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How Bitcoin is Infiltrating the Black Markets of Porn, Pot and Gambling

How Bitcoin is Infiltrating the Black Markets of Porn, Pot and Gambling: Andrew Paterson / Alamy

Andrew Paterson / Alamy

It’s easy to understand why Saffron Bacchus turned to Bitcoin. The Montreal-based filmmaker makes amateur porn with her husband, self-produced and self-financed through her website. The tone is sensual, silly and unmarketable; she’ll dress up as Catwoman and wear an inflatable bra or turn herself into bimbofied version of Daphne from Scooby Doo. It’s a fetish site, but it’s also cute and homemade. Her business thrives without any overarching demands from corporate interests. As such, traditional banking options for collecting money from customers didn’t make much sense.

“Typical payment processors put all kinds of restrictions on what you can sell and limit taboos. With Bitcoin, no one can tell you what you aren’t allowed to sell,” says Bacchus. “You know money you’ve received is yours and can’t be held or taken back, and there’s total privacy for the consumer.”

Bitcoin has certainly become more mainstream and less rebellious with the years—you can now book Expedia flights and buy Microsoft apps with the cryptocurrency—but it’s unregulated, cash-like nature still makes it a favorite amongst the saltier corners of the self-owned pleasure trade.

In a sense, there’s no difference to what Bacchus is doing than your friendly neighborhood cash-only coffee shop does. Both are eschewing rapacious credit card companies to maximize profits. The difference is that Saffron runs a digital marketplace, which means her product is available to anyone in the world. When you promise an anonymous, difficult-to-trace transaction, a whole world of unlicensed possibilities open up.

Ryan Haver runs bustabit.com, which, by his estimates, is the second most popular Bitcoin gambling site on the internet. Last year he estimates the site made 800 BTC, which translates into roughly $500,000. “You can gamble without any ceremony,” he says. “You just deposit Bitcoin, play with Bitcoin and withdraw Bitcoin, while normal casinos want extensive identification and details.” An average online casino takes “two to eight percent” in fees, but Bitcoin sites don’t answer to the same masters.

“The main difference about running a Bitcoin gambling site, is you don’t need to convince a bunch of middle-men to allow you to process money,” says Haver.

He also contends that the laissez-faire nature of the currency requires some ardent self-policing within the community. Bitcoin gambling sites use a transparent algorithmic statute colloquially known as “provably fair.” Essentially, it allows patrons to verify that their losses were legitimate by allowing access to open-source code showing the nuts and bolts of each dice roll. The market may be uncontrolled, but it does lead to better collective bargaining options for consumers.

“I [gamble] with bitcoin because I understand how the system works and feel like I have control over how anonymous I want to be,” says Aaron, a Bitcoin gambler who mostly plays Blackjack and bets on esports. “If you know how to use Bitcoin it’s stupid easy. You don’t even have to create an account. Some quicker forms of gambling like blackjack requires one confirmation before you can start using your money. It takes about 10 minutes. Getting your cash back out is just as easy. Request your money and it will be sent to you in about two minutes.”

Bitcoin gambling falls into predictably dubious legal standing. If betting online is legal in your state or country, then there isn’t any specific reason gambling with Bitcoin isn’t juridical. But Aaron lives in California, a state which houses a number of casinos but prohibits online games, so when he plays on Bitcoin sites he’s technically breaking the law. That doesn’t matter, because the clandestine nature of the cryptocurrency keeps his name clean.

“I’m afraid that [regulation] will happen and gambling will get more cumbersome, but I’m not really afraid of getting into trouble,” he says.

That same philosophy can be applied to virtually any other contraband. An anonymous millennial in Britain tells me he uses Bitcoin to purchase marijuana. He logs into an untraceable marketplace using a program called Tor (which allows its user to browse the Dark Web) and uses services like Bittylicious to turn his cash into Bitcoin. From there, the process is basically like internet shopping.

“You log in to the market, put products into your basket, pick shipping options and place the order. Most sites have an escrow option so you can hold your Bitcoins until you receive your delivery,” he says. “Your drugs (or whatever else) normally lands on your doorstep in a couple days to two weeks, depending on what it is and where it’s getting shipped from.”

The customer tells me he’s never bought drugs from a street dealer because that process seems intimidating. Like others, he’s drawn to Bitcoin for the anonymity and the convenience. “I can read reviews from previous buyers, compare options and contact sellers with any querie. The whole process is really not very different from ordering anything else online. If you’re sufficiently clued up, buying drugs with Bitcoins (or other cryptocurrencies) online is far safer and easier than the real-world alternative.

That’s the free-market utopia of Bitcoin. Drugs, gambling or porn shouldn’t be anyone’s business. Governments are slow, out-of-date and needlessly conservative. There’s people using their hard-earned cash in private, surreptitious poker games around the world. Applying those principles to a global network doesn’t seem all that disconcerting.

However, there are a couple exceptions. Michael Cargill owns Central Texas Gun Works, and since 2011 he’s been selling firearms with Bitcoin.

“It’s no different from cash,” says Cargill. “For some people it’s more about security, but you still have to fill out a form and do a background check.”

He’s right. Technically there’s a pretty stark correlation between buying a gun with Bitcoin and buying a gun with a stack of bills. But most of Cargill’s Bitcoin sales come from the internet. Whether you’re okay with someone wiring camouflaged funds across cyberspace to purchase a deadly weapon comes down to your own personal opinions about mercantilism.

To be clear, Cargill isn’t mailing guns directly to private addresses. They arrive at gun stores where the customer picks them up, thus guaranteeing that there’s some human interaction involved in the sale. It’s reassuring, but it still asks some important questions about the flexibility of Bitcoin. Its unregulated nature empowers independent consumers and vendors in an economy that’s often biased and unfair, but it also can be easily exploited for some unsavory gains. There’s also no cap to how far it could go.

“Historically cash has been used for every nefarious thing ever, but cash itself isn’t inherently bad. With cash there’s literally no paper trail either, whereas with Bitcoin you need to be pretty skilled to be able to separate your identity from your transactions,“ Bacchus says. "If anything, it’s a lot easier to get caught.”

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