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Winter 2022

ISSN 0890-913X

Volume 37, Number 4

Decentralized Marketplaces with Privately Enforced Contracts: A Case Study of OpenBazaar

Peter C. Earle, American Institute for Economic Research

Max Gulker, Reason Foundation

Edward P. Stringham, Trinity College

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TheJournalofPrivateEnterprise37(4),2022,43-59DecentralizedMarketplaceswithPrivatelyEnforcedContracts:ACaseStudyofOpenBazaarPeterC.EarleAmericanInstituteforEconomicResearchUnitedStatesofAmericaMaxGulkerReasonFoundationUnitedStatesofAmericaEdwardP.StringhamTrinityCollegeUnitedStatesofAmericaAbstractMultisignatureescrow,coupledwithblockchain,enablesself-enforcingcontractsbyallowingpartiestoprecommittothetermsofanagreementandtherebyreduce,oreliminate,theirabilitytocommitfraud.Manymainstreamfinancialinstitutionsareexperimentingwithblockchain-relatedplatformsthatusemultisignatureescrowtoassistintradingdebtinstrumentsandcommodities.OnenovelimplementationwasthedecentralizedtradingplatformOpenBazaar,whichdirectlyconnectedbuyersandsellersandranonopen-sourcesoftware.Buyers’paymentswereheldinescrowuntileitherbothpartiesagreedthatacontractwasfullyhonoredorathird-partymediatorsidedwithoneparty.Thefirmsupportingthemarketplacefailedtomonetizeitsinvestmentsandstoppedsupportingthesoftware.DespiteOpenBazaar’sdemise,itlivesonindecentralizedcryptocurrencyapplications,nonfungible-tokenmarketplaces,andillicitdarknetmarketplaces.Studyingitskeyfeaturesgivesinsightsabouttheprospectsandlimitationsofdecentralizedmarketplacesandtheuseofsmartcontractsandmultisignatureescrow.JELCodes:D47,E27,F55,G23Keywords:onlinecommerce,fraud,blockchain,self-enforcingcontracts,privategovernance

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Metadata [hide]

Title	Decentralized Marketplaces with Privately Enforced Contracts: A Case Study of OpenBazaar
Authors/Creators:	Peter C. Earle, American Institute for Economic Research Max Gulker, Reason Foundation Edward P. Stringham, Trinity College
Year:	2022
Volume:	37
Number:	4
Pages:	43 - 59
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	online commerce, fraud, blockchain, self-enforcing contracts, private governance

Citation:
Earle, Peter C.; Gulker, Max; Stringham, Edward P. / 2022. "Decentralized Marketplaces with Privately Enforced Contracts: A Case Study of OpenBazaar." The Journal of Private Enterprise, 37(4): 43-59.