Evolution Exit Scam Shows Multisig Isn’t Enough: We need Decentralization

This week another darknet market closed abruptly. The Evolution site operators stole millions of dollars worth of users’ bitcoins. This is only the latest in a series of “exit scams” where the operators of these centralized markets will run legitimately for months, even years, and then run off with all the funds at once.

When previous exit scams occurred, the proposed solution was implementing multisignature into the marketplaces. Users were told to only use marketplaces that offered multisig. This does make the users’ funds more secure – in theory. In practice, even though multisig was available in Evolution, it wasn’t widely used. People still trusted the centralized site operators with their Bitcoin.

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Why would people still misplace their trust when this pattern has become obvious? One reason is that they are dealing with illegal items. Not all items on darknet markets are illegal, but a substantial portion are. They have no legal recourse if something goes wrong. This means they look for the most trusted site in operation, the one with the largest network of other users. As the number of users increases, so does the notoriety, publicity, and demands on the site infrastructure. With the increased stress and scrutiny on the system, the site operators have little margin for error. If something does go wrong, or the pressure becomes too intense, then those site operators will exit while they still can, taking down the entire system.

Even in legal marketplaces, centralized systems share this flaw. The single point of control gives site operators the ability to determine the fate of the platform, and all its users.

How can this be prevented? We’ve already mentioned multisig. Evolution implemented it, but did so in a way that was intended to still retain power over users’ funds. They required users to deposit funds with them, and then move them into the multisig later. A centralized site operator doesn’t want to give up their ability to extract fees from its users, so they don’t have a strong incentive to make multisig easy to use. Also, multisig might protect funds, but it doesn’t prevent the platform from shutting down altogether.

The solution is to move away from the centralized systems completely. Removing the middleman will have enormous benefits for users. Consider the following benefits of decentralized markets:

  1. Markets are persistent. There’s no central point of control that can be taken down, either by outside actors or internal ones.
  2. Funds aren’t centrally controlled. There’s no central authority to trust and no jackpot to steal. Individuals control their funds directly and likely use multisig for transactions.
  3. No fees. Trade occurs directly between parties; there’s no site operator to take a cut.
  4. No data aggregation. Site operators (and data thieves) profit from aggregation of data on centralized systems, but there’s no single trove of data on decentralized system.
  5. Trust and reputation are dynamic. In a centralized system, you are forced to trust the site operators, and the reputation system is static (as determined by site operators). In a decentralized system, you aren’t forced to trust any parties, and reputation systems can emerge without any control or censorship by central authorities.

Unfortunately for everyone on the internet, decentralized markets are still in their infancy. Over the last eight months OpenBazaar has teased the community with a taste of what the future of trade looks like. We are pushing hard, and are closer than ever to making it a reality. We know you wanted it yesterday, but our mission is not just to push out a product. Our goal is to create an open protocol for trade that will give users to power to push aside the central institutions that control online trade, and begin trading freely. It’s not a simple task, but with your help we’re getting close.

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OpenBazaar is a Black Duck Open Source Rookie of the Year

Our team is exited to announce that the OpenBazaar project has been selected as one of Black Duck’s Open Source Rookies of the Year.

Each year, Black Duck names ten new open source projects as their Rookies of the Year. Former winners include Bootstrap, Ansible, Docker, Tox, and many other amazing projects. We’re honored to be acknowledged alongside such great projects as well as the other rookies this year.

We’d like to thank the community for their enthusiastic support of the project, as well as the dedicated group of volunteers who maintains the project.

2014 was a great beginning to the project, but 2015 will see OpenBazaar move out of beta and into a platform that can be used for free trade online, with Bitcoin, anywhere in the world. Let’s make trade free together.

OpenBazaar 2014 Rookie of the Year

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Announcing development of the OpenBazaar Developer Network

Today we are announcing the OpenBazaar Developer Network or ‘OBDN’.

We recently asked for volunteers to help with the front-end development of the OpenBazaar client, and we’re pleasantly surprised to receive more than 20 responses from volunteers in only the first week. We realized that there are many people who want to contribute to the online free trade movement, but they aren’t sure how to get involved.

In order to bring in more developers to help make OpenBazaar a reality, we decided to begin creating the OpenBazaar Developer Network (OBDN). It will be a platform that allows a community of OpenBazaar developers to share their ideas, collaborate on how best to implement these ideas, and then make them a reality. OBDN will allow the community to propose new features and vote on which features they want to see implemented.

The OpenBazaar team leads found here will use the OBDN to find help for specific tasks within their areas. APIs and other tools will be available for developers who wish to build plugins or new services on top of the OpenBazaar network.

To ensure that we are working with developers who genuinely want to contribute, we plan on OBDN being invitation only. There will be an application process for access to the network once we have a functional beta, which we hope to roll out in mid-January.

If you’re interested in helping build this platform with us, please contact Braden Glasgow. Email: braden@openbazaar.org  Twitter: @bradenglasgow

 

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Blog launch; updates

Note: This blog post is outdated. Read this article for the latest code.

As OpenBazaar nears its initial beta release at the end of August, we decided to launch a blog in order to keep the community updated on our progress.

If you’d like to be alerted to new blog posts or announcements, sign up for our mailing list.

Wait, what is OpenBazaar again?

Glad you asked. We wrote an introductory article just for you. If you can’t be bothered, here’s the tl;dr: OpenBazaar is a decentralized network that allows for peer to peer commerce without fees or censorship.

How can I help?

Over the month of August we need folks with some amount of tech savvy (and Linux) to do some alpha testing, report bugs, and make suggestions for improvement. You can report bugs or request enhancements through the Issues section on our Github page. To get a node up and running on Linux, check out the build instructions (and drop into #OpenBazaar on Freenode IRC if you need help). We’re making progress on a Windows version, but it’s not stable yet. The Mac version hasn’t started yet. We’ll have one eventually.

But I’m not tech savvy; I don’t use Linux!

That’s fine, though you can’t help with early testing you can sign up for the mailing list to be alerted when we start beta testing. You can also help by donating Bitcoin to the project, which helps us do things like running seed servers, host this website, and present OpenBazaar at conferences like Bitcoin in the Beltway or the upcoming Cryptolina conference. Of course, you can also help by spreading the word…we need as many developers and Bitcoiners to be aware of OpenBazaar as possible!

How can I contact you?

We’re very active on IRC on Freenode at #openbazaar, visit us at http://forum.openbazaar.org, or shoot us an email at project@openbazaar.org.

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