OpenBazaar 2.0: How Bitcoin’s Free Market eBay Plans to Go Global

Michael del Castillo (@DelRayMan) | Published on July 14, 2016 at 18:55 BST

Within hours of online marketplace OpenBazaar's launch earlier this year, it was host to its first stores offering illegal merchandise.

But, it turns out that early precedent was not a harbinger of things to come at the distributed e-commerce platform, supported by VC-backed software startup OB1, which boasts investors including Andreessen Horowitz and Union Square Ventures. The next phase of the open-source, distributed market, dubbed OpenBazaar 2.0, will be aimed at meeting mainstream demand.

From a new user interface making it easier for large companies to sell at scale, to a native bitcoin wallet aimed at simplifying the buying process, the new features are designed to reach the widest audience possible and expected to be rolled out over the coming months.

One of the more than 300 vendors online at any given moment is Sam Patterson, who in addition to helping manage the upgrades made by various members of the open-source community, runs OB1's own shop that sells a range of OpenBazaar swag.

Patterson estimates that of 7,000 items for sale at any given time, only about 200 are "illicit" and that global adoption is picking up pace.

He told CoinDesk:

"The really neat thing we’ve seen beyond the enthusiasm is the mix between domestic and international users. While the primary users are certainly in the US, we ship products all over the world."

Identifying users

While the identity of marketplace owners and their locations are not tracked by OB1, some information about users is obtainable with a bit of sleuthing from sites like Duosear.ch and BazaarBay.

So far, the OpenBazaar software has been downloaded in 190 countries and about 20,000 items have been listed.

Users tend to be small- and medium-size merchant with a "strong tilt" toward physical goods, which surprised Patterson, who is COO of OB1.

Due to the distributed nature of the network (which can only be shut down if the hosting store turns off its computer), and the borderless nature of bitcoin (the currency that powers the network), Patterson said he and his colleagues had expected a much stronger inclination to service-based offerings.

In a Google Chat last week among about a dozen OpenBazaar developers, Patterson estimated that 90% of the listings were for physical goods, 7% for digital goods and 3% for services.

While he said a decent portion of those offerings are NSFW, including custom pornography, he says few are illegal.

"The most interesting observation is the lack of illicit transactions going on compared to what some people have anticipated," he said.

OpenBazaar concludes that the majority of their users are based in the US, with a recent increase in Asia, with uptake from China, Japan and Hong Kong.

A better distributed market

Last week, OB1 published plans made by OpenBazaar's open-source community, many of which are also OB1 employees, to attract larger corporations and more users from around the world.

Based on customer feedback, the color scheme of a new user-interface will be lightened and a new internal bitcoin wallet is intended to make it easier for shop owners and customers who aren't familiar with the cryptocurrency to more seamlessly make purchases.

Use of libbitcoin, a set of C++ libraries for bitcoin applications, will also no longer be required.

"The current OpenBazaar requires they already know how to use bitcoin," said Patterson. "As long as people can get bitcoin to OpenBazaar 2.0, they should be able to easily use it with the native wallet."

Other changes include improved security that will change the encryption keys for each messaging session to prevent anyone who has obtained the key from gaining access to more than just a single dialogue.

Also, the search tool used to discover articles for sale will be improved, and private offerings will be enabled, meaning those products or services can only be discovered if a shopper has the URL.

Distributed shops

But the largest change is designed to expand the number of markets available at any given time, and it will involve a move of OpenBazaar’s back-end to the IPFS peer-to-peer distributed web protocol.

While the current peer-to-peer system is designed to be censorship resistant by distributing the network itself, the data for each shop is run locally, giving shop owners the ability to turn off the visibility of their shop by simply shutting down their computer.

That also means if the merchant wants to sell 24 hours a day, seven days a week, they can’t unless they leave their computer on the entire time. When IPFS integration is implemented the shop data itself will be distributed across the entire network.

Patterson concluded:

"For sellers that makes it easier because they won’t have to run their stores 24/7. It also makes the stores more censorship resistant because if they are censored the data is still out there."

Connected world via Shutterstock; Urban Art shop image via OpenBazaar