketing hype, but little indication that he understands what blockchain is, and what it can actually do.
If you know Byrne, and have followed his work, you’re well aware of his many grandiose claims. A conspicuous whopper was his thesis that the blockchain can solve world poverty. It can’t. Fundamentally, the blockchain is a database. It’s special because unlike traditional databases, user consensus drives data verification, not central administration.
The blockchain couldn’t solve poverty more than you can win a fistfight with a silverback gorilla. But Byrne, if he was truly educated about the blockchain, would know this.
Instead, he does what he knows best: how to sell a product. In this case, he’s selling Overstock’s business transition, and the tZERO cryptocurrency. Along the way, he’s making some outrageous claims, and benefitting from the notoriety of it all.
Herein lies the ultimate irony: the very driving force that boosts tZERO’s market presence (Byrne’s cult of personality) is also what will prevent SEC approval. As I stated for InvestorPlace, the SEC is a conservative organization. In fact, they warn investors not to buy into marketing hype.
Which is really what tZERO is: hype. Yeah, maybe it can do what it claims, but I highly doubt it. If a serious and focused organization can’t meet SEC approval, a Wolf of Wall Street-wannabe is unlikely to.
@bullishmoney