EB67 – Brian Hoffman: OpenBazaar, Peer-To-Peer Commerce, Ricardian Contracts, Arbitration

Transcript

hello welcome to App Center Bitcoin the show which talks about the Technologies projects and startups driving decentralization and the global cryptocurrency Revolution my name is Sebastian and my name is Ryan from entraine uh we're here today with Brian another Brian Brian Hoffman so it's going to be confusing uh he is the the lead developer as a main guy behind open Bazaar I'm sure many of you have heard of open Bazar uh open Bazaar is it's the idea you have a completely decentralized uh Marketplace it's a really revolutionary at the really interesting idea and uh huge potential so really excited to talk about that today um now before we get started and before

super civil level Let Brian introduce himself a bit as well we just wanted to mention briefly the inside Bitcoins conference that's coming up in Berlin so that's going to be on March 5th and 6th I'm gonna be there Severance is going to be there uh Sean Jones is also going to be there so it will be everyone's going to be there I'm also going to give a talk like one of the Keynotes on the second day about actually about many of the issues we've been talking about over the last month sort of surrounding Bitcoin economics and their sort of long-term feasibility of Bitcoin so I really look forward to that and and actually I'm also going to be organizing a Meetup on the evening before at the

conference I think semester is going to give a talk then uh and we're gonna have a few other talks I think we'll be a big meet up perhaps or I expect you know hopefully we'll have like 100 people or something so it should be fun uh so if anybody wants to come or it's time to come please let us know yeah I would love to meet up and also you can get 50 off uh with the discount code epicenter IBC for inside Bitcoins conference I guess uh yeah it's an epicenter IBC in all tabs 15 off this kind of code doesn't work uh we'll have it in the show notes as well um so Brian

um can you tell us a little bit about how you got started in the cryptocurrency space and how you got started with open bizarre uh sure so uh I guess I've been following Bitcoin um in general for for quite a bit of time now uh and I hadn't been involved in any projects or any kind of a coding in regards to the technology but um I was looking for something important to kind of get involved with and I am not really sure why uh but when I saw the demonstration

uh about uh dark Market uh up in Toronto at their hackathon it looked like something that was uh pretty powerful a pretty interesting idea and I saw that they had released the source code on GitHub and so I looked into it and it was something that immediately I thought okay I can I can get involved with this I think it's probably um you know in my skill set to start poking around and get involved I actually emailed um Amir talking Who had who had a started who came up with the idea for

that and started that that proof of concept about getting involved and that he was planning on basically relinquishing the the code to the community and just you know letting it go they weren't planning on on it any further it was just like a 48-hour project and so um he said you know just go ahead and do what whatever you want to do with it at the time they were they were pretty busy with dark wallet and they still are so um they didn't really have the bandwidth to kind of work on it um and so I think about about that time uh Reddit was was kind of hyping the idea up and everybody's getting excited about it but

it kind of took a quick turn towards the whole Silk Road kind of aspect of it um and the name was just like this huge controversy and it was really disappointing to me personally because I felt like there was this huge potential for like a like a paradigm shift in the way that we were using cryptocurrencies and they were just so focused on like the name it was just it was just kind of ridiculous you know crazy it was getting and so I just said you know what let's let's take the code let's rename it and just try and start clean and maybe people will start to focus on on the actual uh important aspects of the project

you you talked about fundamentalism and this kind of demonstrates you know to what extent people can be uh you know it could be you can feel strongly about certain things when uh when it's so charged with Audiology um but uh but you know I I completely agree with with you that um changing the name to something uh more accessible to people and that sort of distances itself from the dark web aspect of it uh is definitely important and very valuable if you want to have some sort of message option with this well I mean another another important

part of that was that if a project was not going to be run by the dark wallet team it didn't really make sense to kind of keep that dark something branding I I just did I didn't think that that was something we wanted to do because it kind of unnecessarily Associated us with them right um in their team and they're not involved so it also was a good way to you know separate that thank you so what's the the main idea behind the Handover the main idea is that um the main idea is that right now with um the decentralized

Bitcoin and other cryptocurrencies we have this kind of currency application and we have a bunch of like ideas all around how we use it and we have wallets and all this stuff but people are still kind of scrambling around saying well where's the merchant adoption or you know where can I use it like it's only valuable if you can use it and for the longest time it seemed like it was really primarily valuable because of the speculation as the price is going up that's what people were finding it valuable as they were saying okay I'll buy it now and in six months hopefully all made all this money uh and not really paying attention too much to how they were using it on a

daily basis I still find myself having that issue and if you saw that CNN Special the other day uh you saw that um he had trouble spending you know Morgan Spurlock had trouble spending his money as well um and so I think a lot of where like the business building in the Bitcoin has gone is you know building like a coinbase or a bit pay like where's the point of sale terminal all these things to try and get traditional businesses using Bitcoin and that's great that's that's kind of been covered but how do we make it um how do we enable all these people online that want to use Bitcoin to use it to do online e-commerce and also kind of keep the spirit of decentralization

uh like do we really need um you know a big business like eBay or PayPal or somebody like that to kind of sit in the middle and and babysit our e-commerce um we have this awesome peer-to-peer currency where is that business Network where is that e-commerce Network that'll allow us to kind of like seamlessly use it and and so that's that's where we see this huge potential at least for like the first application of what open Bazaar could be and as we but yeah I think that's actually a great way of putting it and I hadn't even thought of it like that before right because if you look at and I think that's one of the problems we've been

having in Bitcoin is that there's not enough incentive for like users to adopt Bitcoin like unless you like love the technology or like a Libertarian or or want to speculate on that like why would you use Bitcoin there's very very few cases where it actually makes sense I mean I guess using like dark Market is another one um and now if something like Microsoft accepts Bitcoin well it doesn't matter for most people right because you are already able to buy there it's not like a reason to then go out and buy Bitcoin for example get involved in cryptocurrencies but then of course that's totally different with open bizarre now because that is something you will have possibilities there that just aren't accessible unless you have

cryptocurrencies unless you're engaging cryptocurrencies so I mean I I agree I think that's a great a great way of putting it that it really um I I may it may well be more powerful in driving adoption than all this Merchant adoption for merchants where you can already pay with credit cards anyway yeah and I think you know it's funny that the dark net Market kind of aspect of you Bitcoin has been so negatively talked about because of the actual content that is on that is being sold right but the people that are truly um really analyzing it properly or looking at it and saying look they are

demonstrating the value of using a cryptocurrency right like they have built a working Marketplace a community a reputation uh you know system you know it's just it's it's a proof it's a youth use case it's proving the technology and if you can take that and you can apply it in a broader sense like don't just focus so much on selling drugs or guns or whatever if we can bring that back into like what you would call you know the clear net it could be used for just about anything and it's like they've done all the leg work of just really showing that it can that it can function so you know what we're doing is we're just we're we're not gonna you know

replicate that exact business in the in the in the dark web and just bring it bring it out for everybody to use and I think it's going to be super powerful I think when people get comfortable um they get beyond that whole I don't want to use it for Silk Road type stuff um you know perception I think I think there's going to be a huge uh drive for adoption of these kinds of projects Technologies so could you walk us through a simple transaction so let's say I'm a small business or maybe I'm an artisan and I I make um I don't know Wooden Spoons and I want to sell them on uh I want to sell them on open Bazaar or

using open Bazaar and um and I want to protect myself from fraud or from uh you know buyers that may be uh aren't going to pay me so I I want to use an Arbiter so let's say a simple like three person transaction where there's a seller and Arbiter and a buyer can you describe how that works what's the process um for initiating the transaction up until delivery of a product let's say sure so there's a lot of things involved with what you just said right um and that's what makes this project I think pretty complex is that there's like several really complex and challenging areas and we're trying to do all of them at once right

um so I'll just you know I'll give you the kind of high level walkthrough of like a transaction like what you described so first of all um you know open Bazaar we're building it as a protocol and platform that can be used for just about any type of business so uh as we build that protocol and design it we're also building our own example client it's it's it's kind of similar to bitcoin where Bitcoin is is a protocol but it has you know they have the Satoshi client the wallet that is kind of the reference implementation of that protocol and so we also have a client software that we're building uh that basically is the basic use case of

open bizarre and the way that it works for what you describe is you would you would essentially download this client as a merchant or a buyer it's all the same client um so the merchant we'll just start from where the merchant is actually putting the item for sale so he would he would install this application and you can you you know customize your storefront and all that stuff and then you can add a listing into the open Bazaar Network and what happens is uh it looks very much like it would you know for like an e-commerce tool where you can put a title description price Etc about your item pictures whatever on the back side what's happening is the client is generating what is called a

ricardian contract and all that is is a it's a it's a structured uh Json document Json I mean for non-programmers it's basically just a way uh to format the description of your listing but at the same time because it's a recording contract it's also very human readable and so it's almost like a real contract if you were to look at it a computer could understand it and do what it needs to do because it's structured but it also humans can look at it and very clearly understand what the terms of the listing and contract and services and so our client would generate that and it would announce it to the network a buyer would come and download the same

application and say search for uh you know Wooden Spoons and your listing for wooden spoon would would show up in your client just like you would if you were searching eBay or whatever you'd click on that listing and uh if it looked good you'd say purchase just like you always would in e-commerce tools uh and then the the thing that uh or where it starts to deviate from the normal transaction online is normally you would assume that the the merchant is also the Arbiter or perhaps PayPal is the Arbiter in this case we don't have that right because it's just truly peer-to-peer so the third party is what we call a notary they're essentially an Arbiter um

but you can choose from a list of notaries that are on the network and they all have or they're going to Once once the protocol is finished but they will have a reputation score associated with them and you'll be able to kind of rank notaries and choose one that you trust that has a good fee structure and they would serve uh willingly as the third party to your purchase um and it's important to note that this third party doesn't exist unless well they don't enter into the equation unless there's a problem and yeah one question here so sure if if I'm assuming I'm the buyer

now and I I look for Wooden Spoons in my open Bazaar client uh how then does Sebastian's listing get to me right because there's no server in the middle that I'm like calling that show gives me all the listing so how does that process of Distributing the contracts and offers work so so when you um when you connect when you open up your application and you connect to the network um it goes out to a couple uh kind of like super nodes on the network who help you kind of bootstrap your visibility of all the different users on the system

and then what it does is it to gather all those clients as they're talking to each other they have they create what is called a distributed hash table which is basically a giant a distributed database um and this is where we kind of store information that's necessary for doing like product Discovery and other in other aspects like finding notaries and stuff like that so when you open up your app and you search for an item it will basically go out to that Network and look for listing IDs uh that match what you're searching for and then you can go directly to those peers and get that that data and could you so you mentioned you know the reference client so this assumes

that uh someone could develop an app perhaps a merchant platform based on open Bazaar uh on the protocol um I forgot where I was going with this um could you uh uh yeah so a merchant have open bizarre contracts on some other platform which could be a proprietary platform like eBay I mean that that would be very useful but it could be like on his website for example or on another uh Market uh app or platform like on tour or either on a clear web yeah and so that's that's kind of

where we want to go with it right so we are publishing kind of the structure for these different ricardian contracts so you can easily build any kind of tool or integrate it into any existing system to generate those contracts so for instance like let's say let's say Craigslist wanted to do get their stuff out onto the open Bazaar Network you know they could if you create a Craigslist listing they could easily put all that data into a recording contract behind the scenes and then created an open Bazaar link and so when you search on Craigslist and find like a listing that you like you know if there was a link you would click it and it would open your open Bazaar client and you could use it to find that peer who's offering that service or

whatever and do it through open Bazaar so and you could do the same thing with other e-commerce sites you know instead of like you know buy it here you could do buy it on Open Bazaar or whatever or if they could even you know just do all the behind the scenes anyway so yeah we're building um we're building a platform the client we're hoping to have kind of this API where uh people who in custom applications that wanted to to use open Bazaar could just like you you know call the API and do whatever they need to do um instead talk through our core client foreign well that sounds really interesting and we'll get back to uh to open Bazaar and

we want to get into recording contracts how those work arbitration and also talk about you know sort of new paradigm stuff uh in just a few minutes before I do that like to talk about our sponsor shapeshift so shapeshift as you know is the fast and easy way to uh buy and sell altcoins they support about a dozen different altcoins and uh what we'd like to do today is uh demonstrate one other uh one of the features that they developed which is uh the shapeshift lens and so shimshift lens is basically a uh well it's a Chrome extension sorry and that Chrome extension allows you anywhere on your browser that you see a Bitcoin address

you'll be able to pay with any altcoin that they support um without having to go through their website or anything like that so directly on the website that you see the Bitcoin address you've got a little icon so I'm just going to go ahead and show you how this works so uh so today we're on the open Bazaar GitHub page and since we're talking about open server as well donate to open Bazaar um so I've got a Bitcoin address right here so this is a multi-sig address and I can I've got the shapeshift uh Chrome extension installed you can get that on the Chrome web store and so all I do is just click on the little

icon so it's it's when I hadn't detected that uh that Bitcoin address I just click here on the shapeshift icon and I say pay with and I'm going to pay with Dogecoin and so it'll generate uh this little window here on your screen you can set the amount or not you don't have to you can just send whatever but if you set the amount it'll specify what amount you uh you should send to it so I'm gonna go ahead pay and here I've got a QR code I'm going to use my dashboarding wallet to scan that there we go and I'm just going to send uh a dollar

there we go so send and that transaction will be processed by the network and in a few minutes uh we'll be able to see that transaction on the blockchain so the nice thing about shape shift among other things is that it doesn't require you to send them any of your personal information you stay completely Anonymous when you use it uh you don't even have to give them your email address so that's a great thing about it and it's fast so as as soon as you uh send the uh like in this case Dogecoin uh you just they don't they don't uh wait for any confirmation so as soon as they receive the transaction they take care of uh sending the other currency to the set the product you're

sending it to so go to shapeshift.io give it a try tell us what you think and uh we'd like to thank shapeshift for the support of episode of Bitcoin and and quite possibly the first those donation of course it gets to you guys is a Bitcoin donation but at least it will send as as an ocean Nation so I don't know if somebody's perhaps somebody has done it before with the same shape-shift lens and and you wouldn't know um yeah we were at I think we were talking about contract what were you saying I think we're talking about how it works but before we get to recording contracts I'd like just to come back to uh to the example

um so could could you could you sort of just walk us through how like how this transaction would work like so I put my um uh my uh Wooden Spoons up on on open Bazaar and and then say Brian or one of you is interested in buying my nice Wooden Spoons to make some music and uh uh and you go ahead and pay for it with Bitcoin can you can you describe the process there like how the contracts get generated Etc sure so uh so when you uh when when a user uh buys that contract kind of where I was at

when when he says I want to buy this service or this product um he'll choose that third party the notary and then once that's done uh he will basically he'll sign that he'll digitally sign that contract that offer right so it has it has the original information which is about the merchant and the service and then he kind of adds some of his own data which is like what he'll bid on the contract or what he's going to pay and all that and uh and then he'll take that he'll digitally sign it and he'll send that copy to the notary uh the notary would then say yeah I'll be third party to this this transaction and what he does is because now he has that that contract it includes the

merchant and the buyer's data he has their their Bitcoin uh public keys and then he takes his public key and he is able to create a special um escrow address from those three keys and so therefore at that point um the transaction uh is a two of three multi-signature transaction and so the funds will only go somewhere once two of the three of them agree to do so and so you can see that at that point right like this this whole transaction could occur without any interaction with the notary uh Beyond just him initially agreeing because uh the buyer and seller have the

power to to move the funds either way on their own um and and therefore that's where that's how open Bazaar can basically be a Fearless e-commerce solution because when things are are properly done you know everybody's happy there's no one in the middle to say you know there's a link I'm going to take some fees from you guys uh just for you know showing up to to our house um so that's one really big benefit of using open Bazaar while at the same time uh if something does go wrong you do have that third party in the in the involved and they can be brought in to do arbitration um if necessary so at that point the notary

um he he he generates that escrow address and he sends his signed copy of that contract back to all parties so everybody's got a contract of the three parties having signed this agreement this transaction uh within the client it's it's a lot more it's a lot simpler than kind of what I'm describing I'm talking behind the scenes so basically what happens is once the notary is signed it he'll he'll just you know Mark it in his in the app that he's on board and then everybody will get notified uh that that the transaction is going on uh the buyer can then uh deposit the money for that item into uh the the escrow address and uh and once that's done the merchant

will see that the money is in that account that it's available and it's locked and then he will be able to uh ship the item once the buyer sees that the item has been shipped and uh and everything is all good then he would say okay go ahead release the funds and then if the multi-signature transaction would be signed and sent to the merchant the merchant could then sign it and broadcast it to the Bitcoin Network and the money will be moved and everybody's happy so that's that's the happy case in a in a nutshell yeah I mean I think the amazing thing about this you know it's just how much it all bases on on this really simple Bitcoin feature you know

of multi signal because this is so powerful there's so many things you can do and here we are sort of replacing one of the essentially it's a Bitcoins essentially replacing two of the the core functionalities that you could say some plate a platform that eBay has right one is the payment side so that's just purely Bitcoin right and then you have the whole dispute side which then you have to multi-sake with the arbitrator so it's it's pretty I think it's it's pretty amazing you know how how powerful multi-sig is and at the same time you describes a very simple transaction here but you can also Imagine doing something extremely more

complex than a simple three-party like Merchant buyer Arbiter uh transaction you know you could have multiple Arbiters you could have uh I I would even go as far as saying that um if we have Smart oracles uh you could even include some of those in the transaction so for example um uh if you want to do shipment tracking and have that be sort of one of the ways to unlock funds or to validate that you know the item was shipped and that takes uh one of the uh it becomes one of the signatures to the multi-sig someone's work actually someone's

working on this uh with a star called handshake um so you know you could have con you could have transactions which are quite complex and they're difficult to to recreate today with the systems that we have in place yeah and obviously what we just talked about is kind of like the most bare-bone simple uh use case of what we're doing I mean we have you know our focus is to try and prove it out by doing this and then expanding it from there but yeah there's all kinds of different complex things you can do and like the multi-signature transaction you know it doesn't always have to be just three parties there's other ways to include additional parties and and there may be

reasons for doing so and different types of uh and different different types of you know deals so yeah definitely uh I think we're learning as we go um and it won't be long before we'll start looking at more advanced use cases I think like what you described um so we mentioned recording contracts a few times and it seems like those are sort of a core component of uh open Bazaar can you explain briefly what those are the recording contracts so the recording contracts are this really ingenious uh

idea I'd love to be able to take credit for it but I can't um they were originally kind of thought up of by a a gentleman named Ian Grigg and um he is kind of The Godfather of the ricardian contract and described what it was and and how it kind of would work from a beginner level and uh he actually published some white paper I believe online about what it is how they work and uh several projects have already begun to look at using them and uh and trying to figure out how they could apply to to what they're doing I know that um open transactions is one group that uses the ricardian contract

and also I think that ethereum is also looking into ways that they might be able to use ricardian contracts they can be very customizable flexible and ways to support different use cases there's no like fixed format or structure of like how they look so they can model just about any kind of online transaction but like I said before I mean the real point of it is that these are contracts that are computer uh possible they're able to be read by computers and and used programmatically while at the same time remaining very human readable and so you kind of get

that dual benefit from from that we have uh that are working primarily on my contracts uh and like how they can be used and what our structures are going to be what the format's going to be one of them is um our main guy is Dr Washington Sanchez who's based out of Australia and he is uh his super smart guy is working on um coming up with our our version 1.0 standards for for doing these direct transactions and he's also published a bunch of different little descriptions and walkthroughs of different use cases like peer-to-peer lending um

and auctions so like an eBay style auction could be supported with this um and there's there's a bunch of different ways that the contrast can be extended to to support really cool new ideas and I've even seen people proposing systems like you know a decentralized uber replacement using these contracts it's kind of the lifeblood of of our project [Music] cool uh well let's talk a little bit more about the question of arbitration uh I guess that there are two different functions so there's this first is the

arbitrary Arbiter and there's also no tree and and I read somewhere that those should be separated and can you explain that and and why why is why are there two different ones and not just one so this is one of the aspects of our project that's still um a little up in the air because we're still trying to figure out what the real best approach is for this but essentially the reason for the separation is that uh a notary in our eyes is the party that should be responsible for kind of shepherding the transaction so they're the one that would would be signing the transaction

um you know communicating with the uh with the other two parties um just kind of handling the basic stuff where the arbitration comes in is that uh at this point you know let's say there's a problem uh a guy is selling uh you know a a fancy watch and they're arguing over the quality of it or like some detail about it that wasn't you know wasn't what the buyer thought it needs it has there's some expertise there right so when arbitration comes in and he has to determine what what to do um then you can bring in this Arbiter who who would have that expertise be able to make that kind of decision and basically advise the notary to do

what uh what is the what is in the best interest for all parties so the notary on behalf of the parties involved in the transaction yeah so the notary should be someone that both parties uh trust uh the importance of that can't be on uh you know overstated because they're the ones that are that second party if if the buyer somehow had more of an advantage with that notary you know there could be collusion against the the third party and they could release funds wherever they wanted right like it even could be the case that the buyer and the notary or the same person or the merchant in the notary or the same person and then what would you do so it's really important

that that third party is somebody that both sides uh Trust and think that that's going to be one of the big challenges of of getting this network off the ground because uh you know any new reputation system uh or any reputation system in general is is going to be gamed at some point right like people are going to try and figure out ways to um do fraudulent actions or like collude against uh naive users right so that's where reputation becomes really really crucial now in the selection of of the notary and and the our video as well right yeah the reputation I mean it's it's

probably the single biggest issue uh with this uh with this project and and the one that's the least solved at this point um we have a lot of really great ideas about what we want to do to solve the problem um we're not really sure if they're going to work I mean in the end this is all a big experiment to see if we can do this in a decentralized way I mean there's a reason why um businesses that you would you could consider peer-to-peer are still very centralized it's much easier to control the experience for all your users and and kind of maintain control of what's going on and not let it get out of hand like like uber is considered a peer-to-peer service right like I'm

offering you a car service it's just me and you doing things but there's still Uber is that third party is that trusted third party and if there's a problem we both know that like uber would step in and handle whatever issue there is right like if the merchant got screwed over or the buyer had some Merchant they could step in and do something they can do that arbitration step but in a decentralized network where everybody is anonymous how do you provide that for users like how how can you do that like I can trust Uber I know they're a company I can call them I can write to them I can go and visit them or whatever they have a physical address um in some country but like with three parties that are Anonymous around the

world how do you do that and that's that's the big question that we're trying to answer um and and that's that's a huge part of what we're working on I mean that seems to be one of the the sort of absolute core questions in the whole Bitcoin space and especially in the whole uh Bitcoin 2.0 space because there's so many uh cases where that becomes absolutely critical notice to get this reputation problem right yeah and I think that you know with Bitcoin that's one of the most that's the that's the beautiful thing about Bitcoin is they found a way to create that that trusted that trustless consensus without having to have that centralized person

that's that's what's so elegant about uh you know the whole design well one interesting way to think about how this sort of disrupts the existing model like so now when you if we take the uh peer-to-peer exchange um scenario where you have two parties uh transaction with each other PayPal in the case of eBay would be the Arbiter if there's a if there's a dispute then PayPal would uh intervene and and side on either side uh after some sort of uh conflict resolution process

and we pay for that uh indirectly in fees you could also argue that you know within the Visa Network or MasterCard credit cards you pay for uh our some sort of arbitration also in banking like the fees get absorbed in the system this is somewhat different where you have to pay directly you have to it it appears the costs of arbitration on the parties in in the transaction directly um how how do you think this people would how do you think people would react to this and and then secondly how would Arbiters get paid do they get paid up front like uh percentage of the transaction for even being in the transaction and then get paid extra if they have to intervene

or how how's this payment how the payment models work foreign so so generally right now the way that it would work is that the notaries have a um they can decide on their their their fee structure right and so they could say uh you know it's going to be all charged one percent of whatever the transaction cost was to serve as your notary if you need me right so that and that's that's decided at purchase time so in that step where the buyer and the the buyers you know says I'm going to buy it and he sends it over to the notary that's where that notary would put that that terms of agreement in there into

the Conch into the recording contract so that would be stated up front what he would be asking for if there was an issue um so let's say that it gets the last step the buyer paid the seller shipped and then they're deadlocked they can't figure out what to do the buyer won't release the funds or whatever they could notify that notary and he would basically you know figure out what's going on he could then add his fee into the uh into the transaction the release funds transaction and send it to the parties and then they could sign it and broadcast it and now most likely what he stated um and then it would get broadcasted Network and done that way so that's

where he's able to insert his fees now uh why do we think that that's going to work well I mean we're basically democratizing that that third party position right so anybody can come onto the network and say I want to be a notary and serve in that role and start building reputation it creates another way for people to make income in the system uh and serve it in that capacity yeah one idea that we talked about a long time ago I remember hearing about it and thought this is absolutely brilliant and you know this is going to be so so important in the future it's a service that bit rated uh you're probably familiar with it no but it it has the same idea of a

Marketplace of arbitration will you integrate that in some way it seems like that would be a perfect fit uh yeah I think bit rated is is great um I think their newest version is really awesome uh we actually talked with nadev you know the creator of bit rated we've talked to them before in the past and then uh just recently you know as they've released their new version because they're doing something that's so similar in the space but um it's it's very focused on that one aspect of what we're doing and it's also it's almost like a a competitor more than really something that we'd integrate together I think because of

the different strategy right they have a more centralized approach to this but they're doing something with the same goal in mind right they're building a web of trust where people can build reputation and serve as that third party and so I think that you know at some point in time maybe there's a way that we can work together great what we're doing I think it would be awesome I think he's a great guy and their team is awesome and and what they're doing is great and so I would love to do that I don't I don't know if I see a perfect fit right now but maybe in the future I mean one way I could imagine for example right if you have uh some sort of open bizarre client or as you could it could offer like or you know it could have an option

as if it you know bitrate it certified or bit rated uh high rated arbitrary arbitrary you could display that information you know it could be like a way um maybe it could be a secondary a secondary layer of reputation right that that's it's pulled in and I mean of course it's not perfect right because it's or it may only be suitable in some use cases because it does get rid of the anonymity to some extent right like you which isn't that but it seems to be more geared towards their like you know I'm a lawyer and I'm doing this but but for

those use cases it may work well yeah I mean I think that we're obviously not limiting ours to just real world people or anything like that but there there are um you know real world known identities but I do see a use case there and I do think that some people will prefer to work on the network like that and so yeah you're right I mean any way of bringing any kind of Trust From Another reputation system in and somehow applying that I think would be beneficial especially for people that have worked very hard outside of open Bazaar to build a reputation I can see like for instance maybe an eBay seller who has like this massive rating and you

spent last 15 years building that coming to open Bazaar and becoming like a nobody would probably kind of suck for them right they they lose that but finding ways of bringing other trust into the open Bazaar Network and and kind of bootstrapping that trust would be really awesome and I think for instance bitrated if they're able to be successful with that and they start getting a lot of traction in that you know integrating that into open Bazaar would be wood people and I think it would be really beneficial to our users the sort of thing I was thinking about when when reading about the the arbitration and Brian Fabiana Owen to get your thoughts on this is to what extent could

arbitration be like rely on some sort of a distributed consensus consensus or voting mechanism for I mean maybe not for transactions where products are sold because you sort of have to have um I mean it's it's different right but for certain types of transactions it seems like a distributed voting mechanism could work for uh for arbitrating um conflicts yeah I don't know if this is exactly what you were uh you're you're alluding to but um we have actually Washington wrote a nice little description on GitHub how this might work is that make that third

party uh actually like a voting pool and so you could have you know let's say a hundred people that are part of an organization or that third party and they could vote and somehow determine what that that third party is going to do as a group um you could have some kind of voting mechanism there um there's you know these are different things that could be built in and I'm sure if we're able to succeed and like get um you know get a lot of people using this system they're going to start thinking about it in ways like that and and figure out how to expand that we don't we don't currently have any plans to implement that stuff right in the near

term but you know obviously all these things are like sitting there on a whiteboard to look at in the future and I think that that would you know yeah I mean it seems like there's a really nice and sort of obvious way of scaling for like different security needs right so you can have you can maybe have you will have cheap R Victors and expensive Arbiters you know once with more application and it's more at stake and then maybe for their the sort of you know use case so if I'm ordering a book from someone and you know this costs ten dollars or something yeah I have someone very cheap and it's just one person but then if something's expensive of course yeah I mean obviously you would want to have several architectures you know most

likely maybe you'd have three different Arbiters and then the majority decide or five different organs in the majority decide that maybe you have certain levels that you say are you willing to say more because when I'm a high quality you know so it seems like totally uh nice I mean it reminds a lot of code yes it's the idea of of Articles uh and and it's nice because it like scales super well right then maybe you could have uh or you could have a first level of Arbiters so they're like cheaper and then if if there's some some dispute there you could escalate to the next group of orbitals or something like that yeah and to extend on that you know come

back to the example while ago you could have like just like for product shipping you have like the base level arbitration for something that's something like a book under ten dollars would be like the DHL API saying that the product is exactly a great Point yes no no that's a great point exactly yeah you could have the first level could be totally automated could just be the tracking information and then you're gonna have the escalation and maybe you would have it that the person who escalates the next level it then has to pay the arbitration fees for example so you have a disincentive to escalate uh but yeah I know that's a I think that's a great example yeah yeah I think it's really great I mean we've actually had discussions around

this because um you know just tossing around the idea of like what I mean is one notary is one third party enough like does it is the risk of collusion too high if we just have one notary should we have a group of notaries should we have this hierarchical kind of escalation Service as you guys are describing like there's like a ton of ways to to maybe look at this and approach it and the beauty of what we're what we're trying to build is that nobody's limited to that right like so it's not like we're going to come out and say this is the one way you have to do it people could craft open Bazaar compliant clients that do some of the things you're doing like if they want to build some really robust

Network on top of open Bazaar they could do so and and so you know these are all things that we we want to look at if you know as soon as I'm sure Washington sees this and some of the other guys on the team they're going to go nuts and and we're going to be down a rabbit hole trying to figure out how to do what you guys are suggesting and other ideas so I mean that but that's one of the really great things about this project is that people from all over the world are coming flying in and proposing like these what you would think are crazy ideas but they're totally implementable with what we're doing I mean it could easily be done well not easily but it can be done

um it's just up to us to kind of think about you know how it should be done and and since we haven't really released we don't know how people are going to want to use it yet our our strategy is to stay simple and then expand from there but the the future is so bright I think for these kinds of Technologies yeah absolutely so moving on a little bit to this sort of bigger picture I mean we have been talking about it to some extent but so one of the things that I've been sort of trying to wrap my head around and then Sebastian so you also put that in kind of a in one of the questions right is this a platform or a protocol right in

obviously it's it's like a protocol but then the question is so let's say I I was a startup an entrepreneur and I I wanted to say like I want to compete with eBay so I want to create a for-profit company and I want to make money with that hopefully and I I want to provide a service that you know competes with eBay or maybe uh maybe just to buy it now version of you we've had an auction it doesn't really matter um now how would you go about that would you forge the project and maybe put in some some fees that go to a central party and then write a client to distribute or uh what would you approach me there

right and or how do you see that playing out so I think that that's that's a pretty complex question to answer right like it depends on very much on the type of business you'd want to build but if we go with the eBay example that you're proposing so we hope to have um to develop a ricardian contract structure that would support an auction type service and so that means that um you know clients on the open Bazaar Network that could that can handle an auction style recording contract would most likely respond in that way so like you could essentially

check for peers that support that and they all talk to each other over the open bizarre protocol um but but basically what would happen is you don't you don't need to Fork the code what we're going to do is the the main code will have an API that does a lot of like the fundamental Network stuff like being able to push contracts to the network and talk to peers and do those those types of things um and you could just build an app you could be a centralized app a distributed a decentralized app it could be a mobile app whatever it just would need to talk to that that client code the the API and that's how you would interface with other people on the network so if you were going to build an eBay you know you

could essentially just build a you know a centralized website just like eBay where people go and sign up and do all that stuff and they create contracts on your system you would just broadcast your open Bazaar contracts via the API to other peers and they could talk that way um you know in terms of uh forking the code I think the really the only time you'd really need to Fork the code is if you plan on doing something beyond what we're trying to do like for instance if you were going to build like you mentioned before like a dark net market place and you really need to add in some kind of an anonymity layer like tour or something like that

then maybe that would be reason to to take our code and Fork it and extend it in a way that we aren't working on or aren't planning on supporting yeah I wanted to ask you about that so does that seem to also like an obvious use case right the the dark the dark Market because I mean I think you pointed it out really greatly in the beginning right so so dark markets obviously there's been all this criticism and not surprisingly I mean obviously people do uh all kinds of illegal things on them but at the same time you can also say this is such a powerful example for the power of cryptocurrency so that's something that you can't do otherwise and it's something that there's obviously a huge

potential demand for and what everyone thinks of that uh and now it's but but at the same time the big flaw is uh they're centralized right so there's all kinds of scams or they get arrested or uh things like that and and then here everyone says running like you could you could replace those right so you could at least get rid of that centralization so you could get rid of the scams or at least these high level scams maybe there will be scams between people but you know that's the whole point of reputation to prevent that and arbitration um so but couldn't wouldn't it just be possible that for example I would be using Tor and then you could just use

open Bazaar like that why would you have to go a step further and itself well for one thing I mean the the peer-to-peer Network that we've we've built is um at present it's this is going to get a little technical I guess uh but I don't know any other way to get around it but essentially our Network the way that it communicates um supports tour current currently like you could you could run it over Tor people have run uh open Bazaar nodes on tour one issue with that is that any nodes on tour essentially aren't talking with nodes that aren't on tour and so it's not like I can I can be on the network

as a non-tour person and you can kind of on the network as a tour user because you know there's they're separated networks but the bigger issue is is that in our next release we're going to be moving to a type of peer-to-peer network communication that doesn't support Tor um if you don't know a tour the way it works is when you go you request something it goes into the tour system it goes to that destination and then when it comes it has to somehow come back because of the routing that it does so you have to use something called TCP type connections um our our newest update is is going to be UDP which is basically uh the traffic just goes one way and it doesn't it doesn't create a connection

where it can come back and therefore Tor is not going to be supported out of the box that's not to say that we couldn't use something different like i2p um which does support UDP based communication but um it won't be as easy and we don't really have it in our roadmap at this time because um implementing that in the near term is we feel like it's something that we can add on later and support um much like I think what Bitcoin did um just you know just add it on layer later after we've solved a lot of the bigger challenges the more pressing challenges like actually functioning transactions uh the client software getting it to work on all these

different operating systems things like that like fundamental experience we feel like it's way more important to to nail down before we worry about securing uh its usage on the dark net for a very small percentage of our potential users is that also I mean it seems like another way of looking at this and perhaps that's actually made a a good way or a big advantage of this for you guys if when you don't support court because then you know the people who want to run those dark Nets and obviously that's going to happen uh you know they will actually have to afford to code and they will have to run a fork of open but sorry not open for itself right so like I mean for you guys

it provides a level of protection there right they can say like well we what we support is those legal use cases now there are people doing that but you know those are different people that fork the project you know this is not the this is not the project we are running uh so it seems like there's a great Advantage for you guys in this way yeah I mean that's one of the fundamental um moral issues with working on this project I think for and that goes for a lot of the developers that we've had come in and out of the project is that uh it's potential use and like who's going to be using it uh is is Up For Debate right now we don't know since we haven't released we don't know if we're going to get a a wave of legitimate users or if we're just going

to get overrun by people trying to do uh to replicate Silk Road and it doesn't help that like every article that comes out about Silk Road it's like the first comment is like well I can't wait till open Bazaar is out because I don't have to worry about Silk Road and that's not really what we're building I mean yes this this concept this this idea could enable that but it's just it's just one example of how it could be used uh you know albeit a very highly visible one and one that comes to the Forefront of everybody's mind as soon as you bring it up but I I think that be fighting that that perception for a long time to come and we're doing our best but like you said by not supporting that

um I think it's going and we very much encourage people uh to read through the code and understand the documentation where it says this is not a secure anonymous you know hiding ground for you to sell stuff it's just not even if we were doing that it's nowhere clear there's nowhere close to ready to support that kind of activity it hasn't been audited or anything like that and so you cannot trust it to do that connectivity and so I think if you were trying to do that you'd either need to Fork it and do all those things so that you can trust it or you just insane because it would be a really bad place to do that I just I don't think that people realize that they think that they're just going to download it and and go off their on

their way selling illegal items and they're going to be really disappointed when they track them down in like two seconds because right now the software just doesn't support that that use uh [Music] well I just wanted to Circle back briefly because I sort of jumped ahead I wanted to ask about this the UI question again uh and that's a point where I'm a tiny bit like still confused maybe before we go into the use cases so um to what extent will if if you have different clients or with our clients to

what extent are they interoperable right because I'm in an open car uh a contract in principle it seems like any client could could read any contract and sign any contract but then at the same time it seems like there should be this obvious a tendency uh towards a specialization right so you would have maybe a site for used furniture you'd have a site for uh I don't know some sort of uh I don't know book book selling site or like some eBay type side or etc etc um so how will this work because does that mean that to some extent on a client level you will filter the

contracts that come in and only show that this sort of the relevant contracts for this kind of application uh when a person looks for a product in that time or like how would that work so I mean I don't think that we've fully fleshed out exactly how that's going to look in the end but the way I look I can um I can't imagine that it will at least start to look like is once we release the main client um and are and uh and the API it will support a a single basic use case which is just selling items right like selling a direct sell of an item to a person with

three parties and so that contract structure will be you know completed the client will support that and everything um and so I think that the first round of apps that are kind of built on on top of open Bazaar will be more of like maybe a listing aggregation service so for instance there's there's someone already out there who's um who started to build a site it's called bizarrebay.org you can go to that site and um yeah I saw that again and you can see uh his his app basically crawls the open Bazaar Network for contracts looks through all the stores and then he can provide a centralized website where you can go and see all those listings and search through them and so people can provide additional

um services on top of the open Bazaar Network by uh doing extra filtering or like perhaps they only list uh contracts that are related to Wooden Spoons you know they could have a Wooden Spoons Emporium and all their contracts are just filtering that out right so uh and they would have a lot more control over that they could provide all kinds of different uh value and so it's sort of like the Pirate Bay how it's a centralized service that that basically uh helps the the BitTorrent Community right like find items on the network so that that's kind of like that first wave of apps I think are going to be like that and then there's other people that are building tools for like scanning the network and things like that so that initially will be probably the about the

extent of what we see on top of it the next wave will be where people are able to create new uh e-commerce workflows so that's where auctions and peer-to-peer lending and things like that will come in so for instance you want to build a peer-to-peer Lending Service on top of uh open Bazaar you could create a new ricardian contract that supports that you could publish that that contract standard and and they basically would outline the workflow like how that would work like how many parties are involved uh what are the different stages of the transaction and then other clients could build uh they could build it into their app as well and then you guys could all intercommunicate over the same

peer-to-peer Network um so the details are not really like fully hashed out but we're starting to like you know figure out how that would work and um and we'll probably have a lot more to talk about that in the next few months when we get closer to release in our first uh full version right so come on back to sort of these use cases and when I when I even talk about use cases I mean uh I'm thinking about it in various or long-term way and extrapolating so this technology gets you know used and adopted and then um to what extent would so because the examples we talked about so far are pretty basic examples of maybe like

peer-to-peer like person to person or small business to person but to what extent could large Merchants like I don't know Amazon or Walmart or or even um product manufacturers uh you know it could be Logitech or it could be uh some book publisher uh utilize like what ex what is what incentive would they have to utilize a technology like like uh open Bazaar rather than just reading their products on on Amazon or through uh through Merchants like Walmart or large large stores so I think for them a lot of these large

organizations already have like a huge customer support type Network um to kind of help ease any issues there are with the with the product so they might not be as incentivized to jump on an open Bazaar at first but you know because they could essentially just start doing Bitcoin transactions right and save fees and not have to deal with credit card companies or whatever I think this is way more beneficial at least at first in an RIS for like you said smaller merchants and users because you know there are people that you you would consider a small business that run

like an eBay store or an Etsy store or whatever that are making a million dollars a year right selling items and they're still paying 10 to 13 percent to eBay on every transaction they're getting mad charge Backs from credit cards they're getting um they have to deal with PayPal which right there is incentive enough to just find something else to use um and they're just looking for something like this to help them lower that cost which they can in turn hopefully uh give back to their users because uh I don't know about you but I've looked at all kinds of different listings on eBay and stuff and usually the prices are jacked up because of those fees for their uh you know

shipping is exorbitant because they have to work they have to work that overhead in somehow uh to make enough money to survive and when you come into a system like open Bazaar now you're suddenly only paying for what you really need to pay for which is if I have an issue with my transaction then only then am I going to pay fees for this arbitration like why should I subsidize the arbitration across the entire platform if I don't need it um and and that's kind of the model that eBay Works across as they spread that those costs out to every user um and they also pay for a lot of this the stuff that that allows them to be more centralized so I think uh you know in terms of large

businesses I don't know if they'll find it valuable ideologically there are some businesses that are larger and it might do it just because they want to uh you'd hop on the decentralization wagon and and kind of get away from the traditional model but um yeah I don't know I don't know I think it's probably going to take a lot more traction for our network uh to get off the ground and really prove itself before big players come in and decide to use it so can you tackle with um so before we wrap up uh we'd like to talk a bit about the organization so how does that work currently right because

you guys did not choose the path that many have chosen of creating your own coin and doing that that sort of thing so how are you currently funding development and what are the the plans going forward are you planning to monetize it in some way or are you planning to turn this into some kind of foundation um uh I I mean I can't I can't tell you exactly what our plans are because we don't know exactly what they will be for sure yet um you know we obviously know that um we're not going to be able to get as much done if we're just operating at our current level which is just it's a side it's a side project for everybody

involved um so at some point we'll probably have to think about uh you know a way to fund it in a more organized Manner and whether that's going to be an organ you know an open uh Foundation or like some kind of commercial uh Corporation kind of way of of organizing I I don't know yet are we do know however that the core open Bazaar protocol and network is going to remain open an MIT licensed and uh stay on GitHub and it will be free for everybody to to use and look through that that's that's Paramount to our our project and we'll always remain that way

for the entirety of it now how we fund it that hasn't been decided we do know that we don't like to do the coin aspect and we don't we have stayed away from crowdfunding so far because we feel as a community that we would not like to ask too much of our users until we actually have something that's working really well and that they find value with I I don't like some of this like Kickstarter campaigns where somebody you know they break in all this money and then two years later they haven't really delivered anything um yeah exactly and it sucks it really disenfranchises your users and and it

kind of blows your reputation so um you know we're taking hits on different sites because some people think we haven't been fast enough or or come out with like a working app yet but you have to understand that like all these guys on the project are working you know until three four in the morning after they come home from their day jobs to work on this and it's every night and whether you can see it obviously or not um we we pour a lot of our lives and energy into it the project and we don't plan on going away anytime soon and hopefully in the very near future we'll have something really exciting to show the community and everybody will be really happy and they won't have paid a

time for it yeah and those people can just roll up their sleeves and get to work if they're not happy [Music] yeah I know I think that's that's fantastic so I just uh before we wrap up how many people are actively contributing to this project so um I can't remember what the full account is right now uh active active uh serious developers would probably have about a dozen to 20 people but we've had I think almost 200 different contributors on our GitHub repository um

I think I saw some statistics uh recently that said that we're one of the um largest python projects on GitHub just based on um you know different contributors coming in and actually pushing code to our repository so um it's it's been overwhelming unfortunately you know a lot of times you get you get you suffer from the too many cooks in the kitchen syndrome and so we're trying really hard to make sure that people are um you know super oh you got seven so 75 contributors on the main bench and we've got a we got like 325 Forks you see that up there and I mean that's that's a lot of people if you look at other

repositories it's it's it's pretty up there yeah and I want to encourage everybody to to go with your so I'm looking at the GitHub page right now for those of you listening I want to encourage everybody to go to this uh to their GitHub repo we'll have the link in the show notes um and uh contribute if you can donate of course if you can and also this Theory work uh by uh Dr Washington Sanchez who you mentioned earlier is just really really interesting so there are some articles there uh on ricardian contracts on uh the voting pools which you mentioned as well and um uh just really really interesting white papers uh that I encourage everybody Landing there's a yeah yeah we also um you know another big

reason why some people think it it can be a quiet community times is because we have um we actually have a slack uh organization so if you're not familiar with slack it's like an online collaboration tool and uh anybody's free to join up if if you if you get in touch with us we can get you in there we try to keep it as focused on people who are really contributing to the project but it's still open and a lot of activity in there talking about ways of doing decentralized Bitcoin exchange building reputation systems actually the guy I mentioned before that created ricardian contracts Ian Grigg he actually is working with us closely in there on trust and reputation stuff as well

um and so there's a lot of exciting talk going on in there that you just can't see from the from the outside really easily but there's a lot a lot going on maybe the last question uh what's the timeline here by what time do you expect that we will have a client that's actually very useful to start maybe purchasing selling things uh on open Bazaar so right now the thing that's holding up our next release is um there's there's two issues um one is our peer-to-peer Network since I I mentioned before that we're switching from TCP based Network to a UDP based Network which is um it's all really complex under the

scenes and we want like one of the biggest gripes with our software has been uh connectivity so if you're behind any kind of a firewall or you're on a corporate Network or school network or your home router is kind of crappy like it makes it hard to do peer-to-peer communication it's not like a regular website and so we're trying to solve as many of those issues as possible so as many people as possible can can use it and um and we want to make sure that that's working really well before we release in terms of a timeline uh if tonight a breakthrough comes through you know it could be next week but you know it it just it like I said because we don't have full-time employees

working on this stuff it kind of cut it the development um push Ebbs and flows and it just depends on when we can get it out the door so another good reason not to take funding um we don't have to meet any deadlines but we're hoping very soon cool fantastic and uh yeah we will have links to the the project as well uh and the blog there's there's quite a few resources also there's a reddit openstar reddit we will have all of those in the show notes um well uh thanks so much for coming and joining us today Brian hey thanks so much for having me it was great I really enjoyed this discussion and I think this is this is definitely a

project that's going to be uh extremely interesting to watch and uh I think it's probably very controversial as well very controversial and and I just yeah I mean I was mentioning that to Sebastian before I think in terms of sort of revolutionary potential I know this is pretty like I mean this is very much up there with what we've had on the show I mean okay maybe ethereum you could say similar or maybe some of the other projects as well like this is uh yes absolutely huge you know and I think it could be absolutely huge and I I can't wait to see where this does um I thought yeah we really think that's

why we're working on it well yeah thanks so much for joining us today and uh true listener thanks for for listening to the podcast or watching the podcast uh if you want to support the show there there's a few things you can do you can follow us on Twitter we're at epicenter BTC uh you can also leave us an iTunes through if you listen to the show through iTunes or otherwise we have an iTunes account that helps new people find the show uh you can donate to us maybe with the shapeshift lens give us your Dogecoin we take them as Bitcoins at Epson bitcoin.com tips um and then that's it yeah or get in touch if you have some comments or anything so thanks for listening and we look forward to being back next week