Wired Misses the Point
of OpenBazaar
To start and stop discussion of the peer-to-peer marketplace at “drugs” is negligent.
Last Thursday, TheProtocol.TV released an interview with Sam Patterson, Operations Lead for the OpenBazaar project.
The very next day, Alibaba Group Holding Ltd. revealed its plans for what could be the world’s biggest initial public offering. The Chinese e-commerce behemoth’s potential $24 billion sale would value the company at around $155 billion. Although Alibaba has diversified into payment processing, a shopping search engine, and cloud computing services, the vast majority of its revenue comes from charging fees to the users of its marketplace platform. This begs the question immortalized in the film “Office Space”:
“What would you say you do here?”
If Alibaba is, at its core, a trusted third-party that facilitates commerce between two distributed participants, then what use is it when the participants can provide all the added benefits of having a trusted third-party between themselves?
This is the promise of OpenBazaar.
OpenBazaar is an open source, peer-to-peer marketplace. Instead of buyers and sellers going through a centralized platform, like Alibaba, OpenBazaar allows for direct, person-to-person commerce. Trust, security, and dispute resolution are all handled by the users of the system. Since there are no middlemen, there are no fees. Since there are no gatekeepers, there is no censorship.
The originators of OpenBazaar, and its predecessor DarkMarket, see this lack of censorship as one core feature of the system’s many worthwhile attributes. But, if you read the recent Wired article about OpenBazaar, you might suspect that the only use of a peer-to-peer marketplace would be to sell drugs. The title of the article, “Creators of New Fed-Proof Bitcoin Marketplace Swear It’s Not for Drugs” immediately puts OpenBazaar in the context of illicit activity. The sensational headline paints its creators as, at best, criminally naïve and, at worst, willful lawbreakers.
Author Andy Greenberg writes, “And just what will you trade on OpenBazaar? A good first guess might be drugs.”
Actually, it’s not a good first guess at all. Last year, Alibaba saw 231 million active buyers on its China retail sites. Mr. Greenberg seems to suggest that if you remove the element of censorship in commerce then we would immediately have 231 million new drug dealers and users unleashed on the world. The article implies that the main purpose of any peer-to-peer market is for illicit activity. The logic underpinning the Wired piece relies on erroneous reasoning that, when vocalized, quickly gets reduced to unrealistic fear.
We’ve seen this argument many times before. It is basically, “If you give people too much freedom, then they will enslave themselves with immoral behavior. Therefore, you need a central authority to be the arbiter of that freedom to preserve order. Give away your freedom to enjoy feeling free!”
OpenBazaar removes the central authority from the equation entirely. Since there is no mandate to use the system, all of its participants will be there by choice. That is the key here: choice. Some may see a world in which Alibaba, or eBay, PayPal, and Amazon cannot coexist with OpenBazaar. I see the opposite. Central services will undoubtedly have a role to play. But for the first time, they will have robust competition. Consumers will have a choice as to which system they will use on a case-by-case basis thus forcing service providers to offer a better value proposition to its users.
Here is where I think Wired is actually doing a disservice to its readers by solely focusing on OpenBazaar as what they term a “Silk Road-inspired market”. It is amazing that a publication which promises “coverage of current & future trends in technology” could miss the broader implications of this new technological achievement.
Let’s take the case of car-sharing service, Uber. Uber has been banned in Berlin and is facing a shutdown in Germany. Authorities say they are acting in the interest of consumer protection and public safety. Opponents of the ban would suggest that the state is acting as a protectionist agent paid directly by incumbent taxi services.
Fast-forward to a future where using OpenBazaar is no more difficult than using WordPress. Since everything is open source, independent developers have added real-time location data while others have ported the platform to mobile. The company that was “Uber” is now a trusted curator of drivers and a dispute resolution center. Outside of setting up sting operations to bust drivers one-by-one, the system is effectively unstoppable. The best the state could do is instill enough fear in the public so the will to use such a system would be overwhelmed by the uncertainty of price a user would ultimately pay. “Is it worth getting a $1000 fine just so I could get a $10 car ride?”
What’s the role of the regulator when there is no “thing” to regulate? How do you enforce taxation in a truly peer-to-peer economy? When the purpose of government overtly shifts from the goal of serving its citizens to that of serving as the enforcer of corporate interests, will the system still have the authority to stand?
Simply put, a fully functioning OpenBazaar renders many elements of our current societal structure irrelevant.
There is a healthy, rigorous debate that needs to be had about the implications of what OpenBazaar brings. But, for Wired to start and stop the discussion at “drugs” is negligent. Peer-to-peer technology doesn’t seem to be a threat to the largely U.S. dollar denominated international drug trade and associated money laundering racket. However, if I were running a company that did a quarter-trillion dollars worth of transactions and my whole business revolved around being the middleman to every one of those, I would definitely be concerned about the development of OpenBazaar.
