24. June 2021

Cryptocurrencies and the Porn Industry

Cryptocurrency would be the ideal means of payment in the adult industry: no traces on the bank statement, no high settlement fees. But things are more difficult than expected.

At first glance, cryptocurrencies seem made for the porn market: customers could use them to purchase videos or access without revealing their real identity or credit card details. There are also no traces on the bank statement that might raise questions with the spouse.

And digital currencies could also be an alternative to established payment service providers for vendors. After all, many – like Paypal – don’t do porn billing at all, while others – like credit card companies – charge high fees for it. Moreover, with cryptocurrencies, customers have no cancellation options; coin transactions typically cannot be reversed.

The advantages of such systems are so obvious that various entrepreneurs and companies have been trying to profit from them for some time. For example, one push that also attempted some media buzz in the spring of 2018 was the digital currency Eroiy.

Much promised, little implemented

In press releases, the project, which is based on the blockchain cryptocurrency NEM, was hyped up as a potential “gamechanger for the erotic entertainment market” – with its own app and debit card, both planned for October 2018. To date, the official website is adorned with the logos of partners such as the Hamburg-based sex portal Fundorado, promising to accept eroiy payments.

And by the end of last year, at least ten relevant crypto exchanges should be trading with Eroiy, the creators planned at the time: under the item “Exchanges we contact”, the website once featured the logos of market-leading trading venues such as Binance.

In the meantime, however, the logos have disappeared. As of May 2019, the digital currency is not on offer on any relevant exchange, you can’t pay with it anywhere – neither for porn nor for anything else. The app and the debit card have also come to nothing. Even Eroiy’s social media sites seem deserted. The alleged “gamechanger” seems to be one of numerous crypto projects that ran out of steam immediately after the so-called Initial Coin Offering (ICO) – often to the annoyance of investors who were able to buy digital coins for real money at the ICO.

Porn producers meet debt collectors

But there is someone else who believes in the Eroiy: in Mallorca, at a hotel in Palma, where two conferences called Eurowebtainment and The Crypto Summit will end on Wednesday. The conferences have different names for marketing reasons, but practically they are the same event.

The events bring porn producers into conversation with representatives of collection agencies, or marketing people with erotic models like Micaela Schäfer, who is the “Special VIP Guest” here. The conference program includes talks such as “Crypto & Blockchain: Grow up or fuck up”, but also parties and a boat tour with “cool drinks and hot girls”.

On the hotel terrace with a harbor view, one meets Walter Hasenclever, who is the spokesman for the Berlin erotic fair Venus, but also the PR responsible for Eroiy. He says that “certainly everything did not go well” and that with the original team they could not “realize what we wanted to realize.” But Hasenclever also says there is a new team and that market demand is still there: “There is a plan.”

From Sex Coin to SpankChain, experimentation is underway

Part of that plan is Gunnar Steger, who invokes the image of the “phoenix rising from the ashes” when talking about Eroiy. He is the organizer of the double conference and managing director of the company C-Pay from Vaduz in Liechtenstein, where the project management for Eroiy now lies.

Gunnar Steger is a networker, much longer and better than the crypto industry he knows the adult entertainment business and the trappings. He has seen trends and business models emerge and disappear. About his entrepreneurial life, he says things like, “I didn’t even use the dialer and probably lost millions because of it.” He is alluding to controversial dial-up programs that, around the turn of the millennium, also caused high phone bills for many people interested in porn. Many who were in the market at the time made them rich.

At Steger’s events, as some who have been there many times tell us, the question has always been how to make money with the digital – ideally in a morally justifiable way. For some years now, cryptocurrencies have been the tech sector in which many dream of building “the next Paypal”. Or just anything with the often mystified blockchain technology that gets people to give them money.

Although the porn industry has a reputation for being particularly open to innovation and driving it forward, crypto projects have not yet transformed the industry – really big things are still missing, although names like SpankChain, Sex Coin and Intimate Token are being experimented with.

Even the simple use of digital currencies as a payment option is not going as well as some providers had hoped: One problem in everyday life, for example, is that Bitcoin transactions take a long time compared to other payments – which is annoying because porn purchases are often impulse purchases. For another, dealing with digital currencies still overwhelms less tech-savvy people. When it comes to porn and Bitcoin, the first thing that might come to mind for some is a widespread scam.

Pornhub only takes special currencies

Digital currencies can already be used on some sex portals. While Fundorado, for example, where Eroiy payments could eventually be possible, has so far dispensed with cryptocurrencies altogether, the U.S. provider Naughty America allows payments in Bitcoin and Litecoin. Around five percent of subscribers use cryptocurrency, it says when asked.

  • The Canadian portal Pornhub so far accepts only three special digital currencies called Verge, Tron and Horizon. Vice President Corey Price says it remains a challenge to make the user’s payment experience seamless and enjoyable and “less confusing.” Cryptocurrencies are used to pay for “less than one percent of purchases” on Pornhub, he said.
  • Stephen Yagielowicz of industry magazine “XBiz” summed up when asked that the initial enthusiasm in the industry had faded. In view of the manageable user interest, most merchants would save themselves the effort of accepting cryptocurrencies.
  • Payments with Bitcoin and Co. are also nothing new today, says Yagielowicz – in the past, there were still crypto users who spent some coins quasi as a reward when someone introduced such a payment option. And for users who care about not giving away personal information, it’s easier to visit a free porn site than to get into cryptocurrencies, he says.

The exchange is still troublesome

He sees it as the biggest hurdle on the provider side that often an at least annoying exchange of cryptocurrency into dollars, for example, is still necessary: it is not yet far that providers can pay things like their models, the web host and also their employees in cryptocurrency, who then in turn use it to pay for their food or rent. However, Yagielowicz sees opportunities for projects that are more than just payment mechanisms in the long term.

Gunnar Steger and Walter Hasenclever see Eroiy as a bet on the future, pointing to their entrances into the adult industry. At the moment, for example, there is a cooperation with the company Verico from Malta, which verifies users with the help of a blockchain solution, they say. And before the end of the year, they will announce progress with Eroiy. However, they do not provide any details.

The project website proudly announces that the Eroiy makers can be met on their “world tour,” including at the Eurowebtainment conference. However, the event from the previous year is still being advertised.