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OpenBazaar Is Not The Next Silk Road -- It's An Anarchist eBay On Acid

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Bronze sculptures of goblins on motorbikes, R2D2 t-shirts, one sock, imaginary products from the world of Rick and Morty, a dog, the most majestic cat… EVER. This is what users of OpenBazaar, a peer-to-peer digital mall that’s just emerged after a lengthy gestation, will see as they peruse the various stores from the comfort of their desk.

Though it’s very early stages (OpenBazaar has only just opened a test service, with full launch expected later this month), the current app, running on Apple Mac in FORBES’ test drive, is a far cry from what some hyperbolic commentators were expecting. When OpenBazaar’s operators proposed the idea of a distributed marketplace where there was no central authority to hold to account, the currency was the untraceable (but actually very traceable) Bitcoin cryptocurrency and the rules almost non-existent, it led to assumptions OpenBazaar would house  next -generation narcotics markets like Silk Road, illegal weapons stores and child abuse content dealers that police could never track. But right now, OpenBazaar is shaping up to be a slicker, more secure, anarchist eBay ... ON ACID.

There are, undoubtedly, some benefits to using OpenBazaar for anonymous trading. Encryption in transit across the nodes used to host the network (see map below for the spread) helps prevent simple snooping, whilst the very nature of a peer-to-peer setup means the US government cannot target an authoritative, centralized body, whether with a subpoena or a technical taskforce looking to knock out a server. Bringing the network crumbling down, though not impossible as shown in police P2P botnet takedowns, will be considerably harder than if command and control of the network were hosted on a small number of boxes. The chat feature is also end-to-end encrypted, which should prove popular given the rise of such services in response to revelations of mass government surveillance.

Why it ain't Silk Road [insert iteration number here]

But there are a few key reasons OpenBazaar is unlikely to become the next Silk Road. First, IP addresses of users are viewable to those have the technical ability to look. If the user can pull data from the OpenBazaar API (the application programming interface that allows outside access to some OpenBazaar systems), it’s possible to build a crawler that maps out all participants in the P2P network. Anyone who isn’t routing their traffic through other servers and thereby masking their IP address (typically done over a Virtual Private Network or the Tor anonymizing network) can, therefore, be quickly identified and located if police have a warrant.

This is pointed out in a stark warning during registration: “OpenBazaar users are not anonymous by default. Most communications between parties are encrypted, but IP addresses are public and can be associated with activity on the network. Malicious parties could use this information against you; protecting your privacy is your own responsibility.” Even where users take extra precautions, governments have documented methods of exploiting VPNs and Tor.

Then there’s the ethos of OpenBazaar’s chief purveyors: Brian Hoffman, a former lead associate for cybersecurity at Edward Snowden’s old employer Booz Allen Hamilton , long-time Bitcoin specialist Sam Patterson and academic Dr. Washington Sanchez. After taking over the OpenBazaar project after a few emails from its original creator Amir Taaki, one of the first to promote and develop Bitcoin and the associated Dark Wallet, the trio sought to make a platform free of government control where companies could make more money by cutting out the middleman, typically the owner of the store like eBay or Amazon, who take a small percentage of each sale on their respective platforms. With Bitcoin, the middlemen, the banks and credit card companies who took a cut of traditional transactions, were already removed. But the platforms (yes, including those dark web drug and gun markets) still took their slice. With OpenBazaar, there’s only the buyer and the seller.

The creation of the network will earn them nothing directly. Hence why they founded OB1, which is looking into numerous avenues to bring big names to OpenBazaar with which it will partner on certain stores. It’ll also provide merchant support services, such as vetting legitimate businesses and arbitration, for which it may charge. “We have a list of several hundred individuals and businesses who, over the past months, have asked to be notified when we go live. So we'll be starting with them and anyone else who wants to join,” says Patterson, talking to me over OpenBazaar’s encrypted chat.

“We won't be targeting big players immediately. Part of this is that we want to make sure the client and network have been well tested before we push for wider adoption. The other part is that the client currently doesn't have a lot of tools to do proper inventory management, something that will be necessary for anything larger than a small business.

“The initial roll-out is still very much through an excited and engaged community and word of mouth, and we aren't going to be doing marketing until we're confident we've really nailed down this new way of doing commerce online. Peer to peer commerce isn't going to take over the internet overnight, and we're in this for the long haul.”

The beginnings of a retail revolution? Or more dark web drugs?

It’s been an auspicious start for OpenBazaar. Since the test went live at the start of March, Hoffman tells me there have been roughly 15,000 downloads of the app for testing. Having acquired a small amount of funding in a $1 million seed round from Union Square Ventures, Andreessen Horowitz and angel investor William Mougayar, Hoffman says his company is focused on growing the site without any more outsider investment in the near future.

OpenBazaar could still become attractive to those flogging illicit gear. Hoffman and his colleagues plan to increase security on the app, providing much more effective anonymization. They believe buyers and sellers have the right to keep their identity secret; understandable in light of global surveillance, where digital stores have been infiltrated by government spies, most notably attempts by the NSA on Google’s Play store.

More privacy features are on the way too. In the coming months, as OpenBazaar tries to sell the idea of a new kind of retail to the average shopper, it’ll look to tie itself to an anonymizing network, either Tor or the lesser-known i2p. The encrypted chat is currently not as private as, say, a Jabber client like Adium or Tor Messenger. OB1 developer Chris Pacia tells me all of OpenBazaar uses NaCl, a crypto library by Daniel Bernstein. He notes that further updates could provide more privacy. “The encrypted chat is pretty basic at the moment. It's mostly just geared towards connecting two OpenBazaar nodes do they can discuss a purchase if needed. We don't make any explicit attempt to hide IP addresses, for example. More advanced functionality like that could be layered on later as needed,” he says.

At the time of writing, I could only find one dubious seller, who was offering NATO-grade pepperspray and a "flashlight stun gun". One wonders whether he or she has a licence to sell those goods in America.

But even if it does become a playground for criminals, to blame the OpenBazaar creators would miss the point. The OpenBazaar protocol, explains Hoffman, is “agnostic”. Like all code, it has no explicit moral bias. “The distinction allows for sale and trade of goods legally in one jurisdiction that may actually be illegal in others but does not intentionally enable users to conduct illegal trade and encourage that,” Hoffman adds. “It’s a tool, not a business.”

For now drug, fraud and gun merchants will likely stick to Tor Hidden Services, where sites are hosted on the anonymizing network and can only be accessed when users “hop” across randomly-selected servers to reach their destination. When OpenBazaar does get somewhat more secure, there's little reason to suspect dark web merchants will move over en masse as there's currently no indication it'll offer better protection from law enforcement, even if it'll be harder to take storefronts down.

If OpenBazaar can appeal to major merchants and independent retailers who want to save money and know how to handle Bitcoin, it has the chance to shake up the market in a significant way. The early adopters might be a little kooky (expect that anarchist aspect to remain), but that's no reason for big players not to try something different that could, in the long-term, save them considerable expense.

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