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Will OpenBazaar Succeed Where Silk Road Failed?

Saturday, November 19, 2016 4:17
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(Before It's News)

OpenBazaar—a blockchain-based, fully decentralized online market—makes it possible to sell anything to anyone, anywhere in the word, for free.

We know what you’re probably thinking: Hasn’t that been tried before, and didn’t it land Ross Ulbricht in prison for life without the possibility of parole? But the team at OB1, the company that’s developing the OpenBazaar network, is quick to point out that their product doesn’t have the vulnerabilities of Silk Road, the online marketplace Ulbricht ran that got him busted for money laundering and conspiracy to traffic drugs.

For one thing, OpenBazaar is not a website—it’s a peer-to-peer network that runs on open-source software that users download and install on their computers, similar to a BitTorrent client. The software connects people to a network where they can trade with other users without a middleman taking a cut.

Unlike Silk Road and eBay, OB1 doesn’t maintain servers, host product listings, or store transaction data. Because of that structure, the company has no control over what is bought and sold. Whereas the online craft market Etsy forbids the sale of Washington Redskins–branded merchandise, for example, and Walmart restricts the sale of music bearing a “parental advisory” label, OpenBazaar puts absolutely no limits on what can be listed. And since the source code is publicly available, it would be virtually impossible for a governmental entity to shut the platform down.

“We’re merely providing a software tool to the masses, and each user is deciding what they do, how they participate on the network,” explains OB1′s 33-year-old CEO, Brian Hoffman. “So just as someone can write something derogatory in a Microsoft Word document, Microsoft is not liable for that.”

It’s this aspect of the system—the direct interaction between individual users, free from political oversight—that worries critics. Won’t OpenBazaar become simply a means for buying narcotics and other contraband?

In fact, OB1 has its sights set on something far bigger than the drug trade. It intends to compete with the giants of online commerce like Amazon and Alibaba and disrupt the very nature of the world’s $1.6 trillion internet commerce industry. And it has gotten some significant support as it pursues that lofty goal. Last year, the company received $1 million in venture capital from cryptocurrency heavyweights Union Square Ventures and Andreessen Horowitz. Angel investor William Mougayar, too, has contributed seed funding to the venture.

“While it may seem amazing that Silk Road did hundreds of millions of dollars, maybe even a billion dollars, worth of illegal goods, a billion dollars is nothing in terms of how much e-commerce gets done each year,” Hoffman says. “If six months from now OpenBazaar is just flooded with drug listings and illegal services, then most likely it wasn’t a good enough solution for the world’s trade. I would consider that a failure, because this is more about building a free market, not just an illegal market.”

He points to small businesses all over the planet that are already springing up to sell their wares—from comic books to caramel waffle cookies—using the OpenBazaar platform.

“If we work hard to allow users to self-police, to do things legally, properly, easily, cheaply,” he says, “they will rush in and overwhelm whatever could possibly come in from the dark side of the internet.”

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