Posted by: Zubair Muadh June 23, 2014
OpenBazaar (Github: https://github.com/OpenBazaar/OpenBazaar) is a spin-off of the Dark Market that is supported by the official Dark Market team going so far as to allow an OpenBazaar section on their online forums.
OpenBazaaar utilises Bitcoin and Cryptography to compete with the likes of eBay, enabling pure Peer-Peer transactions without a middle manipulating the entire scheme for their benefit.
Ricardian contracts, it’s a system of exchanging agreed amounts of wealth, though not wealth itself, it would be used to facilitate a progressive system. OpenBazaar’s relation Dark Market subjects OpenBazaar to some of the taboo of Online Market Places.
Ricardian contracts where originally formulated by Grigg and Gary Howland, as an addition to the Ricardo payment model. The Ricardian contract is used as a means to translate capital of all sorts into a series of agreements, or trade-able contracts.
How does OpenBazaar work?
The seller would choose an auction style contract. The required sections in the file will include:
Minimum sell price,
Buy now price,
Blank space for bidders to place alternative Bids.
Some of these requirements would optional such as the Buy now price. As people bid on one item, the contract is updated with that formal agreement, and once the bid ends, it is digitally signed by a third party arbitrator. This is similar to verifying Bitcoin transactions through mining. Once this is complete, a multisignature Bitcoin address for the contract is created for the winning buyer. This process is utterly innovative and could potentially decimate competing online marketplaces.
The language that the project is being done in is primarily Python. As the seller may not always be online during the auction time the online version of the contract may not reflect the latest bid. Therefore a negotiator node would be set up so the contract would automatically update in case of a bid. The negotiator node would create their own version of the contract, update the bid price, sign bid contracts, and finalise the final bid contract to the seller for the digital signature once the term expires it would then create the address key. If the seller decides to sign the contract its sent to a third party arbiter.
OpenBazaar’s concepts are not set in concrete they’re not final. The basic infrastructure and creating the fundamental system takes ultimate priority over and auction house for example.However, the auction house is an extremely likely possibility already being considered at an extremely technical level. Other ingenious ideas have been proposed, however, incorporating them proves to be the biggest challenge. Development of the system has proven to be a much more difficult reality than formulating concepts that could potentially innovate industries. Application is harder than planning. The proposal for OpenBazaar describes the specifics of the Ricardian Contract and the auction house in detail, however, this would not be a requirement for users, so as to lower the bar of entry. The complexity of the system would be unneeded information for many users, yet a strong advocate for those that choose to research it.
The seller can be safe that the find for the contracted item actually exist when the buyer has forwarded the agreed amount of Bitcoins to the multisignature Bitcoin address. The seller would the complete the exchange with the buyer. The Buyer could also be refunded from the multisignature address if the arbiter is satisfied with his proof that the item was faulty or didn’t arrive etc.
A surety bond is required by the arbitrary node from both the buyer and the seller. The surety bond is an amount of Bitcoin send from both the buyer and the seller and it’s held in the multisignature address and will be refunded when the trade is completed. The surety bond is alterable and the entire process is optional.
Ramifications of OpenBazaar
OpenBazaar could have through proving identities, a rating system, third party node and usage though Bitcoin addresses would remove any serious potential of scamming. This would create an international market through Bitcoin whilst simultaneously removing many of the fee’s associated with eBay, Amazons and the likes. With Bitcoin breaking borders and being used internationally OpenBazaar would be the market that caters to that global community.