Open Bazaar has made a name for itself as the most prominent decentralized ecommerce platform built on top of Bitcoin. But what does that really mean? What does OpenBazaar offer and how does it differ from Amazon or eBay?

Recently, OB1 (OpenBazaar’s operating company) CEO Brian Hoffman gave a presentation at a Bitcoin meetup in Zurich, Switzerland. During the talk, Hoffman addressed some of the key differentiators between OpenBazaar and traditional ecommerce platforms such as Amazon.

1 – No One Owns the Platform or the Data

The first difference between OpenBazaar and centralized ecommerce platforms discussed by Hoffman had to do with user data.

“With centralized marketplaces, a lot of the reason why they’re so valuable is because of the data they’re capturing about everything going on in the marketplace: your identity, what you’re selling, what you’re interested in searching for, [and] all of that stuff,” said Hoffman.

In contrast, Hoffman explained that every node on the OpenBazaar network hosts all of their own data related to identity, shopping, and sales. Hoffman also mentioned the increased responsibility placed on the user as a potential downside of this setup.

In addition to controlling the data on the platform, centralized ecommerce systems also decide whether a user will even be allowed to purchase items, sell anything, or even create an account. With Tor integration coming in OpenBazaar 2.0, it’s possible that some users of darknet markets like Alphabay may decide to make the switch to a more decentralized model with no gatekeepers.

2 – Fees

Unlike traditional ecommerce platforms, OpenBazaar does not have any fees. “That was never really a viable option for us,” said Hoffman. “We always felt that the protocol needed to remain pure, open, and completely free.”

Hoffman added that even if a fee was included in the protocol, someone could just fork the open-source codebase and remove the fees from the platform.

According to Hoffman, the likes of Amazon and eBay often charge over 10 percent in fees to sell something, which does not include the fees associated with credit card payments.

The only fees involved with OpenBazaar transactions are the fees association with the Bitcoin network. Direct integration with an altcoin like Litecoin may eventually be necessary, as Hoffman admitted the relatively high fees on the Bitcoin network recently have become a problem.

3 – The Dispute Resolution Process

The final key differentiator for OpenBazaar when compared to traditional systems mentioned by Hoffman during his talk was the dispute resolution process.

“They’ve pretty much created a monopoly around dispute resolution,” Hoffman said of platforms like Amazon. “If you have a problem with something that’s going on in the marketplace, you basically appeal to Amazon or eBay, and they decide – that’s it.”

Alternatively, the dispute resolution system on OpenBazaar is an open market where anyone can be a moderator, setting their own fees and terms.

“What’s cool about is we’re starting to see almost like a market of moderation show up, so people are incentivized to actually be good at providing support rather than be just people that get hired by the company to try and do the best they can,” said Hoffman.

Picture from Wikimedia Commons.