OpenBazaar, an Online Platform for "Censorship-Resistant Trade," Gets $1 Million In Backing From Venture Capital Heavyweights Andreessen Horowitz and Union Square Ventures

Investors give a vote of confidence to a libertarian-themed tech venture.

Two of the biggest names in the venture capital world announced today that they're getting behind a libertarian-themed tech project—a vote of confidence for an experimental enterprise that aims to facilitate free and "censorship resistant" trade.

OpenBazaar, a decentralized peer-to-peer marketplace that utilizes the Bitcoin blockchain, is getting $1 million in backing from Andreessen Horowitz and Union Square Ventures, two of the most influential backers in the

cryptocurrency space. Toronto-based angel investor William Mougayar has contributed additional seed funding to the venture.

The goal of OpenBazaar is to give everyone in the world "the ability to directly engage in trade with anyone in the world, for free," says the 32-year-old project leader, Brian Hoffman. With OpenBazaar, "the market participants decide what happens on the network, instead of eBay, Etsy, or some guy in an office building," Hoffman said in a phone interview.

OpenBazaar is one of several decentralized peer-to-peer marketplaces that takes advantage of recent breakthroughs in computer science to allow individuals to transact with each other without the oversight of a third party. In the same way that the Internet enabled individuals to share information without going through a news organization or a publishing company, these platforms seek to remove the middleman from all forms of trade. The hope is that they'll eventually eliminate the need for marketplace operators like eBay, Uber, and even the New York Stock Exchange.

OpenBazaar is built on code written by the virtuoso software developer Amir Taaki at the 2014 Toronto Bitcoin Hackathon. It enables peer-to-peer transactions by integrating aspects of the Bitcoin blockchain with a file-sharing system that's similar to BitTorrent. It's initially being developed as an ecommerce platform—a decentralized version of eBay—but in the future, its protocol could be adapted to facilitate peer-to-peer transactions of all sorts.

The purpose of OpenBazaar is to promote unfettered trade. When I first interviewed him last December, Hoffman told me that he was inspired in part by getting to know his wife's Iranian family. "It gave me a first-hand look at how hard it is for people to conduct any kind of online commerce across borders," he said. "Just to get an iPhone in Iran is such an encumbering process."

Hoffman and his team faced a problem that's common to all developers of decentralized applications: If nobody's making money running the show, who's going to pay the salaries of the core developers? Up until now, OpenBazaar's programmers have been volunteering their nights and weekends, but that "wasn't cutting it," Hoffman says.

So the OpenBazaar team formed a for-profit venture called "OB1," which is the direct recipient of the venture capital funding that was announced today. Hoffman says that OB1 will eventually provide ancillary services on the platform, such as hosting listings and arbitrating disputes between buyers and sellers for a fee. But until it has customers for these services, the company will focus full time on core development.

The biggest hurdle ahead will be enticing merchants to start selling their products through this decentralized marketplace. eBay takes about a 10 percent cut of every sale, while OpenBazaar is free to use. But there are network effects at play. The OpenBazaar team will need to convince sellers that a critical mass of customers will find their products if they list them on its experimental platform.

Hoffman says he hopes to raise more funding for advertising and promotion, and having the imprimatur of Andreessen Horowitz and Union Square Ventures should help with that considerably.

For more on the promises and pitfalls of decentralized peer-to-peer marketplaces, and a description of how the OpenBazaar protocol works, check out my feature story from Reason's May 2015 issue: "Bitcoin and the Cyperpunks: Will recent breakthroughs in computer science make truly free markets a reality?"

Comments

[Fist of Etiquette]

Endeavors that facilitate online transactions outside of regulation and taxation haven't fared too well lately.

[Lady Bertrum]

Maximum penalty ++

[X[redacted]s]

DON'T TALK ABOUT THE WAR.

[Florida Man]

It's a separate issue! Also it's driving me crazy not to have more details on the [redacted] six.

[Some Engineer]

I bet people use this to buy wood chippers.

[Special Place in Hell]

I hope there is a special place in hell for people who buy tariff-free wood chippers!

[Formerly Free Society]

String em up. The creator is no doubt a murderer and child pornographer. But first let's get some victim impact statements from those effected by low taxes and regulations. Some poor sons of bitches are buying things that aren't taxed or regulated at all! The humanity....

[Scarecrow Repair]

Those were only alleged murders, and only alleged in press releases, never in court filings. There were, however, no alleged woodchippers, so this is a safe discussion.

[Ken Shultz]

I would look at Napster as the model.

No one could have rallied the music industry behind that model but Steve Jobs, who was knee deep in the digital rights management and the entertainment industry by way of Pixar, etc.

Napster showed them how to do it, but they weren't going to let Napster continue so long as the industry itself couldn't control the marketplace. Apple helped them along by making it difficult for iTunes files to be played anywhere except for on an Apple device. Jobs got away with it because iPods were better devices than any MP3 players on the market at the time--and then he offered the world's coolest phone.

Another example is online poker. Online gambling will come to the United States--just as soon as the Las Vegas casinos get behind it, can dominate it, and find a way to exclude competitors through regulation.

Otherwise, I suggest the owner of this site take up residence in Ecuador, where Assange and Snowden tried to run. Or maybe New Zealand--this site owner should expect to be treated like Kim Dotcom or Silk Road.

At least he's smart enough not to try to hide from the government behind a pseudonym because we all know that won't work.

[Formerly Free Society]

Quit sucking your own dick about using your real name online. Are you looking for a merit badge? There must be a dozen other things you would elsewise suck your own dick over. Variety is the spice of life Mr Schultz.

[Ken Shultz]

I was talking about Dread Pirate Roberts, you troll.

[Hey Nikki!]

Word

[Formerly Free Society]

"Yeah me too. What he said!"

[Warty]

You seem familiar.

[Hey Nikki!]

Do you prefer, "I agree with Ken, and think Free Society is wrong"? I can say that too.

[Formerly Free Society]

I know most people are joking when they say you're terrible. But surely some of them must be serious.

[sloopyinTEXAS]

Um, we're all serious when we say Nikki is the worst. Every. Single. One. Of. Us.

Now, did you have a point to make, jackass?

[Formerly Free Society]

I made the point further up thread, if you care to read. About Ken sucking his own dick because he uses his real name. So much hostility today, in defense of Ken "Autoerotic" Schultz of all people.

[Mark22]

Except, of course, you completely misunderstood his post and made a fool of yourself.

Really, admit it: you're just irked because you can't reach it.

[Formerly Free Society]

At least he's smart enough not to try to hide from the government behind a pseudonym because we all know that won't work.

You've been congratulating yourself on this point for days at least, you tiny little man.

[Ken Shultz]

It was two sentences in one long comment on another site a couple of days ago.

Get over it.

P.S. You're acting like a troll. No really.

[Hey Nikki!]

Well, Ken, obviously every comment you make is just more autofellatio considering they all start with your real name! And every post you've ever made on this site since the beginning of time, too!

[Ken Shultz]

In all truthiness, I have found it necessary to emphasize, lately, that I think our public officials are a bunch of disgusting traitors to justice, freedom, the Constitution, and all that's good and holy--and despite the government's recent attempts to intimidate people like me into silence, I will continue to criticize the awful injustices they perpetrate in the name of the Drug War--and I am not afraid that they know who I am.

Why my defiance should draw the condemnation of this troll, I don't know, but apparently it's striking in chord in him for some reason. Either that, or he just has no clue what I'm talking about. It's probably the latter.

[Formerly Free Society]

I will continue to criticize the awful injustices they perpetrate in the name of the Drug War--and I am not afraid that they know who I am.

You're only a hop, skip and step away from calling me a coward because I've disagreed with you in some way. That's your usual tact and certainly nothing "trollish" (no really) about that.

You're so brave.

[Ken Shultz]

Like I said, I guess I struck a chord with you.

Maybe subconsciously you're ashamed of hiding behind a false identity.

I don't know. I don't care.

None of this was directed at you personally, but if I won't stop saying what I think for fear that it might offend a judge somewhere--then I'm not going to stop saying what I think for fear that it might offend you.

Deal with it.

[Formerly Free Society]

Breath, Ken. Breeeeath deeply. Now very carefully climb down off that high horse. Remember to breath.

[Warty]

Breathe. You take breaths, you breathe.

[Formerly Free Society]

Thank u, worty

[Warty]

Thank u, worty

No problem, dipshit. Send me your lame insults next time and I'll proofread them for you. No charge. Or, you know, Nikki is really good at this too. She could help you a lot. Moron.

[Formerly Free Society]

No problem, dipshit. Send me your lame insults next time and I'll proofread them for you. No charge. Or, you know, Nikki is really good at this too. She could help you a lot. Moron.

You're very poetic. I'd love to send you some stuff to look over. You're the most wildly successful literary critic I know after all.

[Ken Shultz]

"Breath, Ken. Breeeeath deeply. Now very carefully climb down off that high horse."

I'm not bent out of shape.

I'm not the one going around demanding that other people stop saying things that make me feel inferior.

You should become a Muslim fundamentalist.

Or maybe we should just have an Everybody Draw Free Society contest.

[sloopyinTEXAS]

I'll start the contest!

8=== ~ ~

[sloopyinTEXAS]

8===)~

Better. I'm sure he's been circumcised.

[Formerly Free Society]

So I'm supposed to fly into a rage because you call me a Muslim or something?

[Hey Nikki!]

He called you sensitive. Because you were already raging out.

[Formerly Free Society]

I was raging? Anytime you criticize someone, that's "rage"?

[Hey Nikki!]

This whole subthread is based on you blowing a one-time remark of Ken's wildly out of proportion, dude.

[Formerly Free Society]

Here I thought this subthread was based on some vaginas getting their daily allotment of sand inside them. It's not "one time" if it's said repeatedly. But I guess I'll take your word for it, since I'm just so enraged.

[Scarecrow Repair]

You've quoted his "error" more times than he wrote it. Ever hear of the Streisand Effect? Good job, good job.

[Raston Bot]

the owner of this site take up residence in Ecuador

What I took away was there won't be an owner. It's a distributed marketplace. Maybe if you run a node the Feds could charge you with conspiracy or continuing criminal enterprise charge.

[Ken Shultz]

That's great.

I hope it's a wonderful success.

My faith in the liberty maximizing power of technology has been shaken.

It started with this book:

http://www.amazon.com/The-Net-.....1610391063

This book was from before the Arab Spring, when people were crediting Facebook and twitter with the protest movement. What we didn't hear about was that all of those dictators were identifying dissidents--and all of their friends, followers, and family--through Facebook and twitter, too.

Our communications and financial transactions are under more government scrutiny now than they have ever been in the history of the world, and it is naive to think that oppressive government won't piggyback on the inherently traceable aspects of technology as it proliferates.

Yeah, the same technology that lets dissidents talk to each other over Facebook, also lets the government identify dissidents they never would have known about otherwise. That is always going to be a problem. It always has been a problem. Radio was an amazing way for people to get news that they could never get before--it also made it possible for dictators to propagandize their people like they never could before.

[Raston Bot]

There are wrinkles for early adopters. That book identifies some. I imagine the fixes are being developed or have already been disseminated.

[Ken Shultz]

I hope so.

I hope you're right.

I'm starting to think the fix is with the people.

The less susceptible people are to fear mongering, the more reluctant they'll be to let the government sift through their communications and transactions.

I'm not very optimistic about that over the long term either, I'm afraid. Going DEFCON 1 is the other great American pastime.

https://www.youtube.com/watch?v=qam1fbQmA_s

On the optimistic side, Rand Paul is a serious candidate, and if he doesn't win this time, he'll run again.

[Mark22]

False dichotomy. Technology is liberating because it shifts the power balance in the direction of liberty.It still takes people to make it happen.

[Mark22]

"Yeah, the same technology that lets dissidents talk to each other over Facebook, also lets the government identify dissidents they never would have known about otherwise"

No, not really. Facebook has favored identifiability for business reasons.That had nothing to do with what the technology is capable of.

[Ken Shultz]

Anyway, the author of that book was a dissident in Belarus, who became disillusioned with the false hope of technology. Ten years from now, we may look back and see it as one of the most important books of the early part of the 21 Century. It's a basic concept really--the more you can do electronically, the more the government can track what you do. But the real world implications of that on the movement for freedom from the perspective of a dissident are really interesting.

My observations? It's the cure for technological utopianism. There is no technology that the government won't exploit in the name of security. The only reason the government didn't collect a record of all of our communications before was becasue it wasn't technologically possible for them to do so. Show me something we can do because of technology that we couldn't do before, and I'll show you something the government will soon be tracking us doing--that they never tracked before.

[Raston Bot]

How would a bad actor snoop on open-source encryption? Nothing is 100% safe but there's some powerful tools available.

And those rebel dissidents need a means to defend themselves. Guns first and foremost.

I'd read that wet blanket of a book if it was only $4 for the e-reader version. $9 too beaucoup.

[Ken Shultz]

It is a bit of a wet blanket.

I don't know enough about encryption to say what's possible and what isn't right now.

I know it was technologically impossible before to track and store all of our communications. One it became possible, that's what they started doing.

I know the government has banned encryption for civilian use beyond a certain level--presumably to make it crackable, if not now than in the future.

Sometimes, I suspect we're hoping that technology will save us from having to do the hard work of changing people's hearts and minds. It's easier to believe that advances in technology will save our liberty than that the masses will start thinking for themselves and valuing their freedom, but I don't think there's anyway to avoid going after people's hearts and minds.

I should send more money to Reason.

[Ken Shultz]

"I should send more money to Reason."

Because going after people's hearts and minds is what they're all about, obviously.

[Raston Bot]

Fuck other people's hearts and minds.

[Ken Shultz]

Yeah, I know.

Well if you can't make yourself care about them, think about their rights.

The right of a scumbag progressive to speak his mind is precious even if the progressive is a scumbag.

And I don't suppose it's the progressives we need to convince anyway. It's the people in the middle. Maybe think of people like your grandparents and their friends.

They're probably not progressives, but they're probably not libertarians either--and they think the government should keep an eye on things to protect us. Isn't that probably most people?

We get enough of them to care about this stuff and the politicians they represent will fall right in line. I think that's a better permanent solution than hoping that encryption technology will outpace the government's ability to track us forever. And what are the other options? Do they involve space travel?

[Mark22]

Get over it. Do you seriously believe that a government that could not put together a simple health insurance web site suddenly becomes technically competent when sifting through your personal data?

Granted, the attempt in itself is harmful, but they are going to be woefully ineffective.

[waffles]

I, for one, embrace our shitty cyberpunk future.

[Ken Shultz]

As long as they don't take my motorcycle (because I'm too much of a threat to their driverless cars or for my own safety), I'll be okay.

If they try to take my motorcycle, all bets are off.

[DJK]

I've been thinking about this issue a fair amount lately. I think it's a pretty foregone conclusion that motorcycles will be gone shortly after driverless cars become common. If they live up to their promises of reducing the 30,000 or whatever highway deaths each year, there's no way that Congress doesn't massively incentivize this new technology. And as driverless cars become more and more common, insurance companies will be less and less willing to insure driver-operated vehicles (assuming the driverless cars are as safe as people seem to believe they'll be). All these arguments apply even moreso to motorcycles, since they're so much more dangerous. I would be shocked if people still ride motorcycles in the U.S. 30 years from now. Hit those twisties while you still can.

[Some Engineer]

Happily many states do not require insurance on the motorcycles.

[Mark22]

That makes no sense. Insurance companies insure risk. Driverless cars don't increase risks for motorcycles or cars, hence nothing changes about the economics of providing insurance for motorcycles.

Government may regulate motorcycles out of existence because they don't want to have a "risk inequality" and they think they know better than you what kind of risks you ought to be able to subject yourself to, but that's not inevitable.

Besides, people will still ride other two wheelers, the kinds that progressives like, which I think also protects motorcycles as a side effect.

[Special Place in Hell]

I for one can't wait to shop @ TorBay, Tormazon, or whatever they call this thing.

[gaoxiaen]

Can I buy an untraceable woodchipper there?

[X[redacted]s]

[redacted]

[The Male Gaze?]

So is this one Tor based as well? Seems Silk road-y but not as hidden

[Hey Nikki!]

"It gave me a first-hand look at how hard it is for people to conduct any kind of online commerce across borders," he said. "Just to get an iPhone in Iran is such an encumbering process."

What's wrong with this asshole? Does he think he's better than the laws of Iran? That is deeply troubling, terribly misguided, and very dangerous.

[Raston Bot]

The WTO would like a future word with him about some back tariffs.

[Brochettaward]

Iran lacks the will of the people behind its government. And nukes.

[Formerly Free Society]

Iran lacks the will of the people behind its government.

So popular support for injustice gives validity to it? If I want to murder you because I don't like your haircut, does it cease to be murder if everyone in the room takes a vote and agrees to your murder?

Justice is justice irrespective of democratic majorities and institutions.

[Warty]

How did you manage to read that exactly backwards?

[Raston Bot]

Okay but if anyone mentions decentralized capital markets, then there will be bodies.

-FRB

[Brochettaward]

The creator of this is just asking for a triple life sentence.

[Judgechipper]

OpenBazaar is definitely not "censorship resistant." You have to run a node in order to have a store. That is just asking for Big Brother to have a look at what you're selling and come (no) knocking if they don't like it.

Also, you can expect a tax bill from NY State when they determine that you sold to one of their residents.

[Pogue Mahon]

Blockchain-based solutions are the future. The OpenBazaar model has a fundamental flaw.

[adolphowisner]

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????? http://www.workweb40.com

[DJK]

An angel and two VCs and they only managed to raise $1 million? Is this considered typical for early investing rounds in IT enterprises? For startups in other fields, it would be a pretty meager haul.

[Gabby]

Demand for ecommerce on mobile app is increasing in high demand. There are many readymade ecommerce store coming up.
http://www.duceplus.com/magento-mobile-app.html

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