Openbazaar is a liberating concept, freeing trade and commerce from restrictions imposed by central authorities. A P2P platform for trade and commerce, built by devoted developers and the team behind OB1: Brian Hofmann, Washington Sanchez, Sam Patterson, Dyonisis Zyndros and with the support of William Mougayar and Joel Monegro.

Central authorities do not necessarily need to be a bad thing. They can create a framework for individuals and companies to flourish. They can dramatically improve market conditions, where processes have been deeply fragmented and intransparent. They can help structuring and streamlining processes to the benefit of all, dramatically cutting costs and therefore improving the economic situation of all market participants.

But sometimes, they are either too restrictive or abusive, making excessive use of their monopolistic position as market maker. Underserving the customers, overpricing their own services, overcharging with fees, underdelivering with services.

Putting asides the liberating aspect of it, it is also a question of basic math, which makes you love Openbazaar. The potential savings you may make with Openbazaar are impressive, especially in retail and e-commerce, where small margins on large volumes are the rule. Where 1 percentage point more or less EBITDA separates success from failure.

But first, what is Openbazaar?

To quote Washington Sanchez from Openbazaar, „OpenBazaar is an open source project to create a decentralized network for peer to peer commerce online—using Bitcoin—that has no fees and no restrictions.“

eCommerce and marketplaces like eBay or Alibaba are centralized marketplaces, charging fees for listing and selling goods.

These marketplaces accept, besides national exceptions, as only forms of payment credit cards or PayPal. The cost of those payment services costs both, buyers and sellers, money.

You have also to provide personal information to unknown sellers, which can be stolen or even sold to others.

OpenBazaar is a different approach to eCommerce. OpenBazaar connects buyers and sellers directly.

Because there is no one in the middle of your transactions, there are no fees, no restrictions, no accounts to create, and you only reveal the personal information you want to.

Now focus on the fees.

By using OpenBazaar as a decentral marketplace, you remove Paypal, banks by using Bitcoin as global payment mechanism. And you remove the central operator of the marketplace from the supplychain of international trade.

This results in impressive savings of fees.

Ebay has a 10% seller fee, while Openbazaar has none. It is opensource, free to download. The payment done with Bitcoin instead of PayPal results in another savings of 1,5-3% payment fee for the seller.

If it is a cross border transaction for buying, for example, your next laptop or smartphone in asia, where it is manufactured, you save another 3,5% foreign exchange (FX) fee. The FX rate applied to the FX conversion for your transaction is most of the time not transparent to you, and rarely in your favor.

We talk about potential savings of at least 10-15% of the gross purchasing price. Savings to be redistributed between seller and buyer.

Take into consideration that retailers have usually very low margins, despite huge trade volumes. And that the shipping of goods from e.g. China does not necessarily take much longer then a national shipment. Amazon same-day delivery excluded, of course. The delivery of digital goods like software licenses, music licenses or tickets for example are instant. And digital goods can be traded with Openbazaar as well.

The payment of Openbazaar is done via bitcoin.

But what, if you don’t have bitcoins, like most consumers? No problem, because Openbazaar is a platform with an eco-system of third party suppliers. You will be able to choose between several services like Coinbase to pay with your local currency like Dollars or Euros to pay via Bitcoins.

Or new services been built on top with Ethereum. BTCRelay from Joseph Chow has a way to confirm in a smart contract on Ethereum that a Bitcoin payment occured.

Bitcoin becomes on Openbazaar the low-fee backend payment system for international trade, like VoIP became the backend telecommunications protocol for international calls.

What do I expect for the future?

You will see a large variety of users using Openbazaar: regular consumers like you and me, mom and pop shops, but also retailer, exporters and other businesses discovering its benefits. Manufacturers bypassing entire distribution chains? Let's remind us that 50 country members of the WTO agreed to slash tariffs on high tech products.

You will possibly see a shakeup of existing markets, with the popularity of Openbazaar rising.

You will see new service providers being built on this new ecosystem. For example, payment providers on the OpenBazaar platform, combining the FIAT-Bitcoin conversion on the buyer side, making the international payment transfer with Bitcoin and reconverting them back into the desired local FIAT currency, for example Renmimbi.

Some of these payment providers are going to enrich the pure payment process with multiple insurance packages you can select from. A great benefit of paying with PayPal is the buyer’s protection. Your trade is insured, in case your seller does not deliver.

Which insurances are going to grasp this opportunity, not only providing the insurance of goods, but delivering the payment itself? Are we maybe going to see crowd-funded insurances?

There is in my opinion a huge opportunity to create a PayPal-like payment provider for international trade on OpenBazaar, with lower fees, and with more, transparent options to choose from. Just better, maybe funded by the crowd, cheaper, with more services to selectively choose from.

Add the shipping company to the mix, applying multi-sig capabilities to deliver a portion of the payment each time the shipping company confirms that the goods arrived.

Such services could explode along the growing acceptance of OpenBazaar. And hopefully, OpenBazaar will become the killer-app for Bitcoin as a means of international payment transfers.

Openbazaar could finally give a convincing answer to the recurring question being repeatedly heard, when people are first confronted with Bitcoin: „What is it good for?“

Well, now you know it, „Saving money when buying stuff on Openbazaar!“.

Thats why I love Openbazaar. And that’s why I think, you will love it too.