Earlier this year, the digital cryptocurrency bitcoin received some negative publicity when Tokyo-based Mt. Gox (which was once the world’s largest bitcoin exchange) filed for bankruptcy. No less than $460 million had disappeared from Mt. Gox, presumably stolen by hackers.
But despite security concerns, bitcoin (which was introduced in early 2009) still has an abundance of supporters in both mainstream and adult e-commerce. Mainstream giant Overstock.com has predicted bitcoin-related sales of $10 million-15 million for 2014, and the long list of adult companies that have started offering bitcoin as a payment option in 2014 includes Naughty America, Playboy Plus, Wicked Pictures, the SCORE Group, Porn.com, SKWEEZ Media and DominicFord.com. Verotel, a major Internet payment service provider (IPSP), is now accepting bitcoin. And MetArt is accepting payments via both bitcoin and litecoin (another cryptocurrency).
I anticipate many adult content providers will adopt bitcoin. We also think we might see a surge in litecoin this year and plan to accept litecoin by the year’s end. Bitcoin is here to stay. -SKWEEZ President Jamey Kirby
Steve Ranieri, president of the Las Vegas-based SNR Productions (known for adult webcam sites like ClassyCams.com and CamWithHer.com), cited “low transaction fees,” “anonymity” and “no fraud or chargebacks” as some of the reasons for the company’s decision to add bitcoin to its payment options. “When we process a bitcoin transaction, it only costs us about 1 percent, whereas when we process a U.S.-dollar transaction, we’re paying 10 percent or even more in some cases,” Ranieri explained. “Chargebacks, as most adult website owners know, is a major concern — and having 0 percent chargebacks is definitely a huge plus. Also, for a consumer on an adult website, having anonymity could be the difference between making a sale or not.”
Savvy adult webmasters have learned to think internationally, and SKWEEZ President Jamey Kirby said that accepting bitcoin facilitates the Santa Monica-based company’s ability to attract customers in different parts of the world. “Bitcoin has no international boundaries,” Kirby asserted. “Credit card payments for U.S. companies processing international transactions pay a premium fee. With bitcoin, there are no premium fees for international order processing. We are getting steady orders using bitcoin as payment.”
Kirby continued: “I anticipate many adult content providers will adopt bitcoin. We also think we might see a surge in litecoin this year and plan to accept litecoin by the year’s end. Bitcoin is here to stay.”
Not everyone who has used bitcoin for adult-related billing has continued to do so. The Prague, Czech Republic-based affiliate program ReallyUsefulCash.com, for example, abandoned bitcoin billing in February due to poor conversion. And the Dallas-based DallasNovelty.com (which specializes in online sex toy sales) quit accepting bitcoin — at least for the time being—because of what Nick Mahler (director of sales and purchasing) describes as reliability concerns. “Since implementing bitcoin transactions, we have decided to pull it from the payment options until the processing is more reliable,” Mahler explained. “The biggest issue is finding a good service to convert bitcoin into the dollar because there are a ton of shady companies.”
Nonetheless, Mahler said that DallasNovelty.com hasn’t ruled out the possibility of accepting bitcoin again at some point. “I think bitcoin will come back from all the bad press and mining schemes because it is the future,” Mahler said. “Just like when PayPal started, everyone was skeptical about how it worked. We are keeping an eye on the markets and news and will add it back in the future, but we’re not sure when that will be.”
In January, DominicFord.com became the first gay porn company to accept bitcoin — a decision that founder Dominic Ford said was partly motivated by the company’s desire to protect customers’ privacy. “We decided to give bitcoin a try because there are people who don’t want a porn site showing up in their credit card history,” Ford noted. “Plus, bitcoin appeals to a tech audience, who may or may not pay for their porn.”
In 2013, the Bangkok, Thailand-based Ladyboy Inc. broke ground when its websites LadyboyInc.com and FemboyJoy.com became the first shemale-oriented porn sites to offer bitcoin as a payment option — and so far, Ladyboy co-founder Jack Srikot has not regretted that decision. “To our surprise,” Srikot recalled, “it was a quick and painless set up with Bitpay, taking less than 24 hours to have us up and running. We received our first batch of bitcoin sales within 30 minutes of posting in Reddit, and the overall response has been great. The bitcoin community has been very supportive.”
Ladyboy didn’t lose faith in bitcoin after the security problems Mt. Gox suffered — if anything, Srikot asserted, that scandal underscored bitcoin’s resilience. “Right now, bitcoin is getting a lot of bad press, especially with the recent Mt. Gox fiasco,” Srikot observed. “It did drop in value, but it’s now holding steady despite all the negative press. To us, that shows the real strength of bitcoin and shows that it’s probably not going anywhere.”
Clement, CEO of the Seattle-based VideosZ.com, said that many people continue to be nervous about paying for porn with a credit card—and that is one of the reasons why VideosZ is glad to be offering bitcoin payments. “Everyone of age should be able to enjoy our videos, but many people are unable or unwilling to use traditional payment methods,” Clement stressed. “Bitcoin offers a new choice to consumers without traditional payment methods.”
Clement added: “It is relatively easy to set up bitcoins as an accepted payment method. So we believe that the adult industry will see many more sites accepting them over the coming year.”
How much of a future bitcoin has in either adult or mainstream e-commerce remains to be seen—and Dominic Ford said the verdict is still out on whether the cryptocurrency will increase or decrease in popularity. “Bitcoin is at a precipice right now,” Ford asserted. “It will either take off completely or fail miserably. I don’t see that there will be a middle ground. The challenges to bitcoin include the recent bitcoin theft and countries that have banned the currency. These hurdles make it a little difficult for the currency to achieve the kind of status it wants as a ‘real’ currency. But, the idea is clearly interesting to a lot of people, which makes me feel that bitcoin — the most mature of these types of currencies — has a fighting chance.”