Decentralized? The major non-fungible token (NFT) platform OpenSea is creating controversy this week. It has confirmed that it is blocking users from certain countries, to comply with sanctions from the US. Why is this a problem for the community
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OpenSea blocks users based on their country
We’ve been trying to find a way to make sure that we’ve got the right people in the right place at the right time,” he said. This is the case of several artists, who made their displeasure known on Twitter:
NOT A gm AT ALL
Woke up to my @opensea trading account being deactivated/deleted without notice or any explanation, hearing lots of similar reports from other Iranian artists & collectors.
What the hell is going on?
Is OS straight up purging its users based on their country now?– Bornosor.eth (@Bornosor) March 3, 2022
The controversy quickly escalated, and OpenSea responded with an apology… While confirming that the company was complying with US laws, and therefore with those relating to international sanctions:
We are very sorry for the artists and creators who are impacted, but OpenSea is subject to strict policies related to sanctions laws. We are a US-based company […], which means we are obligated to block people in locations affected by US sanctions. “
This did not sit well with affected users, who reported unproductive conversations with OpenSea’s customer service department:
Please share this to the whole NFT community! How rude @opensea support can be! Shame on you. pic.twitter.com/FwvovDpB1l
– MReza DomiriGanji (@domiriganji) March 3, 2022
The issue of decentralisation of OpenSea
All this gives rise to debates about the place of OpenSea. It has of course built its reputation by being a peer-to-peer exchange platform. It is also commonly referred to as “decentralised” in media publications and guides on the subject. However, in reality, OpenSea does use blockchains that operate in a decentralised manner, but it is itself centralised, with decisions being made at the corporate level.
This means that it can block users, collections, and unilaterally decide what is published on the site. So it cannot be called ‘decentralised’. But the fact is, the crypto community has considered it as such for several years.
It should also be remembered that when a company such as OpenSea grows, it is forced to apply stricter security measures. The current news shows one thing: the platform is still a company, and it is subject to its place of business.
A parallel can also be drawn with LocalBitcoins. The company is also a peer-to-peer marketplace, and like OpenSea, it relies on a reputation for openness. But by 2019, it had started to withdraw payment options… And confirmed that it was forced to submit to the regulations of the country where it is based, in this case Finland. In 2020, it had also blocked users.
A pervasive question in the crypto ecosystem
These kinds of moves show the barriers that Web 3.0 faces. Moreover, this is an eternal question in the field of cryptocurrencies. For an influx of users to happen, big players have to emerge. And these are very often centralised, in order to have the means of their ambition.
Is this a problem, given that Bitcoin (BTC) and the blockchain were created precisely to get rid of this type of model? The community is often divided on the subject…
