What happened

Shares of Overstock.com (BYON 1.02%) were soaring 13% higher in midday trading as the company announced it was a week away from issuing shareholders their digital dividend.

On April 27, the online marketplace will issue to shareholders one "digitally enhanced security" for each share of Overstock they own. The dividend is held in an investor’s brokerage or custodial account and trades on Overstock’s affiliated tZero blockchain platform.

Chain with digits printed on it.

Image source: Getty Images.

So what

Championed by former CEO Patrick Byrne, the Series A-1 preferred stock (OSTKO) helps validate his push for blockchain technology to benefit investors. Byrne has said the digital dividend could end up being more valuable than Overstock's Nasdaq-traded stock, which has often been the target of short-sellers.

Some 5.8 million shares of the online marketplace are currently sold short, which is less than half the amount from last August, when he first proposed the plan.

Now what

Current CEO Jonathan Johnson said in a statement, "Overstock has long championed a new capital markets system built on trust through technology. This innovative dividend issuance is another step in that direction. I'm pleased that the dividend will trade on the tZERO platform."

Although the digital dividend can be deposited through DTC, the largest securities depository in the world, investors should probably not buy Overstock.com stock just to acquire it. The marketplace's business has suffered from falling sales and continued losses, and a replacement for its CFO, who resigned in September, was named just last month.