Medici Ventures, a wholly-owned subsidiary of Overstock.com, Inc., has purchased a 10% stake worth $2.5 million in Grainchain, a blockchain software provider that facilitates payments in the agricultural sector.
According to the terms of the acquisition, Medici will have the option to purchase another 10% in the company at a later date.
Grainchain said in its press release that currently, small- to medium-sized farms were behind much of agricultural output worldwide, and that these lacked the resources for more modernized and secure transactions. This is where blockchain technology is seen to help, while cutting middlemen and allowing farmers to keep more earnings.
“At the end of the day, we’re just leveling the playing field for the farmer, giving them much more power and control over the selling process,” Grainchain CEO Luis Macias said.
At present, Grainchain offers its services in the U.S. and Mexico, but said that the Medici acquisition will allow for an expansion of operations to Central and South America.
Medici President Jonathan Johnson said of the investment, “Producers operate on razor-thin margins and are up against a host of factors far beyond their control… GrainChain helps to support those producers by simplifying and securing the measuring and payment process and bringing unprecedented transparency to the industry.”
Grainchain was founded in 2013, and uses a three-part blockchain-based system to eliminate error and fraud in the process of delivering goods to end-users. According to the company, smart contracts are used between buyers and sellers, and Internet of Things (IoT) devices measure both weight and quality of grains at each step of the way. According to its website, the company has facilitated about 84,000 transactions with over 1,400 active participants, and has overseen the processing of nearly 5.3 billion pounds of various commodities.
While Overstock is most known as a retailer, it has also invested in blockchain through subsidiary Medici, which also holds a stake in VinX, a company that tracks wine futures through blockchain. It has been estimated that about 20% of wine worldwide is labeled fraudulently, which makes blockchain a potential alternative to present tracking systems for wine.
Overstock has also invested in tZero, a new exchange specifically for the selling of tokens.
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It would appear that the formation of the tZero project by retail giant Overstock may not have been such a crazy move after all. The platform has had a difficult beginning, with costs surging to almost $170 million, but Overstock founder, CEO and majority shareholder Patrick Byrne has indicated that it’s time to give up the retail game and concentrate solely on cryptocurrencies.
Byrne made the announcement in an interview with the Wall Street Journal. He indicated that the company is going to focus exclusively on tZero, which is “actively working to develop new technology that will help make markets more efficient, more transparent, and more liquid.”
The executive added that it isn’t “sustainable” to be “The guy who pedals along making $10 to $20 million a year.” He added that tZero has the potential to offer a number of multibillion-dollar operations under its umbrella.
This isn’t just a pipe dream, either. The sale is already in the works and the entire retail business – including Overstock.com, O.co and the company’s Worldstock program – are to be sold off by next February. Byrne didn’t name names, but there would be significant interest from a plethora of retailers, including Amazon and Walmart.
Overstock isn’t exactly hurting for cash. It sold 2.8 million shares last quarter, Overstock raised $94 million and raised an additional $130 million when it launched the initial coin offering (ICO) for its tZero cryptocurrency. However, the launch of tZero has caused a substantial decline in Overstock’s stock price. It has gone from a 2018 high of $87 to under $17 last Wednesday. When the news hit the airwaves that Overstock would drop retail for crypto, the company’s stock climbed 23.26% and, as of this writing, is just under $21.
The tZero platform is an alternative trading system (ATS) that is regulated by the U.S. Securities and Exchange Commission (SEC). It matches buyers and sellers, instead of working through broker dealers, to securities and was launched to offer an alternative to NASDAQ that is transparent and immutable.
Overstock began accept cryptocurrency as form of payment since 2014, making it one of the first large retailers to do so. The shift from retail to full-time crypto is a huge step, and shows that – despite current downturns in crypto – digital currency still has a very bright future.
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