If They Build It, Who Will Come?

There's karmic justice to the notion of using computer code to make the jobs of Silicon Valley executives irrelevant, but are consumers really clamoring for a service to duplicate what eBay already does so well? Hoffman says saving money will be a big enticement: eBay generally takes at least 10 percent of every sale, while OpenBazaar, which has no shareholders, creditors, or paid staffers, is free to use.

Privacy is another selling point. Stored on eBay's servers are the identities, payment information, and buying histories of all its users. The company is known to routinely hand over information to the government—in fact, it maintains a separate portal to make it easy for law enforcement agencies to query eBay's servers. Decentralized peer-to-peer marketplaces have no servers and keep no information on their users whatsoever. And all the personal information traveling through the network is encrypted.

Mr. Knuckle, the pseudonym of one of the lead developers of NXT FreeMarket, says the project is an effort "to route around the system and do the things you should be allowed to do, like trade peacefully." A self-described anarchist who says he isn't breaking the law, Mr. Knuckle still won't reveal his identity because "I don't trust the government not to come and arrest me anyway and stick me in a cage where I can be raped."

All these projects were created with grim awareness of the fate of Silk Road, an e-commerce site primarily for illegal drugs that thrived from 2011 to 2013. Though Silk Road encrypted the identities and transactions of all participants and required payment with bitcoins, it was a centralized marketplace, and that was its downfall. Silk Road concealed the location of its servers, but the FBI eventually tracked them to Iceland, and in October 2013 the Reykjavik Metropolitan Police pulled the plug. The FBI also arrested Ross Ulbricht, the then-29-year-old libertarian founder and alleged operator of the site, and he now potentially faces life in prison after being found guilty of seven charges in a New York federal court.

NXT FreeMarket has no plug to pull.

Mr. Knuckle says he has no personal interest in facilitating the sale of narcotics. He thinks that it's "inevitable" drug dealers will use platforms like NXT FreeMarket, because nobody can stop them. But that's not the point, he adds. These marketplaces will be particularly useful in repressive countries where "many more things are illegal" than drugs.

Even so, filling the void left by Silk Road, which helped make drug buying safer, is one thing. These services could also be used for truly nefarious purposes, like selling stolen bikes and credit cards. eBay collaborates with law enforcement agencies primarily to combat run-of-the-mill theft, and even Silk Road banned the sale of child pornography and stolen goods. On these new peer-to-peer platforms, that won't be possible.

Mr. Knuckle says NXT FreeMarket will eventually roll out a "blacklisting option, by which a user can set a preference to filter out any listings," but ultimately he thinks even genuinely criminal activities on these sites are the price of freedom. OpenBazaar's Operations Lead Sam Patterson says the creators of a decentralized peer-to-peer marketplace "aren't morally responsible for the way it's used," just as the creators of the Internet itself aren't responsible for what people do with it. He's confident "it won't primarily be used for immoral purposes."

Other forms of product censorship could entice users. Patterson, whose day job is working as a technology policy analyst with the Charles Koch Institute (his employer has no involvement in OpenBazaar), points to a recent move by the e-commerce platform Etsy to ban listings that use the term "redskins" because it's "disparaging and damaging to Native Americans," as the company explained in a blog post. "Freedom of speech," Etsy solemnly stated, "is not without limits."

"It's the company's platform and that's Etsy's right," says Patterson, but on OpenBazaar "nobody can censor trade." That's a feature that in theory could siphon business from the world of Etsy into this cypher world.

Neither drug dealers nor the purveyors of homemade Chief Wahoo memorabilia, however, have yet to find OpenBazaar. If you log in to the platform today, you might purchase a video game cartridge for the game "Kaboom!" that works on a first-generation Atari, a bottle of raw honey, a T-shirt that references the British sci-fi series Doctor Who, and other sundry items. NXT FreeMarket recently had nine items for sale on its platform, including a windhorse sculpture and silver maple leaf.

Both operations are in an early test stage so their low usage rates are hardly damning, but ultimately getting users who are