While one of the largest, this industry faces some of the weakest challenges. Spankchain, a blockchain startup for the adult entertainment industry, cited the main pain points for this industry in a blog post. Payment processing is at the top of the list. It’s no secret that major payment providers like PayPal and Stripe don’t support adult entertainment companies, including those that deal with sex toys and pornography.
The founders of Spankchain believe that customers must also act discreetly, but existing payment methods don’t offer this, which is partly due to the KYC guidelines they must adhere to.
Also, popular social media sites like Facebook have prevented adult bar merchants from promoting their businesses on social platforms.
There is also the growing challenge of chargebacks, synonymous with this industry. Chargebacks are a thorn in the side of the industry as customers have a small loophole that they can use to reverse credit card transactions.
Spankchain developers state that there is only one technology that fixes all of the above-mentioned vulnerabilities. Blockchain. How can blockchain technology be used to transform the adult entertainment industry?
One of the great things about Bitcoin and blockchain technology is decentralization. The idea is that no central bank or central authority controls the blockchain, the underlying technology behind cryptocurrencies. Essentially, it is a permanent ledger of transactions that are stored on remote computers called nodes. In this case, cryptocurrencies like Bitcoin can offer trusted peer-to-peer payments with low fees compared to traditional payment gateways. It’s worth noting that some cryptocurrencies allow cross-border transactions at no cost.
Anonymity is another characteristic that makes blockchain popular among adults in the entertainment industry. In the real sense, the adult entertainment industry thrives when retailers and their customers act discreetly. In general, customers are not happy to leave a trace of their personal information online. And blockchain technology enables anonymous transactions, a big boost for the vice industry. While virtual coins like Bitcoin allow for pseudonymous transactions, others like Monero and ZCash are truly anonymous.
Fast and affordable payments
With this in mind, a number of companies in the adult niche are using cryptocurrencies as their primary payment method. If a survey conducted by VogoV in 2018 is a measure, the convergence of the adult entertainment and cryptocurrency industries is fast moving. The VogoV survey found that 470 adult video sites accept cryptocurrency as the preferred payment method. This includes PornHub, the largest pornography website that has since partnered with Verge and PumaPay to process payments.
CoinDesk reported that adult entertainment retailers are turning to Bitcoin payments, which are now faster and cheaper thanks to the Lightning Network, a scalable layer that runs on the Bitcoin blockchain.
As a result, payment startups like OpenNode and CoinGate processed 68,970 and 1,400 Lightning invoices over the past year. At the same time, Lightning analytics company 1ML.com announced that 11,554 Lightning Nodes are online, showing a revival of BTC as a payment method.
However, these are not the only vulnerabilities that blockchain technology is addressing in the vice industry. Many practical use cases are found, including a reward model.
In recent years, blockchain-based reward models have achieved significant success in other industries. They are now finding their way into the adult entertainment space.
Basically, adult content platforms reward viewers with free tokens that they can redeem and use in the ecosystem. Most adult content websites, including sex toy stores and pornography sites, use a reward system to encourage their customers to return.
The adult entertainment industry and the blockchain industry have a long history of interactions, but the innovative use cases of blockchain show an opportunity for convergence. As more and more blockchain-based solutions emerge, experts are optimistic about a thriving symbiotic relationship between the two industries. Two years ago, Charlie Lee, founder of Litecoin, said he was delighted to see the lucrative porn industry adopt the blockchain.
In summary, the blockchain industry benefits when it processes the millions of dollars in adult entertainment. At the same time, the “vice” industries are benefiting from a novel technology that enables them to be safer and prosper.