This story was updated on Aug 7, 2017
Bitcoin has been all the rage these last few months. Between news of it splitting, the rise of Ethereum, and more recently, the surge in value of high performance graphics cards which can now be deputized for the purpose of Bitcoin mining, you’d be hard-pressed to check your favorite online news site without bumping into a cryptocurrency related headline.
The majority of the trending cryptocurrency news is focused on the “currency” aspect of technologies like Blockchain (as in Bitcoin is a Blockchain-based alternative currency to cash). For years, we’ve heard about other uses for Blockchain such as securing APIs or replacing SSL.
In other words, Blockchain has more tricks up it’s sleeve beyond the democratic elimination of money-hungry middlemen (the banks, credit card companies, etc.) who want to take a cut out of every financial transaction that’s made in the world. And today, we at ProgrammableWeb not only stumbled across one of those alternative uses, we even noticed there’s an API for it too! Even better, the technology comes from a major e-commerce player which means it probably has the legs to survive too.
That player, according to Benzinga, is Overstock.com. According to the company’s CEO Patrick Byrne, there’s a loophole in the process that’s used for the short selling of stocks that could (and often does) result in the artificial inflation of stock inventories. The phenomenon is referred to as “over-locating” and in Blockchain’s inherent distributed ledger functionality, Byrne sees a technology that closes that loophole.
To prove his point, Overstock has launched an API called t0. According to Benzinga,
The API has a built-in auction system. When a fund sends the stock to t0, it auctions the stock by generating a digital locate receipt on the blockchain. This prevents over-locating from occurring because the blockchain has all the receipts of the sale and records the underlying stock. The auction occurs on the Overstock API, which is licensed to prime brokers.
“This is disruptive to the activity at the very core of Wall Street,” Byrne said. “Eliminates over-locating and naked short selling, since naked shorting relies on over-locating. It’s a propeller to jet fuel conversion for the whole securities lending market.”
Some digging around at the t0 website didn’t reveal any gory details about the API. So, we’ve created a barebones profile for it in ProgrammableWeb’s API directory .Once we have them, we’ll be sure to add it to ProgrammableWeb’s directory.
Update (Aug 7 2017): After sharing this article via Facebook, a friend pointed out that Overstock has been pursuing a vendetta against the short-sellers of its stock. The company initiated litigation in which it argued that traders colluded in a short-selling scheme that was aimed at driving down the value of Overstock's stock. A good synopsis of the situation was reported by the Economist back in 2015. So, it appears as though, in founding t0, Overstock CEO Byrne has a bit of an itch to scratch.