Bitcoin's Porn Potential — Adult Industry Weighs In
LOS ANGELES — Will bitcoins ever catch on as a driving virtual currency for porn?
Porn pundits say that it's a natural fit and a perfect candidate for adoption because bitcoins are nearly as untraceable as cash, which makes them valuable to people who don’t want their purchases tracked by credit or debit cards.
But so far, the adult industry is somewhat tied up over the usage of bitcoin for transactions because payment gateways don't accept them for sexually explicit material.
"In that case, for a company like us, it would be risky to use a gateway if it violates their terms and risk the account or payments being held," Allison Vivas, CEO of Pink Visual, told XBIZ. "Of course the benefit of the gateways is to actually get paid out in the currency we desire rather than hold on to the bitcoins."
Vivas said that the viable option for use of bitcoin lies in non-sexually explicit, or soft, adult products.
And that is exactly what one operator, Amelia G, is marketing on gothic erotica site BlueBlood.com, which features nudity but not hardcore.
"BlueBlood's content is more of the coffee table art book variety and has more to say than just 'that's hot' (although we say that too), so those sorts of policies tend not to be applicable for us," Amelia G told XBIZ.
Tony Gallippi of BitPay.com told XBIZ that bitcoin has a good future for some transactions in the adult industry space.
"Not only is the checkout process smoother and more private for the buyer, but it eliminates the fraud risk for the merchants," he said.
"Services like BitPay can guarantee the exchange rate and offer a direct deposit into the merchants bank account, so there is no risk of holding bitcoins if they don’t want to."
If one day bitcoin gateways were to let up on policies against sexually explicit material, it's likely that some porn companies might just jump in and embrace it — but not if the currency is unstable.
Fabian Thylmann, Manwin's managing partner, told XBIZ that until bitcoins' value stabilizes, he couldn't see how any real business can function using them for their customers.
Just in the past week, the price of bitcoins plunged more than 70 percent, sparking a rush of activity that overwhelmed trading platforms and suggested the bubble in the virtual currency has burst.
Bitcoins were down to $77.56 last Friday but reached as high as $266 per bitcoin Wednesday morning. On Thursday, trading was halted on Mt.Gox, a Japan-based exchange that claims to handle 80 percent of bitcoin trade worldwide. The price at that time was already at about $123, down more than half from its peak.
The trading of bitcoins, which has no central organization and is not managed by any government or central authority, relies on a peer-to-peer network.
Creation of new bitcoins is automated and given to servers or "bitcoin miners" that confirm transactions as they add them to a decentralized and archived transaction log approximately every 10 minutes. By the year 2140, the mining of bitcoins will cease after 21 million are created.
With bitcoin prices working like an accordion recently, some are skeptical of the currency but yet embrace it.
Last week at The Phoenix Forum, which drew online adult professionals from around the globe, bitcoin was on the minds of many, particularly in light of the economic fallout in Cyprus, where many adult entertainment companies operate due to its ease on business taxes.
"A lot of money moved out of Cyprus through bitcoin," said Brian Schuster of Utherverse at one of the conference's panel sessions. "It was one way that people in Cyprus were able to convert their euros into something that couldn’t be tracked by the government and converted back to a currency.
"Because of Cyprus and Spain the price of bitcoin spiked from below $10 about 90 days ago to $140 today," he said.
As for a viable solution for the adult biz, Schuster sees bitcoin, or some other similar product, as a necessary tool in commerce.
"Bitcoin in its current reiteration is temporary but a virtual currency like bitcoin is viable," he said. "Like so many forms currencies, they transition to the next and the next."
But Schuster warned that the current high value of bitcoins could be a warning sign that reads caution.
"It is such a target for hackers to manipulate the currency; i wouldn’t feel comfortable to hold on to a $140 bitcoin," he said.
For Amelia G, the idea of employing an alternative currency for her non-sexually explicit site an exciting one, while she closely examines conversion rates.
"I decided to be an early adopter of Bitcoin, partly because of the philosophy, partly because I think the technology is really neat, and partly because I think it makes sense to give potential members every possible option for payment," she said.
"Adult adopting Bitcoin means it is likely to be a winning technology and I am happy to do my part."
To put it simply, Bitcoin, like other forms of alternative payments, is just one more avenue that adult entertainment companies can use to find and acquire more customers. Witness Amelia G's efforts. The future of transacting with it could be huge.