Overstock.com is building software, based on the bitcoin digital currency, that could allow the big-name etailer to issue corporate stock over the internet, sidestepping traditional stock exchanges such as the NASDAQ and the New York Stock Exchange.

The Salt Lake City-based company recently hired two of the developers behind CounterParty—an online project that helps individuals and businesses build all sorts of financial services atop the worldwide network of machines that drive bitcoin—and according to Overstock founder and CEO Patrick Byrne, these coders will help build "cryptosecurity" software that any company could potentially use to issue financial securities over the net. Mirroring bitcoin—known as a "crytocurrency"—these securities would be controlled by cryptographic algorithms running across computers spread across the globe, not by a central stock exchange.

Code-named "Medici," the project aims to democratize Wall Street in much the same way bitcoin seeks to democratize currency and payments. By operating separate from traditional stock exchanges and the big corporate banks, it could eliminate certain loopholes in the system and reduce the costs associated with issuing and juggling stock.

After building the software inside Overstock, Byrne says, he will spin off its developers into a separate company that will continue to hone the software and provide various services to those who use it. "There is an opportunity to recreate the financial world as we know it in the parallel universe that is the blockchain," Byrne tells WIRED, referring to the online public ledger that keeps track of all bitcoin transactions. "We are writing rules for this whole new universe."

Previously, Byrne had hinted that Overstock would build such software, and now, he has publicly committed to the project. He will formally announce the effort this afternoon, during a speech at a bitcoin conference in Las Vegas, and no doubt, he will describe it in the most grandiloquent of terms. A former amateur boxer with a PhD in philosophy, he likes to build his arguments around high-flying metaphors involving everything from Star Wars, Dilbert, and zombies to the British economist Karl Popper.

The rub is that this software would require the approval of government regulators. Byrne has a long (and rather bizarre) history of pushing for reform on Wall Street, and he has often taken a rather antagonistic stance with regulators. But he says that in this case, he wants Overstock "to be an adult partner to everyone involved in this. I don't want to be an adversary."

After Overstock builds its cryptosecurity software—which will likely take several months—Byrne intends to present the system to regulators for approval. But this may be difficult to win, because the SEC and the incumbent banks are so set in their ways. "The biggest hurdle is institutional inertia," James Angel, a professor of finance at Georgetown University and a visiting professor at the Wharton School of Business who specializes in the nuts and bolts of the economic system, told WIRED when Overstock first indicated that such a plan was in the works.

But in order to grease the wheels, Overstock has enlisted a team of lawyers from the international law firm Perkins Coie, which, in recent years, has sought to build up an expertise in the area of bitcoin and other digital currencies. "We think we have the first string in all positions," Byrne says, referring to Perkins Coie and CounterParty.

The ultimate aim of the project is to create a stock system that operates, in large part, outside the control of the big incumbent banks. A stock system based on math, the thinking goes, would eliminate loopholes maintained and exploited by interested parties. Byrne, for instance, has long railed against a Wall Street practice known as naked short selling—where banks and funds essentially sell shares that don't exist—and a system based on the blockchain, where all transactions are public, would eliminate such a thing.

The other hope, says Robby Dermody, one of the CounterParty developers hired by Overstock, is that the system will allow startups to more easily take their companies public. "Startups get a lot less of the money than they otherwise could because there are so many middle men," he explains. "We hope to really increase the efficiency of the market." And, in the end, he explains, this could bring investments much closer to the average consumer. "If you shop for linens on Overstock, you can get a new mattress too. And now—oh by the way—you could also spend $10 more and invest in the company," Dermody says.

After spinning off from Overstock, Byrne says, the company behind this project will help other businesses take their companies public and juggle transactions. The intention is to charge about 20 percent or less of what Wall Street banks charge for similar services today.

Like many others, Byrne uses hyperbole in describing the prospects of bitcoin and its related technologies. And he's committing between five and ten percent of Overstock's cash flow—"single-digit millions"—to the company's cryptosecurity project. "Building this—and being the company that owns this—can be more valuable than Overstock," he says. "It can be more valuable than Alibaba."

But it's worth noting that, at least in terms of public perception, bitcoin is at its lowest ebb in months. After trading at above $1,000 in December, the value of the digital currency dropped below $300 over the weekend. But as is typical of the man, Byrne is unbowed. "This could be as big or bigger than the internet," he says.