Is OpenBazaar the future of ecommerce?

Lately, I’ve become more interested in the idea of a decentralized marketplace. Somewhat spurred on by the rise of crypto and decentralization over the past 15 months or so, and partly inspired by problems presented by selling on centralized marketplaces (specifically on Amazon), I’ve looked into some alternative marketplaces.

Currently, there appears to be at least a few decentralized marketplace projects in the works, including SysCoin and Soma.co. The only decentralized marketplace project currently operating appears to be OpenBazaar, which is an open source ecommerce project dating back to 2013.

OpenBazaar is run by OB1. Brian Armstrong, CEO of OB1, was interviewed on Software Engineering Daily back in November 2017 and addressed many of the problems that OpenBazaar solves when compared to a centralized marketplace like Amazon – or even Shopify.

If you were to sell t-shirts on Shopify, let’s say you sell Donald Trump t-shirts and all of a sudden the people who run Shopify say, “Well, we don’t like Donald Trump, so we’re going to remove all of the stores that sell Donald Trump t-shirts.” Your business could instantly disappear, because you’re at the behest of this company or centralized organization.

In our case, because OpenBazaar is completely peer-to-peer, it’s up to the participants of the network to decide what stays and what goes. Those Donald Trump t-shirts would remain for sale just like if you were running your own website. That’s one primary advantage of it.

Describing how the process works, which includes a third-party to release payments:

When you’re going to buy the t-shirt from somebody, you would put your money that you want to pay to the merchant into this special account, and when you receive the t-shirt and you’re happy, then you guys both agree to give the merchant that money out of the escrow address. That actual capability really only exist in these cryptocurrencies. There is no real way to do that with like a PayPal for instance. That is necessary. That’s why Bitcoin is necessary in this case. But there are other cryptocurrencies that have similar functionality and could replace Bitcoin there

Much of the interview gets a bit technical, which tends to be one of the problems around decentralized projects at the moment. Addressing this, Brian says:

We want everybody to be able to use OpenBazaar. It’s not a Bitcoin protocol per se. It’s really just a decentralized protocol and so Bitcoin happens to be the first option that we leverage, but we want everybody to build and use in. We’ve tried to build like a very agnostic contracting language that can work on all those platforms.

In terms of what is being purchased and sold on OpenBazaar, he aknowledges there’s not much yet:

We can see what’s on the network, like what are people currently offering. Right now, a lot of it is like collectibles, clothing, kind of small business type stuff. There is some drop-shippers that are selling all kinds of electronics and things like that.

You have this weird collecting mix of like small businesses and garage sale type stuff right now. You also have a situation where tools not quite advanced enough to tie into other types of systems that serious merchants need. Shipping integrations, fulfillment systems, things like that, like a Shopify might have or an eBay.

We’re not quite attracting those types of merchants yet, but we’re working on it.

The full interview is well-worth a listen if you’re at all interested in OpenBazaar and decentralized exchanges. We’ll be posting some more of our own content on the subject soon.

Andrew @ EcomLoop
EcomLoop founder. I've worked in ecommerce since 2005, beginning with my own ebay store. I've run multiple independent ecommerce businesses on Magento, Joomla, and more recently, Shopify and WooCommerce. I believe marketplaces should be looked at as a sales channel and that all independent businesses should strive to build a direct connection with their audience for long-term success.

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