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SALT LAKE CITY — While 2017 may well be looked back on as the year bitcoin and its crypto-coin brethren became legit, it's also shown that a bet made in 2014 by Midvale-based Overstock.com on cryptocurrency and its underlying blockchain technology was both prescient and profitable.

Medici Ventures, a wholly owned subsidiary of Overstock, announced its lead position last week in a $2.2 million seed-funding round for mobile online voting platform Voatz (sounds like "votes") that's working to make electronic vote-casting safe and secure using biometric verification and blockchain technology for "immutability."

The deal is the latest in about a dozen investments made by Medici, a company that's focused on backing "firms building solutions leveraging and servicing blockchain technologies," according to its website.

Julie Smith, Medici's director of research and business development, said Voatz's business goals jibe perfectly with her company's interest in efforts that embrace "both a social mission as much as an economic potential."

"The voting space is an area we are very passionate about," Smith said. "It's perfect for (blockchain) technology to be able to create a more secure, auditable and trustworthy means to operate our democracy."

Voatz has already been used in numerous smaller-scale elections, including student government elections, labor organization votes and the 2016 Massachusetts Democratic Convention. The company announced it will use the new funds to build out its business development team, add features and expand product territory.

Aaron Thorup, dutchcorionprovider.com
dutchcorionprovider.com

Medici Ventures President Jonathan Johnson, who was also a 2016 Utah gubernatorial candidate, said in a statement that Voatz could also help amp up voting rates by lowering the participation threshold.

"Voatz is a great addition to the Medici Ventures portfolio," Johnson said. "The Voatz team has developed a leading solution to usher in an era of greater efficiency and transparency in voting.

"Democracy will benefit greatly from critical improvements blockchain technology can bring to voting systems. For example, providing secure, immutable record keeping will bring greater confidence in accurate results, and ease of use will lower the barrier to entry for citizens to participate in elections."

While Voatz believes its approach — combining biometric security measures with real-time identity verification on a blockchain platform — can "turn every smartphone and tablet into a secure voting booth" critics of online voting technology say voters may not be ready to trust a system that only exists in the digital ether. A recent Government Technology Magazine article on the challenges facing online summed it up this way.

"The minor mountain standing in the way of this vision is, to simplify the issue, cybersecurity. The public is treated regularly to stories of vaunted, savvy organizations brought low at the hands of faceless hackers."

Blockchain technology, which may be envisioned as a shared digital spreadsheet document in which every transaction or change to the data must be verified by participating, validating peers, is an approach that has wider ranging utility than just backing up cryptocurrencies like bitcoin or Ether. Smith said Medici sees opportunities, in addition to voting, in capital markets, banking, identity, land titles and as an underlying platform for, potentially, many more business and service models.

Medici Ventures launched in 2014, the same year Overstock began accepting bitcoin as a form of purchase payment. At the time, the company was holding 10 percent of the payment as bitcoin and converting the rest into U.S. dollars. In August, Overstock CEO Patrick Byrne said the company would begin to accept nearly all the major cryptocurrencies and, as a response to the volatility of the market (bitcoin began 2017 valued at around $900 and moved as high as nearly $20,000 at one point late in the year) would begin holding 50 percent of crypto-payments in their original form.

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In December, another Overstock subsidiary, tZero, launched a token sale, or initial coin offering, looking to raise $300 million from a pool of "accredited investors." Smith said the tZero ICO has attracted "tremendous interest" and brought in $100 million within the 12 hours after the effort launched. She noted the company is the first Securities and Exchange Commission-regulated alternative trading system and could be well-positioned to become a pseudo-Nasdaq as other cryptocurrency efforts are scrambling to become compliant following increased scrutiny by the SEC.

Overstock's long bet on blockchain-centric investments and the viability of cryptocurrencies is proving highly profitable for the company. Stock values have risen from just over $17 a share in early January 2017 to a high of almost $87 per share early last week.