The developers of OpenBazaar, the open-source decentralized marketplace protocol, have received $1m in seed funding.
OpenBazaar aims to enable broader peer-to-peer e-commerce, free from the privacy and economic concerns attributed to more centralized models, using bitcoin as a medium of exchange.
The announcement comes more than a year after DarkMarket, the proof-of-concept decentralized market on which OpenBazaar is based, won the hackathon at the Bitcoin Expo Toronto in April 2014. OpenBazaar, later forked from DarkMarket, has since released several beta versions, with the most recent, dubbed “Portobello”, launched in late April.
The funding will be used to support several full-time developers, as well as enable the creation of OB1, a new company that will develop services for future OpenBazaar users.
Union Square Ventures managing partner Brad Burnham told CoinDesk his firm became involved with the project in a bid to support continued innovation that utilizes the blockchain, which he said is key to “opening up markets again”.
Burnham said he sees OpenBazaar serving a critical role in the development of a new kind of shared public data layer that will reduce the commercial barriers that exist between companies and their customers, explaining:
“There are going to be a few public companies that provide some basic building blocks and we are trying to make some investments in those companies, and we think OpenBazaar is one of them.”
Both Mougayar and Burnham said the development of OpenBazaar and its underlying concept of decentralized commerce is deeply intertwined with the growth of bitcoin and the blockchain itself.
Mougayar, who advises technology startups and is also an investor in ChangeTip, said he has been following the project since DarkMarket won the hackathon in Toronto last year.
“Open, peer-to-peer commerce is as much about an ideology as it is about a creative implementation of the bitcoin blockchain technology using multi-sigs and Ricardian contracts as the basis,” he said.
Those backing the project say they don’t support the utilization of the technology for illegal trade, a use case cited by some who see OpenBazaar as a way for dark web markets to flourish without any centralized points of failure. Sellers could use the peer-to-peer nature of OpenBazaar to trade directly instead of through a centrally controlled marketplace, thereby avoiding the kinds of operational weaknesses that ultimately led to the downfall of Silk Road.
Burnham acknowledged that the protocol could be used by dark market operators, but stressed the OpenBazaar developers have no interest in supporting such use cases.
“They certainly won’t be in the business of providing enhanced services to marketplaces that are selling illegal goods,” he noted.
Burnham pointed to the creation of protocols like HTTP and SMTP as evidence that legitimate use cases can quickly outpace any potentially illegitimate purposes that may arise during the early stage of development.
“[Protocols are] neither good or bad – they can be used for both. But those particular protocols have proven to be incredibly valuable to society,” he concluded.
Dollars image via Shutterstock