Blockchain in the Sex Industry: Light at the End of the Tunnel? by@viceasytiger

Blockchain in the Sex Industry: Light at the End of the Tunnel?

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The sexual wellness market is expected to double over the next few years from $62 billion today to $125 billion by 2026. The sex-positive movement continues to change social norms and lift taboos worldwide. The adult industry is undervalued and underserved due to bias and many unrecognized market segments. But with the advancement and proliferation of blockchain technology, there's finally a light at the end of the tunnel for the industry, says author.Blockchain helps disintermediate the banks and payment gateways that are causing some big problems today and enables fixing the payment issues.
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Vik Bogdanov

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The sexual wellness market is expected to double over the upcoming years from $62 billion today to $125 billion by 2026. 

As the sex-positive movement continues to change social norms and lift taboos worldwide, the adult industry is set for a surge of innovation, offering several opportunities for businesses and users along the way.

Let's explore how disruptive new tech like blockchain can help the industry fight stereotypes and bias, add transparency, and ensure compliance, privacy, safety, and sustainability.

Bumps in the road

Despite several sexual revolutions we had in the past and the extremely high demand for sex-based content and products we see today, most of us still look at the adult industry through a negative prism. It's still considered to be something dirty, sleazy, bad, and shady – something to stay away from.

Existing businesses within the adult ecosystem in the United States and many other countries are completely legal. Still, the industry is heavily undervalued and underserved due to bias and many unrecognized market segments.

Some entrepreneurs have great ideas for sex products and services. Still, any entrepreneur in this industry will tell you that starting and running a business in this area is incredibly difficult. You cannot create a bank account, and most legal and recognized payment gateways will not work with you. PayPal and Stripe will absolutely not do business with anyone from the adult industry. 

Startups in the adult industry cannot promote their ads on most social media platforms like Facebook. Love hotels cannot advertise on Booking.com. There are so many judgments and stigmas out there that you really have to think twice before making an effort to tap into the industry.

However, with the advancement and proliferation of blockchain technology, there's finally a light at the end of the tunnel for the industry. 

Blockchain as a "rescue ranger"

Blockchain in the adult industry is all about security, empowerment, protection, and removing bias.

Let's think of the adult industry as proof of concept. Blockchain allows us to transact securely in a decentralized peer-to-peer marketplace and behave under a pseudonym, with this added element of trust. 

Every market would want that. Data privacy and security are becoming increasingly important. As well as the ability to make transactions respectfully and confidentially. These unique blockchain attributes create interesting and thought-provoking implications for future use cases and scenarios.

Blockchain allows telling people, "the data is yours, and you can do with it whatever you want." This helps create a robust and fair space for the future. Blockchain helps disintermediate the banks and payment gateways that are causing some big problems today and enables fixing the payment issues in the industry. 

Numerous studies confirm that users don't want to use their credit cards to buy sex-related goods and services. But the "intimate token" can be the source of trust they crave to solve this layer of problems while lowering barriers to entry.

Blockchain technology allows people to transact privately with built-in trust and transparency. 

Besides, blockchain helps facilitate and improve adult content creation and monetization, protect sex workers from discrimination and abuse, etc.

Let's dive deep to see how decentralization helps the adult industry overcome its most significant obstacles.

Blockchain in the adult industry: use cases

Payment processing

As mentioned above, most payment engines, including PayPal, do not work with adult products.

As such, sex industry players have to overcome many barriers because they cannot use conventional payment systems.

SexTech companies also have to pay almost twice as much processing costs as other non-adult businesses.

Creating a payment processing system for SexTech platforms is a huge market opportunity. On the other hand, blockchain can be a default platform per se.

The merger of sexual wellness products and blockchain will likely build a symbiotic relationship, allowing both adult entertainment and SexTech companies and consumers to access fast, low-fee, and anonymous payments.

Moreover, blockchain allows adult content platforms to implement reward systems where consumers receive tokens they can redeem and use for purchases.

For instance, SpankChain is a startup that pioneers Ethereum-based payments for adult industry models and merchants.

Legends Room LV calls itself "the world's only bitcoin nightclub in Vegas" that handles payments in digital assets such as BTC or the club's local currency, LGD. By scanning temporary tattoos with a QR code located on the strip dancer's body, you can pay for any of their services.

Allie Rae is a 37-year-old mother of three children who went from making about $84,000 a year as an ICU nurse in Boston to $1.3 million, thanks to her work on OnlyFans, which has more than 130 million users.

Last summer, OnlyFans struggled with an advertising nightmare. After banks began flagging and rejecting transactions on the site, OnlyFans announced plans to ban sexually explicit content – its core product. This decision was met with such a backlash that OnlyFans reversed course within days.

Rae felt "kicked to the curb" and never wanted to be put in that position again.

So she took action and founded WetSpace, a blockchain-powered adult entertainment platform, into which she has vowed to invest $1 million of her own money. As Rae describes it, "WetSpace will be a place where creators don't have to worry about "big banking restrictions and payouts."

"For people like me making millions of dollars, a thirty-day notice from OnlyFans would be the end of us. Crypto really feels like it's kinda it, otherwise, we're going to be controlled forever and who knows the kind of content they're going to continue to ban. They can turn you off tomorrow." Allie Rae

Adult content creation and monetization

Imagine that adult content creators could own both their media and content. Sex content creators need an infrastructure that would empower them to take control of their audience's data. This is the bright future of NFT in the ever-growing adult content market.

Non-fungible tokens or NFTs are defined as cryptographic and visually distinct assets. These tokens on the blockchain reveal the ownership of a particular digital item.

It's time for meaningful NFT utilities to be used by adult content creators. This is the industry that would benefit significantly from NFT marketplaces.

The adult content sector is the market leader in technological solutions. Therefore, it is logical that this sector shows significant interest in the crypto community.

One option for adult content creators to monetize their work is to sell video clips as NFTs. These marketplaces are familiar, and clips can be stored on the blockchain. Cryptocurrency allows secure transactions for buyers, especially when they want to make payments. NFT merchants can also make higher profits than many existing adult content platforms.

The power of NFT comes from the connection between creator and consumer. Consumers of adult content value personal connections to their subjects of interest, which is why real-world adult clubs are so popular. 

NFTs introduce an element of exclusivity. Everyone wants a simple solution without paying fees with every transaction. This solution will consist of peer-to-peer transactions that are very careful on the blockchain. In this model, the production and consumption of such content are more ethical and safer.

With NFT, you get something that can neither be damaged nor copied. In addition, you get access to an easily accessible market.

"I see NFT's as an opportunity to navigate consent within our creative work and utility of how it will be used to innovate SexTech. SexTech has a trust management problem to manage with the current web2 /centralized system," SX Noir

One of such adult NFT marketplaces is Proof of Peach. It provides a blockchain space for creators to have full autonomy of their creations and an authentic fan experience for their admirers.

Cryptotities is the world's first NFT charity project. 144 Cryptotitties popped out on January 4th, 2018, and became the 19th oldest NFT in the world. It donated 100 ETH to TheBreasties.org –"the first all-inclusive nonprofit organization that creates community for survivors, previvors, thrivers, and carevivors, impacted by breast and gynecological cancers." 

It's an excellent example of how adult industry actors can indulge in meaningful social projects and make a difference.

Safety and security of sex industry workers

It is incredibly unfair when an entire industry suffers from a lack of transparency and security, isn't it? 

Due to the nature of the industry, sex workers do not receive the respect and dignity they deserve and are often taken advantage of or put under stress. Although adult female models earn more on average than their male counterparts, they still don't reap all the fruits of their work's value.

Sex workers face discrimination, harassment, and other human rights violations. This is often the result of the lack of privacy and security but is also the result of a huge power imbalance in the workplace. As in many industries where the employer has all the cards, sex workers are often mistreated and underrespected.

Although prostitution is legal in many countries, there's still a high risk of assault and violence against prostitutes, especially when strangers pick them up on the streets.

Also, going with an unfamiliar escort is never safe as clients can be drunk or drugged and can do harm to a prostitute that remains unprotected. By verifying users, recording their transactions on the blockchain, ensuring maximum privacy, and at the same time connecting a reputation ranking system to their profiles, we can make the "world's oldest business" much safer.

Solving the problem of human trafficking

More than 20 million people are forced to work in the $150 billion illegal sex industry today. According to the UN, 79% of human trafficking involves sexual exploitation, with children accounting for 20% of all human trafficking. As such, it's a huge problem that must be addressed and solved. 

What does this have to do with blockchain? 

First, authorities worldwide say that human traffickers use crypto to conceal cash flows that could lead to their arrest. 

According to Carl Berry, Jamaican Deputy Superintendent of Police, "They [human traffickers] are asking for payment in bitcoin and other cryptocurrencies, which is a new factor that creates problems for law enforcement." In Jamaica alone, about 7,000 men, women and children live in captivity and are sexually exploited regularly.

Privacy coins designed to prevent identity tracking (like Monero and Zcash) are among offenders' favorite forms of payment. Criminals have started to use coins like Zcash that encrypt real sender addresses, making it nearly impossible to find merchant data patterns when used across multiple transactions.

While many cryptocurrency exchanges collect important data from the transactions they generate and seek to urgently solve the problems of anti-money laundering (AML) and modern slavery, some of the unique characteristics of cryptocurrency make it attractive to criminals who seek to hide their identity and cover their illegal actions. 

The pseudo-anonymity of cryptocurrency transactions, primarily through unregulated exchanges or peer-to-peer networks, can facilitate transactions not regulated by Know Your Customer (KYC) controls. Human traffickers use cryptocurrencies to buy ads or purchase premium memberships on review board sites. Some cryptocurrency community members specifically cater to human traffickers who advertise on Backpage and similar sites.

Although blockchain facilitates transaction anonymity within human trafficking, it's also used to "fight fire with fire."

While there are no personal identifiers, there are methods to identify the address owner, including 

  • analyzing blockchain activity for patterns that can give insight into a user's identity, 
  • using blockchain tracking tools, or
  • using data obtained from regulated cryptocurrency exchanges that collect customer data under growing KYC and AML regulations.

Using the information collected by crypto companies through advanced data analysis systems and artificial intelligence, we can better understand the scope, geography, and population of victims and combat modern slavery more effectively.

Here's an example of how blockchain-based tools can be used to detect and prevent human trafficking. 

In 2019, a South Korean citizen was arrested for working on the "Welcome to Video" darknet marketplace – the largest child porn marketplace by content volume. "Welcome to Video" contains over 250,000 child porn videos and boasts over a million video downloads. A group behind this darknet website, including some South Korean officials and their relatives, offered these videos for sale in bitcoin.

U.S. and South Korean investigators were able to trace the flow of funds on the blockchain to track bitcoin payments to the darknet website and identify wallets associated with the site's administrator. The investigation resulted in the arrest of 337 people worldwide.

Wrapping up

Stigma and taboos reinforce the lack of opportunities to protect people working in the adult industry. They are forced to do their business in the shadows and are exposed to personal safety and privacy risks.

Blockchain technology and the adult industry make a great couple with the potential for legitimation and empowerment. 

And what's your take on this?

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