What is tZero?
The online retailer Overstock introduced the cryptocurrency and distributed ledger platform tZero (t0). It was created to enable businesses to produce and distribute tokenized assets for investors and provide initial coin offerings (ICOs) with more legitimacy and control.
As an alternative trading system (ATS), tZero is subject to FINRA and the Securities and Exchange Commission (SEC) regulation in contrast to other decentralized blockchain platforms.
tZero History
Since the birth of Bitcoin in 2009, the development of cryptocurrencies, trading platforms, and blockchain technology has reached a fever pitch.4 Technology enthusiasts, libertarians, speculators, and investors have all come together around cryptocurrencies because of how quickly regulations can be implemented to protect consumers, given how quickly innovation is happening.
Initial coin offerings, or ICOs, are new financial products with new digital wallet investment management techniques. People’s perspectives on money are shifting as a result of these developments.
Companies sometimes try to provide a platform that processes transactions using blockchain technology and a cryptocurrency token. One such business is tZero, which provides tokens and an alternative trading system (ATS).
The platform functions as a matchmaker rather than a broker, enabling buyers and sellers to transact over a dark pool. A distributed ledger is used to handle transactions. tZero wants to be the top marketplace where businesses may launch initial coin offerings.
Introduced by Overstock
Overstock.com, an online retailer, first created the blockchain platform Medici, which gave rise to tZero. Medici was created to enable the sale of cryptocurrencies by Overstock and other companies that license the technology. In 2014, this endeavor got underway. As of 2021, Pelion Venture Partners, a venture capital firm, is in charge of managing Medici Ventures on Overstock’s behalf.
One of tZero’s partners, according to Overstock founder Patrick Byrne, is mentioned in the company’s 2018 Notice of Exempt Offering of Securities (Form D) filing with the Securities and Exchange Commission (SEC).
In December 2017, the business started offering accredited investors Simple Agreements for Future Equity (SAFEs), a convertible financial instrument. In addition to giving investors certain convertible note features, SAFEs enable businesses to obtain cash outside conventional debt and equity markets. The majority of the time, bitcoin firms employ it.tZero anticipated raising $250 million, according to its maiden SEC filing.
Overseen by the SEC
Regulators see tZero as one of the first cryptocurrency and alternative trading system management efforts. Eight years after the inception of Bitcoin, the SEC did not rule on tokens until 2017. Because of regulatory ambiguity, investors in cryptocurrencies were less protected than those in securities, likely leading to price volatility and well-reported exchange hacks. The day after Overstock.com’s shares gained over 20%, FINRA granted tZERO’s application for membership in 2020.
Being regulated gives tZero a significant edge over other platforms in the financial goods market for cryptocurrency-based offerings since it allows it to provide services it may not be able to. Regulations need compliance. Therefore, it may market itself as a clearinghouse, verification, and advisory service provider for other businesses wishing to generate capital by releasing tokens.
While businesses wishing to eliminate intermediaries by raising money via the sale of tokens may create their platforms, this would take significant capital and technical know-how. Employing a business such as tZero may become more economical, and tZero might eventually be compared to Nasdaq.
Conclusion
- Internet retailer Overstock introduced tZero (t0), a blockchain-based asset exchange, to solve the issue of ICO regulatory compliance.
- Using the same technology that powers Bitcoin, tZero enables businesses to register and issue tokenized assets into a distributed ledger called a blockchain.
- An initial coin offering (ICO) helped finance tZero itself.
