KJ Erickson’s pitch on Medium wasn’t too inspiring, but the home page at their website was interesting. I’ll participate, if they make it easy to list. In the rest of this article, I’ll compare their stated features to OpenBazaar 2, the current leading above-ground-mostly-legal blockchain marketplace. This is a long article of > 900 words.
The Blockchain Markets
Most of the active ones seem to be “dark markets” designed for buying and selling illegal (and legal) recreational drugs, both to individuals, and from wholesalers to retailers. They don’t use a blockchain for everything – rather, they use Bitcoin or other cryptocurrencies for the money, and use regular web servers, hidden by VPNs and the TOR network‘s .onion domain.
I haven’t used them, but it seems like a huge pain in the ass. You need to get a VPN, and then TOR, and find the markets. Then, you need to make some purchases to establish a reputation. For each transaction, you need to use bitcoin money-laundering services, because all your transactions are public. Money laundering mixes up your money with a lot of other money, so the transaction are difficult to pin on you.
OpenBazaar is a decentralized online marketplace that uses bitcoin for transactions. Where the dark markets run on regular web servers, OB has every buyer or seller running an OB node.
Each node includes a built-in server to publish a store; a store is a catalog and inventory information. When a buyer decides to look at someone store, they download the catalog and inventory info. (The node must remain online. If the computer’s shut off, the buyer won’t be able to download the store info.)
I don’t know if the store uses blockchain technology. I assume it doesn’t, because store outages are common. Blockchains are databases that are distributed, but are unitary — that is, the database is the central authority, and all nodes are attempting to alter this single reference point — and every node should have a copy of this database.
OB uses the Interplanetary File System (IPFS), a distributed, networked file system, to store images and the listings. IPFS is a network of nodes that serve files, somewhat like Bittorrent or Freenet. I think OB participates in IPFS, donating some of the node’s disk space and network bandwidth to host files.
Purchases on OB can be made directly between two parties, or they can be mediated through a “moderator”, who acts as an escrow service.
OpenBazaar’s problems are numerous, but I found one fundamental: I bought some tools on there, and the seller never got their money. The moderator never got the money. I looked into the blockchain, and my payment was there, but the moderator couldn’t get it.
Other problems include searching, a lack of categories (and a lack of an existing taxonomy that’s endorsed by OB), a lack of forums. Even a couple years ago, people were down on it.
Enter Public Market
I was kind of put off by the original announcement, because I have a kneejerk negative reaction to Libertarian Party propaganda. I don’t think it was that, exactly, but it felt a lot like it. I felt like I was reading Reason mag or something. It set of my LP-dar.
It’s probably just the rhetoric necessary to get people to buy into the ICO.
The homepage, on the other hand, was more encouraging, because it was more about ecommerce: catalogs, inventory, fees, and protections.
As a small time seller, it wasn’t that encouraging, but at least it was speaking in the same language as some Ebay/Amazon/Posh/OfferUp/FB sellers.
That said, I think the trend in the market isn’t toward decentralization, but a kind of increased centralization based on bundling services that ebay sellers undertake on their own.
Look at GOAT, the shoe market. They want the shoes, and take a smaller commission than Ebay, and also take care of a lot of the marketing and merchandising. So, the sourcing is like Ebay, but the selling is like a retail store. GOAT takes on more of the process of storing, selling, and mailing.
The same goes for Thredup. People pick the clothes, wash, and mail them in. Thredup does the merch and mailing.
The Real Real is even more like a traditional consignment shop, except they are really picky about what they will sell.
Public Market goes in with some disadvantages that OB (and Ebay) already has. I won’t go into them in detail, but here goes:
- Inaccurate or nonexistent catalog. No agreed-upon taxonomy of terms.
- Item metadata isn’t detailed in the right way, and you cannot really search for the ones that matter, like size and part compatibility, easily. (Ebay actually has a pretty system here… but users don’t realize it.)
- Searching sucks on OB.
- OB has no public API to publish a catalog, and no tools to turn CSV files into catalogs.
From the seller side, I found PM’s leaning toward pushing all liability onto sellers a big downer. One of the more appealing aspects of selling on Ebay is that Ebay protects sellers from buyers… or used to. The common tendency is to view buyers as honest, and sellers as greedy, but, in reality, there are always some buyers who are out to run a scam against sellers. Shifting the liability to sellers will make it more expensive to sell.
While these deficiencies are significant, perhaps, if PM looks viable, other parties will invest money to develop those services. It’s possible that markets that provide more services will be able to operate here – and, if anything, the higher capital requirements to open one of these could lead to mini-monopolies forming on top of this allegedly anti-monopolistic platform.
I’ll jump in.