Decentralized cryptocurrency-based marketplace OpenBazaar has reversed a decision to shut down after receiving financial support following a call for donations.
In a post last week, OB1, the lead development company behind the OpenBazaar decentralized marketplace protocol, announced that it would be shutting down essential infrastructure services for the platform next month:
"As of the 1st of October, OpenBazaar will be undergoing some significant changes. OpenBazaar’s supporting services (e.g. seed nodes, API wallet, exchange rate API), which OB1 has financially maintained for the past 5 years, will shut down unless additional community funding can be raised. Moreover, it is with a heavy heart that we will be removing Haven from the iOS App Store and Google Play Store on October 1. [Note that your app will remain on your device but will not work as expected due to underlying OpenBazaar services being shut down]."
The root cause of this decision was allegedly financial difficulties from not enough usage on the platform to sustain a post-investment company:
"When we launched OpenBazaar back in 2014, we wanted to bring the full power of decentralized marketplaces to a global audience. We were lucky enough to raise money from world class investors to found OB1, and have worked tirelessly on the vision of free trade. Unfortunately, we simply haven’t achieved the level of user growth and adoption required to build a sustainable business off serving OpenBazaar/Haven users. As a result, OB1 cannot sustain funding the ongoing infrastructure costs."
OB1 later reversed the decision following receipt of financial support.
A second chance after a flood of donations
Two days after the initial announcement, OB1 announced a reversal of the previous shutdown decision, noting that anonymous donations had enabled the infrastructure to continue operating for the remainder of the year:
"BREAKING NEWS! An anonymous donor has agreed to cover the costs to run OpenBazaar infrastructure through at least the end of the year. We still need your support though. 2021 will come soon enough. Please consider donating so that we can continue supporting free trade. We will be working hard to find ways to lower costs and decentralize more of the infrastructure to extend the length of your contributions!"
Between the five cryptocurrency donation addresses posted in the initial announcement (Bitcoin, Litecoin, Bitcoin Cash, Zcash, and Ethereum), the total value received to these publicly-posted addresses equaled $11,606.16 USD at time of writing.
The challenges of a decentralized currency startup
The difficulties in starting a successful business may only be compounded by additional challenges in the decentralized digital currency space. According to the US Bureau of Labor Statistics, 44% of businesses started in 2014 were defunct by 2018. Similar figures are more grim in the world of cryptocurrency, with 80% of ICO (initial coin offering) projects ranking as outright scams with only 8 of the remaining 20% managing to reach the trading stage on exchanges, according to a study conducted by Satis Group LLC. Research from tech market insights platform CB Insights indicates that 42% of startups failed due to a lack of market need, while 29% failed due to running out of cash. 17% failed due to having a product without a viable business model.
Bitcoin, the first cryptocurrency, maintained an initial focus on serving as peer-to-peer electronic cash, and reached about 300,000 daily transactions at the beginning of 2017. Since then, however, the lack of success in scaling the network to accommodate more users has kept this daily transaction rate fairly constant, limiting small payments-based use cases.
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