OB1

Market position

Positioned as the commercial sponsor of a decentralized alternative to corporate-controlled e-commerce platforms, deliberately architected without network-effect defensibility, meaning it must compete on execution with other service providers on the same protocol.

The marketplace is defined by a protocol distributed across all participants rather than hosted centrally, so hosting costs are shared and no central authority can extract rents from users through network-effect market power.

Technology

An open-source, protocol-based marketplace distributed across participants' own servers, with no central authority. The client has included a marketplace wallet, Tor integration and multi-currency support covering bitcoin cash and zcash, and an Ethereum-based token (OBT) was announced for smart contracts within the marketplace. Later repositories use Filecoin and IPFS for dataset storage and exchange, 3Box for decentralized marketplace data, and the DAI stablecoin as a medium of exchange.

Go-to-market

Development and sponsorship of a public open-source project with a freely downloadable client, layered with optional paid or value-added services such as moderation for marketplace participants.

Merchants and consumers seeking to buy and sell goods, services and cryptocurrencies peer-to-peer outside centralized e-commerce platforms; later projects target buyers and sellers of datasets.

Geography

Headquartered in Fairfax, Virginia, United States, with a protocol intended to support trade between participants in any jurisdiction.

History

OB1 launched the first release of OpenBazaar in April 2016 and subsequently added a marketplace wallet, Tor integration and support for bitcoin cash and zcash payments. In March 2018 it raised a $5 million Series A led by OMERS Ventures and Bitmain Technologies, with prior backers Andreessen Horowitz, Union Square Ventures and Digital Currency Group participating, and outlined plans for a mobile version of OpenBazaar and peer-to-peer cryptocurrency trading. Its public code repositories later shifted toward Filecoin- and IPFS-based projects such as Filehive and 3bay, with activity recorded through early 2021.

Risks & controversies

The openness of the OpenBazaar protocol means participants may use it in ways that are considered immoral or that are illegal in some jurisdictions; OB1 does not control the protocol and its investors have publicly acknowledged the unresolved tension between supporting an open protocol and avoiding facilitation of its misuse. OB1 states it will not knowingly offer value-added services to anyone using the protocol for illegal activity. Investors also flag the strategic risk that a protocol designed to remove network-effect defensibility offers OB1 no proprietary advantage over competing service providers, and that discovery in a decentralized marketplace could itself become a new source of concentrated market power.