On November 6, 2014, the Feds shut down an anonymous online marketplace called Silk Road.
Most folks remember Silk Road as a platform that was used for drug sales, prostitution, and basically anything folks didn’t want the government to know about.
Of course, like it or not, the government is an omniscient force. Every move you make is scrutinized by some advanced algorithm, and every monetary transaction you make is strategically recorded.
Don’t get me wrong; it’s not that my defeatism regarding government spying has made me sour on online marketplaces like Silk Road. In fact, I love the idea of being able to buy and sell goods and services through a decentralized system where government-issued currencies are of no value. But outside of scoring 15 grams of methamphetamines or a date with a 21-year-old college girl for a 30th high school reunion, I remain unconvinced that such marketplaces offer much in the way of opportunity for investors.
More Than $1 Trillion Up for Grabs
In the new issue of Reason magazine, there’s a piece entitled, “Will OpenBazaar Succeed Where Silk Road Failed?”
In this piece, the claim is made that OpenBazaar is superior to Silk Road because it doesn’t have the same vulnerabilities, noting that unlike Silk Road, OpenBazaar doesn’t maintain servers, host product listings, or store transaction data. Check it out…
Because of that structure, the company has no control over what is bought and sold. Whereas the online craft market Etsy forbids the sale of Washington Redskins–branded merchandise, for example, and Wal-Mart restricts the sale of music bearing a “parental advisory” label, OpenBazaar puts absolutely no limits on what can be listed. And since the source code is publicly available, it would be virtually impossible for a governmental entity to shut the platform down.
Fair enough, but outside of illegal products and services, is it really that hard to find another “above-ground” marketplace that’ll sell you a t-shirt with an offensive caricature of an Indian or a download of a song that manages to fit all of George Carlin’s seven dirty words into one verse?
Still, OpenBazaar claims it’s not particularly interested in illegal drug sales and instead is looking to compete with companies like Amazon and Alibaba. With more than $1 trillion a year in Internet commerce up for grabs, it’s easy to understand why.
But Here’s the Problem…
Right now, I can just go online and buy a ukulele starter kit on Amazon.
I’ve ordered from Amazon in the past. I know I can get my deliveries rather quickly and be able to track those deliveries utilizing a trusted application. It’s quick, easy, and I’m not required to do much more than click a mouse.
If I order that ukulele starter kit now, it’ll be at my front door by Thursday (maybe Friday, given the Thanksgiving holiday).
I don’t need to download anything, I don’t need to install anything, and if I’m not satisfied with my purchase, it’s pretty easy to contact customer service and get a refund. Not that I expect to find anything wrong with my new ukulele starter kit.
All jokes aside, Amazon offers such an unbelievably convenient service that I cannot imagine any scenario where I’d seek out a peer-to-peer network for my online purchasing needs. I could add eBay and Etsy to that list, too.
Now, I’m not saying that some really smart millennial tech wiz isn’t going to create something in the next year or two that I’ll be salivating over, wondering how I ever lived without it. But in terms of competing with Amazon and Alibaba, you have to show up to the party with more than, “Hey, the government can’t see what you’re buying.”
Unless, of course, what you’re buying is illegal.
And while that in itself is an incredibly valuable proposition (Silk Road was pulling in billions providing a platform for eager entrepreneurs to hustle 100-count bottles of Xanax and tutorials on how to hack ATMs), it is in no way enough to topple the online marketplace titans that have successfully gotten us hooked on free two-day delivery and annoying little algorithms that effectively trick us into buying stuff we didn’t even know we wanted.
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Put Some Real Bread in Your Pocket
While I wish nothing but success for any online marketplace that caters to those of us who favor using cryptocurrencies over government-issued currencies, I remain unconvinced that such a marketplace will be able to hang with the Big Dogs.
And I can assure you, Jeff Bezos and Jack Ma are not worried.
But maybe I’m wrong. I actually hope I am. But until proven otherwise, if you’re looking to profit from the trillion-dollar Internet commerce industry, stick with what works. Which, by the way, still isn’t going to make you particularly wealthy.
I love Amazon, but I’m not going to pull a triple on that stock anytime soon.
No, if you’re looking for a solid tech play that’ll put some real bread in your pocket, focus on what’s around the corner, not what’s sitting in your lap. Like virtual reality and augmented reality, for instance.
That stuff is a tech gold mine!
In fact, if you play your cards right, you can actually get a piece of a new virtual reality stock that a lot of insiders are now calling the iPhone killer. It’s pretty spectacular stuff. You can read more about that here.
To a new way of life and a new generation of wealth…
Jeff Siegel
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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.
