Last year, the former CEO of Overstock found the purpose of blockchain-powered assets, calling security tokens the “killer app” that will propel the technology into mainstream finance. True to his word, Overstock (OSTKO) security tokens trading on tZERO platform managed to outperform not only DoW Jones but other US indices as well.
Security Tokens Outperform Major US Stock Indices
Although security tokens are not cryptocurrencies per se, they use all the key features of cryptocurrencies except that they are tethered to some kind of real-world asset. As such, June of 2020 was a milestone month for security tokens.
For the first time, security tokens surpassed the average performance of all major US indices, as you can see here:
- Dow Jones: +1.33%
- S&P 500: +1.46%
- NASDAQ: +5.30%
Rounded up, this averages the US Indices to +2.70%. On the other hand, security tokens averaged +4.38% in June.
The giant internet retailer, Overstock (OSTKO), with its 2019 revenue of almost $1.5 billion, is the culprit for this milestone. In May 2020, Overstock issued 4.37 million security tokens to its investors via Computershare. Consequently, Overstock held nearly 60% of the security token market share in June.
Overstock used its own security token exchange tZERO. Accordingly, tZERO’s share of the security token market cap rose to 76.18% compared to its May dominance of 70.89%.
Thanks to the full embrace of blockchain by Overstock, this resulted in the security token market performing 1.68% better than the average of the US indices for the month of June. Security tokens saw notable progress in 2019, but outperforming major US stock indices was not a common forecast in 2020.
Security Tokens Hold Strong in 2020
Overall, the security token market cap continues to rise on a monthly basis by 45%. Thanks to Overstock, the month of June topped it off to $145 million.
One may think that a single-digit outperformance for one month is nothing to write home about, but this certainly looks like the beginning of a trend. COVID-19 hit all the markets hard, but if you compare its 2019 rapid rise to this year, it’s a solid path to recovery.
If a single online retailer, Overstock, managed to spur such a rise, it is only a matter of time when legacy companies with much deeper pockets decide to take advantage of security token benefits. Although some FinTech companies couldn’t overcome both the coronavirus and the relative novelty of the security token market, the future is definitely digital with security tokens playing a major role.
Six years ago, Overstock was one of the first major retailers to accept Bitcoin as a form of payment. Have you taken advantage of this, or has Amazon taken dominance as your go-to online shopping venue?