A new e-commerce platform known as OpenBazaar has exited its extended test phase and is open for business. Unlike the Amazons, eBays and Alibabas of the world, OpenBazaar offers a decentralized network for peer-to-peer commerce which is free of “restrictive” policies and fees, among other things.
As explained on the OpenBazaar blog, the service eliminates a centralized entity and puts buyers and sellers in direct contact with each other. There are no accounts to create and you only reveal as much personal information as you’re comfortable sharing (or that's needed for shipping purposes).
The nature of the service means there’s no trove of user data for hackers to steal which has to be worth something, right?
Let’s use the example from the blog in which you want to sell your old laptop. Using the OpenBazaar client (it’s a software program you download, not a website), you create a product listing just as you would on eBay or Craigslist. Once published, the listing is sent out over the distributed peer-to-peer network of other people using OpenBazaar.
When someone searching for a used laptop finds your listing, a price is agreed upon. At that point, the buyer has one of two options: they can either issue a direct payment in which they send the amount due in Bitcoin (all transactions are handled in Bitcoin) directly to the vendor or they can perform a moderated payment in which funds are sent to an escrow account controlled by the buyer, the seller and a moderator.
The funds can only leave escrow when two of the three parties agree on how to release the funds. In most cases, it’s the buyer and seller. The moderator only comes into the equation if there is a dispute. In that case, the moderator will decide which party is at fault and either issue a refund or pay the vendor. Should this occur, the moderator will receive a percentage of the transaction which is called a dispute fee.
This method is billed as the safer of the two although it’s important to select a trustworthy moderator. OpenBazaar points to this subreddit to discuss good or bad mods.
If you’re thinking this all sounds a bit shady, well, there’s reason to be cautious.
According to The Daily Dot, OpenBazaar started life two years ago on the Dark Net as the heir apparent to Silk Road 2.0. In an interview with the publication in 2014, OpenBazaar’s operations lead, Sam Patterson, said that if you’re thinking of it as Silk Road 3.0, then you’re thinking about it much too narrowly. Patterson said he thinks it’s much more powerful as e-commerce 2.0.
What are your thoughts on OpenBazaar? Is the concept strong enough that it can successfully eliminate the middleman or does e-commerce need a centralized unit to keep the peace?