Companies selling sex toys and webcam entrepreneurs may benefit from the cryptocurrency’s rise.
Though traditional financial companies are leery of these companies, digital currencies don’t judge.
New Ways to Pay
Traditional financial companies are often very hesitant of companies selling primarily sex related products such as toys or the more recent webcam industry. These small companies often struggle to be able to obtain loans, despite the fact that they are legitimate, legal businesses owned by individuals in good financial standing. The industry itself makes the finance industry uncomfortable.
That said, cryptocurrency is creating a whole new opportunity for this industry. Unlike in traditional financing such as banks and credit card companies, Bitcoin and other digital currencies won’t blacklist companies based on their industry, particularly when they are perfectly legal businesses.
Despite the hesitation of banks, sex toys present a very large sector. Technavio, a market research firm based in London, currently estimates that global annual sex toy sales are worth around $20 billion. By 2020, sales are expected to rise to $30 billion by that same firm.
Despite this high value, banks and credit card companies consider sex toys and other sex related products to be associated with a high risk. They combine these products with pornography websites and escort services, of which there are many legitimate businesses, but where there can also be cross-overs into legal problems as well.
Credit card issuers are also hesitant of this industry due to the chance of chargeback claims. Chargebacks occur when a cardholder claims that a transaction is illegitimate and requests a refund. There is an increased instance of chargebacks in the porn industry as people will frequently deny making the purchase when a spouse or someone else spots it on a credit card statement. This denial then becomes a call to the credit card issuer and a refund is made at the expense of the credit card company.
As a result of this increased risk, credit card companies consider pornography to be high risk. As they link that type of product with sex toys and webcam entertainment, all these forms of business frequently struggle with traditional finance companies.
Bitcoin and Ethereum
Digital payment tokens such as Bitcoin and Ethereum allow customers to skip beyond the traditional transaction intermediaries, paying directly with the cryptocurrencies. Customers also appreciate the fact that the purchases can be made perfectly anonymously, which means their transactions remain private.
That said, business owners often feel that while crypto might present an opportunity for the future, the tokens aren’t quite there yet. The issue at the moment is that transaction costs remain prohibitively high and there is considerable concern over the security of the infrastructure which is known for freezes and cyber-attacks.