OpenBazaar bills itself as a new way to transact online, through decentralized markets and with cryptocurrencies. At the root of the global push of OpenBazaar is a business model with no restrictions (or fees), as parent company OB1 CEO Brian Hoffman tells PYMNTS, aiming to reduce transaction costs and bring marketplace power to buyers and sellers, sans middlemen.
To bring eCommerce truly global … decentralize? As in: decentralized marketplaces, and decentralized money, done digitally and privately.
OpenBazaar bills itself as a new way to do commerce online. In an interview with PYMNTS, Brian Hoffman, the CEO of OB1, the parent company of OpenBazaar, said the peer-to-peer nature of what he termed the “world’s first and only decentralized marketplace” is one that sets the business model apart from strongholds such as Amazon and eBay, and illuminates the advantages of marketplaces marked by no restrictions.
“The difference in what we are trying to build and what exists currently in terms of marketplaces is that these other marketplaces are created by a database,” Hoffman told PYMNTS. “They are not really and truly free marketplaces. They are businesses that kind of look like a marketplace.”
He noted that there has traditionally been no way for participants to form a marketplace without some centralized organization doing a lot of the legwork, providing buyers and sellers with a process for matching and conducting transactions. And, of course, with the eBay and Amazon model, there also needs to be centralization of payments methodology, via credit cards or PayPal, along with the stipulation that personal information be presented in order to conduct commerce.
But with the emergence of peer-to-peer payments and processors, as well as conduits like bitcoin, he said there is no need for middlemen to facilitate those actions.
“It’s not a business-operated marketplace,” Hoffman said of decentralized markets in general and OpenBazaar in particular. “It’s a people-operated marketplace.” In this case, it is the buyers and sellers who come together, find each other and agree upon rules to operate, distributing the responsibility of certain key actions that had previously been delegated to a firm offering up the centralized market.
Against that backdrop, last year OB1 debuted OpenBazaar 2, an update to its protocol that allows for transactions without data being stored on centralized servers, and also allows those transactions to take place with anonymity, using cryptos as payment. More recently, the company has added cryptocurrency trading to the mix, via unveiling OpenBazaar 2.2.0 last month.
In a simple transaction, a seller downloads the OpenBazaar client and creates a product listing, which becomes available through the P2P network. The product is then found by buyers using applicable search terms. The act of transaction creates a contract defined by digital signatures. In terms of mechanics, Hoffman noted that payments go into an escrow account and are not released until both parties agree that goods or services have been delivered and that terms of the transaction have been met to mutual satisfaction.
Asked by PYMNTS what frictions are eliminated in a peer-to-peer marketplace, Hoffman stated that technological issues are sidestepped in an eCommerce world where if, for example, eBay or Amazon goes dark (via glitch or hack), commerce comes to a standstill. He also stated that fees are eliminated in direct transactions, which means buyers don’t pay extra, and sellers can keep more of what they earn. “On the buyer side, the hardest part may be acquiring a cryptocurrency,” Hoffman said, but neither party has to provide data that might be required on other marketplaces, such as Social Security numbers (SSNs) or employer identification numbers (EINs).
As for OpenBazaar, Hoffman told PYMNTS to “think of it more like a marketplace protocol than an application,” noting at another point in the discussion that “we think of OpenBazaar as the internet of trade, and not like a singular marketplace … we are not providing a service for people. We are providing software that they can use as a tool.”
If OpenBazaar operates with the internet as its model, it has similarly unfettered access to the marketplace.
Pretty much anyone can come to the platform to search for and sell goods. But Hoffman did note that there are search engines that reside of top of the OpenBazaar platform. There’s a default search engine that is controlled by the company, as well as one that is used to filter out fraudulent and illegal listings. Other search engines give the user the option to control what they view among offerings.
“As much as we can be outside the decision-making department, the better,” Hoffman said of his company, “It’s unrealistic to police a system that is global and user generated without running afoul of any jurisdictional restriction.”
Hoffman said the platform exists only as a desktop application now, but the firm is considering other conduits.
“Over the next few years, we are going to be making a very hard push to look like more traditional eCommerce in that we want this decentralized application to be able to run on the web through the mobile devices.”
Hoffman noted that firms like his have to deal with Apple and Google, and whether those two “gatekeepers” they like or approve of what the company is doing. “Shutting us out of their app store – if they do not agree with us – that can be an issue.”
On a larger scale, “there are many people who are trying to do business in countries where it is hard to get online and sell,” he said of OpenBazaar and the P2P mode. “Now they are instantly accessible.”
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