Bitcoin, Porn and Marginalised Communities
Porn is probably the first industry that will be changed forever by Blockchain and other marginal, fringe communities will follow
If value proposition and incentives remain constant, transaction costs will probably make or break a trade². For a simplistic example, if you are on Amazon and choosing between mobile phone covers that have nearly identical properties, the same brand equity and same price, chances are that you would go for the one that offers free shipping with Amazon prime, than the one for which you have to pay shipping costs. Now imagine if Amazon is biased towards traders from a specific region of the country, and decides to not list their products under Amazon Prime. The traders from the region would be affected adversely.
Centralised organisations are subject to the same kind of biases that human beings are subject to, but ideally to a much lesser degree. After all, that is what made the founding of “organisation” such a profound moment in human history. Individuals are subject to myriad biases of thinking that cloud our judgement and analysis. The value of organisations lies in the fact that other individuals would be able to correct our biases by poking holes in arguments and pointing to obvious fallacies of thinking. But no central organisation can adequately represent the myriad world views, realities and best interests of every community. This is a problem.
Take the example of the porn industry. Payments in the porn industry has a couple of problems and these problems have persisted for the lifetime of internet porn:
- Banks and payments processors have been known to levy high transaction costs on porn performers and content providers. They are also known to close down or deny services to the industry. These transactions costs can go as high as 25–50%. Thats higher than the highest tax brackets.
- Privacy is an obvious concern that people who pay for porn have.
Porn is a huge industry and that is an understatement. So its baffling that this problem has not been solved yet. Part of the reason is that people who work in the porn industry don’t have the cultural clout and acceptance of most other industries. Apple Music tried to pull of not paying musicians for the first 6 months of release but was brought to its knees by Taylor Swift and “Swiftians” (did I do that right?). But, industries such as porn are never part of the conversation, they are looked down upon, morally policed and as a result people working in the industry remain exploited by payment providers, banks and content owning websites. Essentially they are easy prey due in partly to the apathy of the general community.
Cryptocurrency is able to solve this problem.
Take the case of Spankchain. An adult entertainment ecosystem built on the Etherum network. It would serve the purpose if it was explained by someone with skin in the game (no pun intended ofcourse), so over to Janice Griffith:
With SpankChain, we’ll be able to take money that is funeled into keeping sites up and running and instead reinvest it into our own community. Right now, on clipsites, performers like myself will make anywhere from 25–60% of the money we actually earn. Imagine getting only 25–60% of every check you ever made! But SpankChain is going to change that, because this decentralized system doesn’t have costly transaction fees, we’re able to completely eradicate the standard fees that exist today and establish payments structures that are much more reasonable.
Our industry can’t be fixed by outside sources alone, we need to come together. With SpankChain, we’ll be putting more money into the pockets of talent and working hands — instead of payment processors and middlemen — leaving models with more power over their careers and options in how they want to build their legacies. Control over your career trajectory is the ultimate power. Today, there are big hurdles to creating your own content site, such as finding hosts and payment processors to support the site, which seriously inhibit this potential for power and autonomy. I chose to work with the SpankChain team because they care about changing the industry for the better; with the utilization of blockchain, everyone in the adult entertainment field can make more money and stop supporting companies and organizationsthat shame us while charging us more than anyone else.
SpankChain can change the incentives of the porn industry. Consider this, one of the biggest problems in the porn industry is chargebacks. I’m guessing this happens for two reasons:
- Fear of shady payment providers
- Guilt and shame of watching porn
Now SpankChain will take out the middleman and connect the performers with the viewer directly. This may result in performers making porn “tasteful” for the viewer and offering better user experience. It is the same thing that happened when traditional distribution of content was disrupted by Facebook and Twitter. There are two things that happened in the case of social networks and will happen in the porn industry:
- The creator has direct relationship with the user
- There is zero marginal costs for serving users i.e no distribution costs, no transaction costs and only fixed costs are incurred¹ .
Power to the oppressed and the shunned
Blockchain can enable similar marginalized communities. This can be regions such as Catalunya, Kashmir or Chencheya, that are at war or dispute with centralized governments who have the ability to cut off resources to the region. It can also be the alt-right that is increasingly getting shunned by mainstream media sponsorships. It can be women in rural India who have to hide their money and gold from abusive partners. It can also be digital freelancers who are levied heavy charges by freelance marketplaces.
If you consider a larger scope, a large section of products that exist today have literally created customers. Their customers did not exist when the product was founded. YouTube did not have a bunch of cinema-verite creators itching to have a platform. They created a use case for the product. When Stripe was launched in 2009, Patrick Collison famously said “Our customers do not exist today”.
May be these marginal communities that exist at the fringes would be the first true users of crypto currencies in the wild. The users that do not exist today but will soon in the future.
[1] — This take the industry close to what Ben Thompson calls aggregation theory. I think it is much better explained by the creator. Read it if you want to learn more about how internet platforms have changed value propositions to publishers and users by changing the distribution model
[2] — Nick Szabo’s paper on the origin of money delves a lot deeper into this topic and is an interesting read that gives context to how trade works.
