Overstock.com subsidiary tZERO has just announced that it will be adding its first 3rd party security token to its tokenized securities trading platform. The token comes from Aspen Digital, Inc. whose ASPEN token represents an ownership share of the St. Regis Aspen Resort. Ignoring the fact that real estate is yet again at the forefront of development within the sector, even if this time there is a service to go along with the land, the addition of ASPEN is big news, and poses some interesting questions for the sector as a whole.
For starters, ASPEN's addition marks the beginning of an expansion of tZERO's platform, transforming it from just another website to hold tZERO's initial coin offerings to a place where tZERO and Overstock's security tokens have real trade value. Moreover, as one of only a handful of companies in the sector to hold a full patent for its trading platform with patent 10673634, tZERO is already miles ahead of most companies competing for space in the sector. By not only having a functional platform, but also being able to host a 3rd party security token on said platform, tZERO has placed themselves ahead of even the companies that have secured patents in the space. If tZERO can obtain security token offerings for other companies for trade on its platform, the company could become the first to fully realize the goal of every company within the sector, to upend the financial market and provide a new way for trading securities.
If you have read this author's work before, you know an analysis of tZERO's position is not the end. Aspen Digital has no patent documents within the sector, and is exemplary of a curious trend within the tokenization of securities. Plenty of companies have made initial coin offerings where they have tokenized shares of their company for trade, yet they have not dipped their toes into the world of patenting. The question then becomes, why not?
Certainly a company does not need to hold a patent for its security token. Undoubtedly, the USPTO would not allow the patenting of individual security tokens, even if companies tried. The sector is still very new though. Why go through the trouble of investing the time and capital to build out the necessary systems for tokenizing, recording, and facilitating the trade of securities, but not take the final step of filing patent applications for these systems? The easy answer is more effort equals more money spent. The more complete answer lies in the state of the sector.
Looking at the Patent Radian®, of the 244 patent documents published in the past 5 years only 43 full patents exist. While the platform space does have approximately 30 patents, giving it the most issued patents of any space, it also has approximately 100 publications, giving the space the most publications of any space as well. The other spaces within platform development do not even reach 100 documents total, and have less than 10 issued patents a piece. Additionally, the majority of publications are still in the examination stage, and have not been abandoned or otherwise formally rejected by the USPTO. This information combines to signal that there is a great deal of uncertainty as to whether patenting technology within the sector is doable. Is it possible to attain a full patent? Certainly. Is it probable that a company can attain a full patent? The jury is still out. Therefore, companies like Aspen who are not geared toward fin-tech development have a much safer option in entering the tokenized securities world through companies with an established, patented service such as tZERO, making these companies that much more valuable and competitive within the sector as a whole.
Overall, tZERO is turning up the heat within the sector, and if current trends within the tokenization of securities as a whole continue, tZERO may be positioned to become dominant in the new age of securities trading. Be sure to analyze tZERO's patent at Patent Matrix® and investigate the Patent Radian® to see the whole sector.
