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Friday, September 26, 2014

OpenBazaar: P2P Marketplace to Undermine our Corporate Overlords

By Haystack on September 26, 2014
Howard Pyle: The Buccaneer (1905)
Around the turn of the century, Amazon, eBay and other online marketplaces provided revolutionary new venues for small-business entrepreneurship, but they have since grown into heavy-handed corporate behemoths that treat sellers like share croppers while exerting an ever-expanding influence over government and the economy. In the future, online marketplaces will be publicly shared via distributed p2p networks. There will be no fees, no trade restrictions, no corporate overlords running the show. The concept is gaining traction; the technology is already here.
One promising effort in this direction is OpenBazaar. They hope to offer a full release in 2014, and are currently seeking beta testers:
OpenBazaar is an open source project to create a decentralized network for peer to peer commerce online—using Bitcoin—that has no fees and cannot be censored. Put simply, it’s the baby of eBay and BitTorrent.
Right now, online commerce means using centralized services. eBay, Amazon, and other big companies have restrictive policies and charge fees for listing and selling goods. They only accept forms of payment that cost both buyers and sellers money, such as credit cards or PayPal. They require personal information, which can lead to it being stolen or even sold to others for advertising or worse. Buyers and sellers aren’t always free to exchange goods and services with each other, as companies and governments censor entire categories of trade.
OpenBazaar is a different approach to online commerce. It puts the power back in the users’ hands. Instead of buyers and sellers going through a centralized service, OpenBazaar connects them directly. Because there is no one in the middle of the transactions, there are no fees, no one can censor transactions, and you only reveal the personal information that you choose.
How does OpenBazaar work?
Let’s say that you are looking to sell your old laptop. Using the OpenBazaar client (a program you download), you create a new product listing on your computer with details just like you would on any ecommerce site, and ask for a price in Bitcoin. When you publish that listing, it is sent out to the distributed p2p network of other people using OpenBazaar. Anyone who searches for the keywords you’ve used—laptop, electronics, etc—will find your listing. They can then accept your price, or offer up a new price.
If you both agree to a price, the client creates a contract between you both with your digital signatures, and sends it to a third party called a notary. In the case of a dispute an arbiter can be brought into the transaction. These third party notaries and arbiters are also folks on the OpenBazaar network—could be your neighbor or someone across the world—who the buyer and seller trust in case something goes wrong. The third party witnesses the contract and creates a multisignature Bitcoin account (multisig) that requires two of three people to agree before the Bitcoin can be released.
The buyer then sends the agreed upon amount to the multisig address. You get a notification saying the buyer has sent the funds, and you ship the laptop to them and mark that it has been shipped. The buyer receives it a few days later, and they mark it received, which releases the funds from multisig to you. You got your Bitcoin, the buyer got the laptop; no fees paid, no one stopped your trade, everyone’s happy.
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