The Wired.com headline (but not the headline here at HN) is misleading. Per an Overstock SEC filing, any securities they (or t0.com) issue "will not be issued on the Bitcoin blockchain ... the ownership and transfer of such digital securities will be recorded on a proprietary ledger that will be publicly distributed."
One of the biggest advantages of blockchains is that you can create your own private blockchain, and then hash the state of it every X interval and then put the hash on the Bitcoin blockchain.<p>You get all the the security of a 6.6 billion network without the costs.
Though it will surely be a (very) long process, I'm excited about the ways in which blockchain technology can improve the efficiency of the financial system. There's an amazing disconnect between the speeds with which we can execute and settle trades. The former is on the time scale of milliseconds, while the latter is on the time scale of days.<p>Even if we disagree on the merits of HFT, we can surely agree that settlement is an unnecessarily slow and unreliable process. In September, 2011 (the most recent date for which I could easily find data), there was a failure to deliver $200M worth of stock per day! [1] In the Treasury market, the daily average is currently $50B! [2] Blockchain technology has the potential to solve this problem.<p>[1] <a href="https://en.wikipedia.org/wiki/Failure_to_deliver" rel="nofollow">https://en.wikipedia.org/wiki/Failure_to_deliver</a><p>[2] <a href="http://www.dtcc.com/charts/daily-total-us-treasury-trade-fails" rel="nofollow">http://www.dtcc.com/charts/daily-total-us-treasury-trade-fai...</a>
What happens if a malicious forks is introduced in the blockchain? I see two possible outcomes, with the latter much more likely than the former:<p>a) The blockchain protocol is the final arbiter of ownership, and those who purchased the stock in the other branch of the chain no longer own the stock. Caveat emptor.<p>b) Courts rule in favor of the people who actually bought the stocks and marks the attack branch as invalid. This is possible because the attack was witnessed by so many people.<p>It's unlikely that a fork would be resolved with (a), but if it does, there would be a lot of very pissed of investors and lawsuits. All it takes for such a fork to happen is someone with the motive to do it and the means to lean on a few mining pool operators.<p>It's more likely that we would see outcome (b), in which case, the courts are the final authority and then what the heck is the point of using an expensive, slow, poorly scalable, decentralized consensus system?<p>I totally see the value of a decentralized system despite the shortcomings, but if you're coming to do away with that aspect, what on earth is the point?
I think this is a really interesting idea. If you could issue stock as a million "units" on a block chain, then you could transact fractional units easily. Assuming you trust the ledger it would mean you really wouldn't ever have to split the stock. More units, more ownership, minimal brokerage fees/control.<p>Of course stealing the private key of the hot wallet representing 10% of Overstock.com, well that would be a very juicy target indeed.