Who Controls OpenBazaar?

You’re probably here because you saw or heard about something on the OpenBazaar network that was offensive, or illegal, and then someone directed you to this link to learn more.

Perhaps you’re not quite familiar with what OpenBazaar is yet. There are many questions to consider: How could anyone defend this? How come it’s not shut down? Who controls OpenBazaar? This post is meant to answer these questions.

First of all, you’ll need to take a moment to understand what OpenBazaar is. Or more importantly, what it isn’t.

OpenBazaar is not a website, a company, or an organization

Most people are familiar with the standard ecommerce model. A company – such as eBay, Amazon, or Etsy – has a popular website where people buy and sell stuff. The company directly controls the trade on their own website. You don’t hear about illegal or immoral goods sold on these websites because the companies won’t allow it. They remove any such listings. This model is a centralized model, because there is one central authority that can make decisions and control what happens.

This image shows a centralized model. The central hub is the website, which all the nodes (users) connect directly to. Everything happens in the central hub; users don’t interact with each other directly. If the hub (website) goes down, no one can do anything at all.

Centralized network
Centralized network

This is not how OpenBazaar works.

OpenBazaar is decentralized, peer to peer, and has no central authority

OpenBazaar is not a website. It is a peer to peer network of people around the world running software on their own computers. This is a decentralized model; there is no central authority that can make decisions and control what happens. If some people on the network have trouble with their computers or internet connection, other users are unaffected. They will still connect directly to each other.

This image shows a decentralized model. Unlike the centralized network pictured above, it has no central hub. All the nodes (users) are connecting directly to one another.

Decentralized network
Decentralized network

This is how OpenBazaar works. Users download the software onto their computers, and they buy and sell goods and services directly with each other. A seller lists items on their own store, which is hosted on their own computer. The only way for that store or that listing to be taken off the network is for the user to take it down themselves, or for someone to physically visit their home or business and shut down their computer.

Removing offensive listings or stores

With this decentralized model there is no central authority on the network which can take down their store or listings, even if they are offensive.

The developers of OpenBazaar – in fact, no one at all – have any control over the activity on the network. We don’t give permission to users to join the network; anyone can join by running the software on their computer. We aren’t making money from selling the software; it’s open source which means the code is open for all to see and use without any cost.

There is one method to remove offensive listings or stores. A store which is breaking the law can be reported to law enforcement. They can then attempt to track down the store, find the computer hosting it, and take it off the network.

Why decentralized?

You might be wondering why we would build a marketplace which could be used for offensive or illegal goods and services. First, it’s important to understand all the benefits that the decentralized model of online trade offers over the traditional, centralized model.

  1. Cheaper trade.

    A vendor on eBay is usually charged 10% of each sale. It’s 15% on Amazon. These fees are an enormous cost of doing business on centralized platforms. OpenBazaar has no middleman taking a cut, so the vendor is charged 0% for each sale. Vendors can pass on some of the savings to their customers resulting in less expensive goods and services.

  2. Borderless trade.

    Many popular online marketplaces aren’t available in every country. The popular payment methods available online such as credit cards or PayPal aren’t available in many countries. Engaging in international trade for people in these countries can be nearly impossible.

    OpenBazaar has no geographical restrictions, and it uses Bitcoin, which also is global. Anyone in the world with a computer and an internet connection can use OpenBazaar.

  3. Trade with cheaper and better escrow.

    Centralized marketplaces have a monopoly on trust, safety, and payments via escrow. It’s the reason why they can get away with charging high fees – users only have one choice. They also have complete control over funds, so users are forced to trust them completely.

    OpenBazaar does not have a monopoly on escrow. Instead there is an open market of third-party escrow services (called “Moderators”) which buyer and seller can mutually select. Having an open, competitive market for escrow services means fees will almost always be lower than monopolized platforms.

    Escrow on OpenBazaar uses a feature of Bitcoin called Multisignature transactions which means the escrow agent doesn’t control the funds directly, but controls them jointly with the buyer and the seller. Two out of three of them need to agree before funds are released. This leads to more secure escrow.

    Using an escrow service is optional. If buyer and seller trust each other, they can transact directly without involving a third party.

  4. Secure trade.

    In order to use the centralized platforms, you need to give them your personal data, or use a payment method which is tied to your identity (usually credit cards). Unfortunately, this information is a prime target for hackers to steal and use your personal or financial information for their personal gain. OpenBazaar has no account to sign up for, and you only share as much information about yourself with other users as you choose. It also uses Bitcoin, which means there are no credit cards numbers in a big database for hackers to steal.

  5. No restrictions.

    Centralized markets force their users to agree to their own “terms and conditions.” While some of these rules make sense to most vendors (preventing the offensive goods from being posted), other don’t. For example, Amazon recently banned the sale of some of their competitors products, for their own benefit. Etsy bans spells and other non-physical items, as well as banning the sale of merchandise from the Washington Redskins. None of these restrictions exist on OpenBazaar.

We built a tool which allows anyone with a computer and an internet connection to trade directly with anyone else in the world – for free – and we’re proud of that. The offensive listings must be viewing in context of the overall activity on the network, of which the vast majority is legitimate trade that makes everyone better off. We hate it when people abuse our technology, but the fact is that they alone are responsible for their own actions.

The internet itself is a decentralized system. Many people abuse this to do illegal or immoral things. However, we’ve collectively decided that the incredible benefits the internet has brought far outweigh the bad, and we do our best to reward the good while punishing the bad. The same should be true of OpenBazaar.