Cryptocurrency was supposed to save the world, sort of. The adult industry has eyed bitcoin — and even some less reliable, flash-in-the-pan currencies known as “shitcoins” — as a way to break free from the tyranny of banking discrimination. People believed that crypto and adult were perfect for each other, but that marriage has yet to be consummated. Why?
Ease of Use Issues
The fees are cheaper than a credit card, wire and almost every other payment option, and the customer pays the costs — plus, there are no chargebacks.
The first time I heard the word “bitcoin,” I was dining at one of Mario Batali’s restaurants in Las Vegas. This was over a decade ago, before it became inconvenient to be Mario Batali. Between bites of the crazy obscure wild game we were eating, an early adopter was opening my mind to what was possible with crypto. At the time, only a handful of businesses would accept it as a currency. You could mine it and spend it — including, famously, on pizza — and people were even buying porn with it. However, just like now, most people weren’t doing anything with it because it was, and still is, less convenient than other options.
Many paysite owners have complained that integrating cryptocurrency is a waste of time, and that it made less than a 1% difference in their top-line revenue. That’s because the average person simply doesn’t use crypto. Crypto is harder to get and spend. To this day, you still can’t go to the convenience store and buy a case of beer and a bag of chips with it. Even when you do find a place to spend it, network fees make most everyday expenses unrealistic. Worse, waves of people and companies have lost bank accounts and credit cards merely for purchasing crypto with them.
But I Want My Porn Now!
Transacting in crypto can be exceptionally slow. At my company, we recently sent a batch of payments that took over 10 hours to arrive in publisher wallets. While this has been rare and outside our control, when many transactions are being made, congestion can cause transactions to be very slow to be confirmed and added to the blockchain. In my experience, it is never instantaneous and often takes several minutes or an hour.
Existing financial systems are exponentially faster than blockchain. Visa can process up to 24,000 transactions per second, while the bitcoin network processes a whopping seven transactions per second. Ethereum is slightly less embarrassing; it can handle up to 30 transactions per second.
It is obvious how this impacts the adult industry. Porn is literally an “impulse” purchase. Imagine paying for your shiny new porn membership, being “ready to go” — then waiting hours for your transaction to complete.
There Are Fees to Consider
The “lubrication” to make crypto easier for the masses to adopt is exchanges. Anyone can sign up and create a wallet to send and accept crypto. But you know what they say: “Not your keys, not your crypto.” These exchanges own your coins; you don’t. You are bound to their terms of service, and multiple crypto hacks at the exchange level have proven the risks. Most exchanges are heavily regulated, but it depends on your country. Many won’t even provide service to the United States because the regulations and KYC (“Know Your Customer”) standards are so strict that it’s easier to block the U.S. Also, exchanges that exist to make crypto simpler need to make a profit, so they charge fees on top of the existing network fees.
Even if you held your bitcoins outside an exchange, you still have to pay anywhere from $10 to $25 to send a payment, to pay the base network mining fee, and that fee fluctuates by the minute. So much for crypto’s promise of cheap, borderless transactions! This is precisely why it doesn’t make sense for a paysite owner to accept it, or for paysite subscribers to pay using bitcoin. The fees take up half the price of a subscription, and in some cases are higher than the subscription rate itself.
There are a lot of crypto coins that are cheaper to send and receive. For example, tether is an excellent alternative with much lower fees, and because it is a stablecoin pegged — no pun intended — to the U.S. dollar, it is easy to price and use as a cash alternative, and it is cheaper than accepting credit cards. The problem, however, is that all of these coins must, at some point, be purchased with a fiat currency, meaning traditional government-issued money.
Are Blockchain Transactions Really Private?
People say crypto is perfect for buying porn because it is discreet and private. This is true in some ways, but is there really such a thing as privacy in cryptocurrency? With a transparent and publicly viewable blockchain, anyone on the internet can see who is doing what. There are tools to trace every transaction and calculate how much money a wallet has earned or sent. For something touted for its privacy, there’s nowhere to hide. Plus, most legitimate exchanges perform full KYC for any significant transaction, when you want to turn all that digital currency into “real” money.
When it comes to cross-border transactions, knowing whom you’re paying is essential. It’s misguided to believe that entirely unrestricted crypto transactions between all countries is a smart or safe idea. The most obvious example of crypto gone wrong is Silk Road, but even unintentionally violating Office of Foreign Assets Control sanctions is a serious issue.
If you’re looking for privacy when buying porn, isn’t it just as easy to go to the store and use cash to buy a prepaid credit card? Why overcomplicate it? Plus, anyone can get access to crypto — even if they’re not old enough to legally view porn, which is problematic.
Volatility Is Scary
I won’t lie; I’m jealous of my friends with massive bitcoin wallets. Early adopters who have watched their coins skyrocket in value have accumulated wealth basically from nothing. They’ve bought houses and cars with it. Who wouldn’t be jealous? The other side of the coin — pun intended this time — is that these people live in constant fear of the next big crypto drop. It’s a roller coaster, especially when watching eight-figure multimillionaires get wiped out. It’s scary. Why would anyone want to transact with a currency worth $100 one day and $10 the next?
The standard solution to this wild volatility is using stablecoins or instant fiat conversion. So how is crypto a solution if it is so ridiculously volatile? Why should people immediately transfer to a stablecoin or a fiat currency, piggybacking on an existing world currency, for fear of not knowing how much their wallet will be worth tomorrow? If the only solution to volatility is to exit the coin or peg it to a standard currency like USD, then exactly what problem is crypto solving?
The Best Use Cases for Crypto Payments
Years ago, we became the first adult advertising network to start accepting the big three coins: bitcoin, ethereum and litecoin. There was concern that some nefarious advertisers would use it for bad things, but those fears were never realized. We had the opposite problem. Very few used it, and adoption was slow at the start.
But things have evolved. Fast-forward to last month, when almost 10% of our advertising was paid for by cryptocurrency. Adoption by publishers is even higher. We recently announced that we are now accepting 28 cryptocurrency payment options, and we have seen activity across multiple currencies.
Why does paying for advertising, a website acquisition, a domain or your hosting bill with crypto make more sense than using it to buy a porn membership? For bitcoin, it comes down to transaction size. The fees are cheaper than a credit card, wire and almost every other payment option, and the customer pays the costs — plus, there are no chargebacks. Bitcoin might not be suitable for adult consumer transactions, but it’s viable for business transactions.
Crypto continues to fail as a mainstream currency because most people use it as something other than regular money. It remains primarily a speculative investment rather than cash. Canada and other countries tax crypto not as income or a bank account, but like stock or other investments with capital gains: by each purchase and sale.
Still a Long Way to Go
Bitcoin was billed as solving a lot of problems, but it isn’t accomplishing those goals. Exchanges, the primary starting point for people new to coins, merely replace banks as the new gatekeepers and charge the same exorbitant fees.
When you consider the pros and cons above, and that over 90% of the world’s currency is already digital and only exists on computers and hard drives, you may wonder what problem crypto is trying to solve at all. Things may continue to evolve, but for now, its main advantages to the industry involve a fairly narrow and specific range of B2B transactions.
Juicy Jay is the CEO and founder of the JuicyAds advertising network, as well as the founder of Broker.xxx, which helps people buy and sell adult websites and businesses.
