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OpenBazaar Team Raises $1 Million

The open-source and free marketplace has landed a cool $1 Million from Venture Capitalist investors. Here's how the world will get its completely free marketplace while the investors get a chance to profit.

The OpenBazaar development team announced today that they’ve received $1 million in funding. The funds will allow several of the core developers to work full-time on further platform development, adding new functionality and strengthening the system for a mainstream-ready client version. It will also allow them to create the first company built around the marketplace, OB1.

The OpenBazaar marketplace is a global effort started in April 2014 by Brian Hoffman, who based his marketplace off of the hackathon-winning DarkMarket code by Amir Taaki. Since those early days, the project has taken off dramatically, capturing the attention of nearly 1,400 developers worldwide, with about 100 developers contributing code to date.

The OpenBazaar protocol uses peer to peer software to create a distributed network of buyers and sellers, who offer their goods and services directly to each other for Bitcoin. Unlike Ebay and Amazon, there are neither middlemen to charge fees nor settle disputes. The protocol includes a robust reputation system for all parties and the ability for anyone to become a dispute arbiter, and get paid for their time.

“OpenBazaar removes the intermediaries and gives everyone – individuals to large companies – the ability to directly engage in trade with anyone in the world, for free.”
— – Brian Hoffman, OpenBazaar Project Lead

The marketplace is set up to sell both physical objects and data, covering a far broader range than any centralized competition. Each of the varied products or services being sold in the OpenBazaar system uses a specific smart contract that greatly reduces fraud, while also offering privacy and finance options that centralized services like Ebay cannot offer today.

“The Internet has decentralized communications, and Bitcoin has decentralized money, but online commerce still relies on numerous intermediaries.”
— – Hoffman

The funding is being provided by venture capitalists Union Square Ventures, Andreessen Horowitz, and angel investor William Mougayar. The three capital contributors are no strangers to Bitcoin. Union Square Ventures and Andreessen Horowitz have both previously invested in Coinbase. William Mougayar invested in the Creators of ChangeTip, ChangeCoin, and currently sits on OpenBazaar’s board.

“USV is excited to support and help OpenBazaar and OB1 realize their vision of delivering a free and open marketplace protocol that ushers in a new era of peer to peer global commerce.”
— – Union Square Ventures

The decentralized marketplace is currently in its fifth beta release version, despite the lack of prior funding. Since OpenBazaar is decentralized and open source, much like Bitcoin, questions have been raised in the community regarding how such an ambitiously disruptive project could be practically developed. Until this announcement it seemed unlikely that investors would be found, since there was no apparent way for them to receive any returns from the protocol.

Investors now have a separate company to invest in, OB1. This company is designed to offer supporting services to OpenBazaar users, although no details have yet been released about the nature of those services. Since the Openbazaar protocol will always run with or without the company, it’s censorship-resistant nature should be completely preserved.

OpenBazaar encourages those interested in the project to find out more and get involved with the developer community on GitHub or through their public Slack by requesting an invitation at [email protected].


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