OB1 is a startup created to maintain the OpenBazaar software, and recently secured US$200,000 in funding from Barry Silbert’s Digital Currency Group (DCG). While OB1 does not own the platform, nor run any type of central server for it, the developers have now received a total of US$4.2 million to fulfill the vision of creating a decentralized, uncensorable e-commerce protocol using Bitcoin.
“The future of commerce is evolving to empower buyers and sellers, and we are eager to work with OB1 to leverage the power of digital currencies to create new marketplaces and new models for global, inclusive commerce.”
- Barry Silbert, CEO, Digital Currency Group
OpenBazaar is the first decentralized marketplace that uses Bitcoin and a peer-to-peer network. No company or organization controls or can censor the platform's users, who simply download and install a program that directly connects them to other people looking to buy and sell goods and services. The only payment option for the network is bitcoin, although it is being integrated with Shapeshift soon and will allow payments in all the most popular altcoins as well.
With zero fees and user restrictions, anyone on the planet with an internet connection can use the software to sell a product or service to a global audience in a way that cannot be censored.
The program has grown steadily since the official launch of OpenBazaar 1.0, in April last year, as the OB1 team have worked on countless suggestions for improvements. The user base, however, has remained low.
The development team has since announced a much-improved version 2.0, acquired more funding, hired a larger team, and got to work. While their blog has been trickling details and hints about upcoming features, a launch date has only just been provided.
According to OB1 CEO and Project Lead for OpenBazaar, Brian Hoffman, the version 2.0 launch will likely be in August this year, sandwiched in between the release of their upcoming smartphone app and an event they plan to hold for the community.
Dubbed “Crypto Is Currency Day,” the event will be some time in September. The company says that they will be holding the event in order to “highlight use cases for digital currencies worldwide” and “encourage users to build network value by spending some of their coins.”
However, the first software release is an OpenBazaar mobile application that Hoffman says will be on the market “very soon.” Unlike a desktop or server installation of OpenBazaar, the mobile app would be primarily for shopping and secure communications. The CEO explained that while the software will be running a mobile only version of OpenBazaar version 2.0, users won’t be able to host stores with the app.
The app follows in the footsteps of an unaffiliated alternative, Bazaarhound, which recently closed. The now-defunct 3rd-party application was developed well over a year ago, but Hoffman made it clear that their upcoming app is not the same program. “We have something way cooler,” he noted, “It's going to be the first OB1 branded app.”
The lack of potential customers already holding Bitcoins, and the lack of an active revenue model for the OB1 team, have been raised as serious challenges for the project. There are, as others have noted, several reasons why the platform could still fail.
The latest injection of capital from DCG gives the team more time to develop OpenBazaar and find a way to monetize it. OB1’s first US$1 million was raised in a seed round in June 2015 from Andreessen Horowitz, Union Square Ventures and William Mougayar, several months before the platform was even ready for a beta release.
The cash helped the initial four-man team create and deploy the 1.0 platform, but by December last year, OB1’s team found themselves raising an additional US$3 million, despite the fact that it still did not have a primary means of generating income.
While this latest round of fundraising does give them more time, it was considered more strategic than other rounds, according to Hoffman. The CEO told BraveNewCoin that his team “didn't really have room in previous rounds for DCG and they've really wanted to work with us.” A smaller investment was welcomed as part of a way to join DCG’s web of contacts. “We wanted to have access to a portfolio with more crypto companies,” he explained.
“We are proud to announce our newest partnership with Digital Currency Group (DCG) as a strategic investor! This is very exciting for us as DCG is the most active investor and business incubator in the bitcoin and blockchain industry and they share a vision for the future of commerce where digital currencies are more accessible and usable for everyone.”
The contacts are a key factor, according to Hoffman, as the latest investment will go towards marketing and growing the team for 2.0, among other things. With the cash in hand, and a Rolodex full of new contacts, OB1 will be taking a networking approach to growing their customers as soon as their new version has been released. “The marketing plan is really just legitimizing our approach to getting more users on the network and starting to form more partnerships with other crypto businesses,” Hoffman divulged.
The OpenBazaar software itself has been downloaded “hundreds of thousands of times” since their initial launch, Hoffman told us, and has seen steady growth since launch. While there is no ideal way to measure the size of the network, the @openbazaar storefront, which is the top default store for new users, has nearly 36,000 followers at press time.
OpenBazaar’s most popular search engine, Duosearch, currently lists 156 storefronts with 4,816 listings between them, although this number fluctuates a lot due to the peer-to-peer nature of the self-hosted storefronts. Meanwhile, competing OB search platform BazaarBay shows that users and listings have been growing steadily throughout the last month, although the numbers are still down from a recent spike at the end of last year.