Bitcoin's Future Could Be In Porn

In keeping with its barely legal mystique, the future success of virtual currency bitcoin may lie in porn.

Bitcoin, an electronic coin that exists only on computer servers and is not backed by any national government, has skyrocketed in the past few weeks, seeing an exponential rise in both price and popularity. But the currency has a serious problem: Very few businesses actually allow consumers to pay using bitcoins, making them about as valuable as Monopoly money for everyday use.

Enter pornography.

“Generally speaking, porn is an early adopter of anything related to new technology. If you look back, they were the first to adopt many of the new video formats,” said Fred Ehrsam, a former Goldman Sachs currency trader who left a desk in New York to create Coinbase, a company that processes bitcoin payments for merchants.

But there’s more to it than the adult entertainment industry’s historical interest in emerging sectors. Bitcoin, Ehrsam explained, was born as a passion project of computer programmers with a penchant for libertarian politics.

“A weird mix, frankly, of Internet nerds and privacy advocates were the early adopters,” Ehrsam described them.

A sizable number of those early adopters happen to run businesses that provide online hosting or website design services, two products that pornography businesses, like others with major web presences, use in spades. If porn sites start to see they can pay their suppliers in bitcoins, they will likely be willing to accept the currency themselves.

“It’s definitely a natural avenue,” Ehrsam said.

Bitcoin enthusiasts say consumer demand to use the virtual currency is also there.

Kacper Cieśla, a computer programmer in Krakow, Poland, has been trading bitcoins for years. He set up four computers inside his apartment to create the electronic currency from thin air back in late 2010.

“The porn industry is a perfect candidate to prompt adoption,” Cieśla said, explaining that bitcoins are nearly as untraceable as cash, which would make them valuable to people who don’t want their purchases tracked.

“I really don't know much about the profile of an average Joe who pays for porn, but if that was me, I would not like to have this listed on my credit card statement,” Cieśla said.

Only a handful of adult websites currently accept bitcoins, but the operator of one such site that began taking payments in the currency this week says Cieśla is right on the money.

“Because bitcoin functions pretty much as cash, it has a vast advantage over other options,” said Amelia G, who refers to herself as “chick in charge” of the erotica site BlueBlood.com.

G’s website began accepting bitcoins as payment on Wednesday. To promote the new initiative, she offered free BlueBlood.com T-shirts to the first 100 people who signed up to use the service.

A few did, G said, but they turned down the T-shirt: “They told me it would kind of defeat the purpose if they still had to put their mailing address in an online form.”

G says she's a true believer in the staying power of bitcoins and isn't worried in the risks associated with being a technology pioneer.

“A dollar bill is worth something only because we believe in the value of it," she said. "But at the end of the day, it’s a piece of paper: a really cool, high quality piece of paper."

Ehrsam, the Coinbase founder, agrees. “Bitcoin is something that unless the entire Internet shut down, it’s never going to go away,” he said.

He might as well have been describing online porn.