Can Bitcoin Prevent Another Ashley Madison?
By Poly Paradyme
The digital world is still reeling over the massive hack and leak surrounding Ashley Madison the adult, “cheating on your spouse” website. There have been heavy consequences for some that used the site.
Reports of extortion for Bitcoin are hitting the web. Homosexuals in foreign countries with anti-gay policies have been outed. We’ve also seen suicides connected to Ashley Madison. Marriages have likely ended this week, families likely broken or dealing with a very strange type of digital drama.
There’s no telling what else is going to come out of the collective hivemind scraping the data dump clean to expose their friends, politicians, and neighbors. Unfortunately for many this is going to be a long time story that develops further as the leak bleeds into reality. Ashley Madison is likely to be the news story that keeps on giving headlines for the foreseeable future.
This is not the first time a hack has compromised personal data (see: Target, Sony), but it is one of the most notable cases due to the scandalous and emotionally charged industry that it connects into. Once again we see a failure to protect customer data from external forces.
One of the largest tasks for any large corporation now is simply securing your server from malicious hackers. Hackers are resourceful, and can come from any corner of the globe to try to penetrate any system at any time of day. Some of them are bored and like the challenge, some of them are after digital gold – private and financial data.
There are server rooms out there more valuable than any single possession on earth simply due to the value of millions of personal records in centralized locations.
With such a series of privacy related scandals we have to ask ourselves why we continue to centralize our data and trust pieces of our lives to third parties. We have to provide our names, billing addresses, and identifying information simply to authorize our credit cards for online transactions.
Additionally, we have to provide a key to merchants that if mishandled can prove to be a massive headache for our bank accounts and credit scores. These companies have to follow restrictive guidelines because there is massive credit card fraud happening every day. Billions are spent covering the cost of fraud and theft worldwide.
Bitcoin solves both identity theft and credit card fraud in a variety of ways. The first being that no directly identifiable information is required to send or receive a transaction. If no physical goods are being mailed out, no address is needed. The merchant has little fear of fraud because Bitcoin has no chargebacks since it acts like cash.
Anyone who has your credit card information and address could spend your money. Contrast that model with Bitcoin. You cannot spend Bitcoin without the private keys to your wallet. Significantly, no additional identification beyond the private key is needed for Bitcoin to trust the transaction. Thus, Bitcoin users don’t need to provide their real name, address, and identifying information to verify funds for purchases.
However, all transactions on open-source cryptocurrencies can be analyzed because their blockchains are public. So if you buy porn with the same wallet you use for other things, your identity could be discovered.
After the Ashley Madison hack, adult websites would be smart to add Bitcoin to their payment systems, especially if they’re heralding themselves as private services: “We don’t need to know who you are” policies will attract the masses of anonymous adult service users.
The adult services industry and online dating scene needs to begin grasping at Bitcoin like the holy grail of payments. Their KYC standards can be lowered and they wouldn’t need your personal information. Their customers get to enjoy themselves without worrying about another Ashley Madison. OKCupid already has engaged the Bitcoin option for their users. Bitcoin Cam sites are starting to pop up on the web outside of the US. Xotika.tk had their largest tip ever of three Bitcoin for one model recently. Just short of $700 USD.
As icing on the cake, merchants can lower their prices since they lose less to chargebacks and fraud. Bitcoin is simpler for payments once set up. A QR code instead of lines of text, expiration dates, and other form filling. They pay for their service quickly and easily, their privacy is not violated. Everyone wins.
The issue of taxation and Know Your Customer laws has not been discussed widely for the adult industry within the United States. But actual legislation or taxation guidelines are still some time away. This will be the major benefit for Bitcoin acceptance in not only the adult services business but for many other companies in the US.
Private, cheap, digital transactions and online adult entertainment is a marriage made in heaven. It’s only a matter of time before Bitcoin payments dominate this industry.