At the same time of the second police operation against the centralized Darkmarkets under Tor, we had big important releases of the new generation darkmarkets, Openbazaar and NXT FreeMarket.
They come with the desire to become the norm in e-commerce and the main reason is that they are decentralized, implying that the nodes holding the network are distributed throughout the world which, therefore, eliminates the increased vulnerability of centralized markets under Tor (i.e. single point of failure attacks).
Not only that, decentralized darkmarkets promise a number of features that surpass those offered by sites like eBay, Aliexpress or Amazon, as multisignature escrow, P2P lending, low fees, Ricardian contracts, decentralized arbiters system… Darkmarkets are working as decentralized and distributed organizations.
Will this type of service will give value to cryptocurrencies? We spoke with NXT FreeMarket and Openbazaar developers to know what they are doing and what is their opinion.
First interview is with of NXT FreeMarket
Ferdinand Reyes: First of all, can you explain to me which are the possibilities and how NXT FreeMarket works?
Mr. Knuckle: NXT FreeMarket is a decentralized marketplace, similar to eBay but without the high fees and censorship. Our goal is to make trading inexpensive, easy, and most of all private for users across the globe. Searching is fast and powerful. Item listings can include images as well as shipping options, and to make things easier, payments are taken directly from your NXT account.
FR:This year a lot of dark markets were taken down by the police. What opinions do you have about centralized markets under Tor network? What system uses NXT FreeMarket for maintaining the net?
Mr. K: With Silk Road 2 and a host of other dark net sites in the news recently, there is a lot of concern about how reliable these sites are. The fact is, they aren’t reliable, because they are built on the model of a site hosted on a server (or several servers). Servers are a juicy target for law enforcement and anyone else who would presume to tell you what you can and cannot purchase peacefully. In the end, every one of these sites will be taken down.
FreeMarket operates on a different model: the blockchain. In our case, we use the NXT blockchain because of its solid core and its very active developer community.
Because all transactions are stored on the NXT blockchain, FreeMarket is highly unlikely to be taken offline. Why? Because there is no central server to go after. All item listings, messages between buyers and sellers, payments, etc, are stored on the hard drives of every NXT user, so the only way to kill FreeMarket is to kill every single copy of the blockchain. That’s not going to happen.
The blockchain also avoids the risks of a peer-to-peer network. If you’re a store owner, you don’t have to be online for your items to be available for purchase, and you don’t risk making yourself a target by running a node that could be de-cloaked.
FR: What is your opinion about the possibility of drug vendors in NXT FreeMarket?
Mr. K: I think it’s inevitable. Some people want drugs. But a study postulated that the Silk Road marketplace actually decreased violence associated with the drug trade (“Not an ‘eBay for Drugs’: The Cryptomarket ‘Silk Road’ as a Paradigm Shifting Criminal Innovation”). If we contribute to a decrease in violence, that’s a positive thing in my book.
FR: How we can say for sure that NXT FreeMarket is secure?
Mr. K: One of the reasons we chose NXT is that it’s been operating for a year, and that track record gives us a lot of confidence. We are leveraging a proven technology, using NXT’s built-in encryption to secure the privacy of FreeMarket transactions. NXT has more security and privacy features in development, and we will incorporate those as they become available. Security is not a destination, it’s an ongoing process.
FR: What differences are there between NXT FreeMarket and OpenBazaar?
Mr. K: I have not used OpenBazaar myself, so I can’t speak to its features or user experience. Judging from their website alone, I think the main difference is our approach to decentralization. OpenBazaar seems to be built on a peer-to-peer model, while FreeMarket uses a blockchain. I believe the blockchain is the superior solution, due to the privacy risks inherent in peer-to-peer technology.
FR: Leaving aside the decentralization, why is NXT FreeMarket revolutionary in comparison with eBay and other traditional markets?
Mr. K:FreeMarket doesn’t require buyers and sellers to turn over their personal information to a large corporation, and it doesn’t require the use of a payment processor like PayPal, which also demands an unreasonable amount of personal information from its users. Too many people are locked out of global trade because they are unbanked. Technologies like NXT and FreeMarket can empower these people and improve their lives.
We want to make global trading as accessible as possible, and for that reason, we have worked very hard to make FreeMarket available in a wide range of languages. We have 10 languages right now, with more planned.
FR:In NXT FreeMarket we can only use NXT or it is open to other currencies?
Mr. K: Right now, FreeMarket requires the use of NXT. In the future we will allow the use of any currency through integration with jl777’s superNET. jl777 is a member of the FreeMarket team, and superNET integration is a top priority for all of us.
FR: Do you think that all the SilkRoad & Darkmarkets users will use decentralized markets in the near future? What about eBay users?
Mr. K: I expect that users will be drawn to decentralized markets eventually. It’s likely that dark market users, who tend to be more technologically savvy and have a strong incentive, will make that transition first, but I think the privacy benefits and savings on fees are too good for this to remain a niche for long.
FR: How can I install NXT’s FreeMarket and start buying & selling products in this platform? Is the platform ready for commerce? Are there any fees?
Mr. K: FreeMarket is up and running now, and it’s easy to join us! We have apps for both Windows and Mac. It’s a simple download and install, no need to compile anything or futz with configurations. If you have your NXT Wallet open, just launch FreeMarket and you’re in business.
We also offer a “do it yourself” download if that’s your preference.
For the rest of 2014, there are no fees, other than the standard NXT transaction fee of 1 NXT (about 2 US cents). Starting next year, FreeMarket will charge fees, but they will be extremely low. A complete cycle of listing and selling an item will cost a seller around 10 NXT (20 US cents), and a buyer can pay as little as 1 NXT.
FR: Could you tell me some problems or inconveniences of decentralized darkmarkets?
Mr. K: I think the biggest issue for decentralized markets is a people problem, not a technical one. How can you trust the vendors not to scam you? Solutions to this problem will be primarily social, although there will be a technical component required to implement those social solutions.
Buyer feedback and vendor reputation ratings are one possible social solution, which is part of the approach that eBay uses. Letting a buyer leave feedback on a vendor and rate that vendor are the technical components. Will this work in a decentralized marketplace? I don’t know yet.
We are working on a feedback and reputation system now. This might be the best solution, or users might come up with their own complementary, or even superior, system. This is uncharted territory, but I believe in the power of decentralization to find an answer.
FR: Finally I would ask you what features we can expect in the next months.
Mr. K: In addition to the superNET integration mentioned above, we are working on reputation and feedback systems, optional filters to remove certain items and sellers from your search results, and a greatly expanded built-in help system. There are even more features that we are excited to incorporate over the next few months, so stay tuned!
Ferran Reyes is a social educator involved in cooperativism and commons projects. Nowadays he works for the crowdfunding platform @goteofunding and as a advisor for social economy as well as social and cryptocurrency initiatives. You can reach him on Twitter at @ferranrego