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Culture War Roundup for the week of April 22, 2024

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Dispatches from the War on Horny/Payment Processors: the other shoe has dropped for Pixiv.

A year and a half ago, Pixiv made signs that they'd be clamping down on content on some of their services to appease Visa and MasterCard. Today, Pixiv announces that US and UK users will face restrictions on content they can upload. (Specific details here.)

Currently remains to be seen how much this affects the Western artists who are on Pixiv, but it doesn't bode well. Some think this portends a coming era of digital pillarization, and while I won't rule out the possibility that things will get so walled off that VPNs become a necessity, it's hard to say how likely that actually is.

EDIT: This may be the rationale for the change.

This is the kind of problem that crypto currencies were meant to solve.

To elaborate:

  1. Cryptocurrencies are a bit like cash in that transactions are never reversed (I know it can be done, but its mostly not done). This is important when the products might be embarrassing and for digital goods which can't be fully "returned" once you have access.
  2. Cryptocurrencies do not have to actively endorse all the transactions that go through them. If a government doesn't like a transaction going through a traditional payment processor, they can lean on and pressure the people running that payment processor.
  3. Cryptocurrencies can have a degree of anonymity. Bitcoin doesn't have great anonymity, large-scale actors like government can figure out who owns specific wallet addresses. But personal anonymity is pretty easy compared to credit cards. Its not a payment to pornhub on your financial statement, its a payment to wallet [string of characters]. Which is often enough to hide from girlfriends/wives.

I'm not sure if I'm supposed to have sympathy for these websites/users, because the failure of traditional payment processors to handle this sort of thing was recognized and predicted before cryptocurrencies existed. When bitcoin/cryptocurrency was first released/invented it wasn't a bunch of people saying "oh look at this cool toy, we have no idea what its for, but it seems neat!" No, they were specifically saying "yay! we have solved this hard problem of digital payments that has been plaguing us for the last decade on the internet! These are the cool things we will now be able to do: [same list as above plus other things]."

For any kind of business that once needed cash to function: switch to crypto or die a slow death as payment processors leave you.

Is there a crypto coin that is actually practical for this? The first one everyone thinks of is bitcoin. But bitcoin is slow, it has huge transaction fees (about $25 right now), and like you said it's not that anonymous. Etherium is better (about $1 now) but that's still not great for a use case where most people just want to tip a few bucks, and fewer people have heard of it. There's probably some altcoins that work better, but I don't know if there's any others that have widespread adoption so that non-technical people have heard of it and will trust it. Plus you have to, you know, convert it back into fiat, because at the end of the day that's still how we pay for things in the real world.

I don't know any of the practical details/solutions. The companies that sell sketchy products should have been trying to figure this stuff out for the last decade. If they'd dumped a cumulative 1 billion into solving problems like these how many roadblocks would remain? That is just 1% of the industry in a single year.

They didn't do that so obviously a bunch of roadblocks and practical problems remain in place.

Bitcoin has not been slow, nor has it had high transaction fees, for quite some time now. If you want you make a payment in Bitcoin you use something called an L2, or a layer 2, (an example is called lightning).

This is fast and with negligible transaction fees. Bitcoin L1 is still used as a final settlement layer.

This is mostly transparent to the end user, btw. The interaction is “pay Alice”, and the underlying technology is as opaque to the user as TCP, or various caches and proxies are to a person posting on this forum.

Ah cool, this is the first I've heard of that. Seems like great tech, but how much adoption does it actually have?

I think PayPal (ironically) made a big deal about adopting Lightning a few years back.

I think the bigger problem for shady companies switching to crypto is that they are going to have expenses they cannot pay in crypto, necessitating entities that will swap their crypto for fiat. These entities are almost certainly, if they do business in the US, required to abide by KYC and AML laws. Maybe randos looking at the blockchain don't know address X is Pornhub, or whatever, but whoever is changing Pornhub's crypto into dollars has a legal obligation to know. So the angle of attack can easily shift from payment processors to whoever is doing their currency exchange. Crypto is censorship proof as long as you only ever have to use crypto but that's not a sustainable state of affairs for most people or businesses.

These entities are almost certainly, if they do business in the US, required to abide by KYC and AML laws.

Wouldn't Pornhub (or whomever) and its affiliates be complying with AML rules if they did KYC on customers who pay via crypto? And therefore whatever crypto Pornhub uses to convert to fiat to pay its bills is clean? Or, at least, not their liability?

Yes. The problem isn't the Pornhub customers identity (although that is a general problem in crypto) it's that whoever is doing the crypto->fiat conversion for Pornhub needs to know who Pornhub is and so needs to at least tolerate their business. The benefits of being anonymous (or pseudonymous) when using crypto disappear once you need to turn the crypto into cash.

Yes, agreed. In fact, you probably have less anonymity when you use crypto given all of the KYC intersected with blockchain analytics.

(Yes yes I'm aware of Monero)

There is always El Salvador?

On September 7, 2021, the Bitcoin Law came into effect and bitcoin became legal tender in El Salvador, making it the first country in the world to do so.[24] As part of this adoption, the government began requiring all businesses to accept it.[25] Under the law, transactions in bitcoin are not subject to capital gains tax, and foreign bitcoin investors who invest over ₿3 in the country are eligible for permanent residence.[26]

It seems quite easy to interpose a cut-out for crypto-to-fiat conversion, so that your only real exposure is to tax authorities. The only challenge is ensure there are enough socially acceptable crypto use cases that you don't draw too much attention.

I am not sure what you mean by a "cut-out." Like, a third party that works with the crypto exchange doing the conversion instead of Pornhub? Unless that third party is also paying all of Pornhub's cash bills it seems like that would be the same as working with the exchange. I guess the idea is the exchange might object to Pornhub but not the third party?

Yes, something along those lines:

I guess the idea is the exchange might object to Pornhub but not the third party?

When big money's at stake, plausible deniability is usually all that's needed to keep things moving.

The problem with crypto is that it's used for a lot of fully illegal things, and so the government has cracked down on it quite a bit. It's also somewhat difficult for the average person to use, at least marginally more complicated than something like Paypal. Then there's the issue of risk, where plenty of people use crypto as a form of speculation so you can never be sure if the crypto held will have the same value as before unless you're using a stablecoin. Then there's the risk of exchanges just running off with your money like FTX did.

Most people beyond the small niche of ideological libertarians only use crypto when they're doing something sketchy or illegal, otherwise conventional banking is the easier option with far more guarantees for standard transactions.

Then there's the risk of exchanges just running off with your money like FTX did.

This risk can be fully mitigated by following the mantra "Not your keys, not your coin".

Are you suggesting everyone just not use exchanges, or only use exchanges that let you still "hold your keys"? That's fine for committed crypto enthusiasts, but most people just want the financial system to work hassle-free. It's like the difference between an iPhone and some hacky Linux system.

I'm suggesting that you use exchanges to convert your coins and then immediately move them to a wallet under your direct control. Coins shouldn't be left on exchanges for extended periods of time.

I mostly agree that crypto is not very useable. I personally don't use it.

My post was originally just that first sentence, and as I tried to write anything after it I just kept expressing frustration at these companies and users of crypto that have wasted it.

Going through the problems:

  1. Not easy to use.
  2. Value is not stable.
  3. Funds are not secure.
  4. Risk of government crackdown on use.

I think the first problem is something that porn websites could solve. They are web companies, they know how to build useable things on the web. They have more resources than paypal and venmo had in their early days.

The second problem of stable value is solved (as you point out with stablecoins), but people just choose not to use it. Because speculation and gambling is more fun than a boring currency that just does its job of facilitating transactions. This could be better solved by the porn websites and other places that need crypto uniting behind a stable online currency.

I think the funds don't need to be quite so secure if you aren't using crypto as an investment vehicle or speculation device. Store your money in traditional banks / stocks / etc. And then just transact into crypto when it is specifically needed. And yet again porn websites are some of the places that are better suited for dealing with security issues. They still live in a wild west style internet, because they don't enjoy as many protections as traditional businesses. If some hacker messes with a bank website they could have the feds come after them. If that same hacker does the same thing to a porn website, they won't get in trouble at all.

Some governments, like China, have cracked down on crypto. I did have more worries about government crackdowns on crypto back in the early days. The US and western crackdowns on crypto have mostly been because of the problems of crypto. People getting their money stolen, or using it as speculation / asset bubbles. I don't think the Western government crackdowns would necessarily stop if those problems went away, but I think it would blunt a lot of the political momentum.


Most people beyond the small niche of ideological libertarians only use crypto when they're doing something sketchy or illegal, otherwise conventional banking is the easier option with far more guarantees for standard transactions.

The sum of my frustration is that if you are one of those businesses selling "sketchy" things this whole crackdown by payment processors has been predictable and visible for at least a decade. And the solution and their salvation has also been available and sitting there for a decade. Its like they've just been sitting on a railroad track waiting around. Now that the crossing bars are down and the warning lights are flashing they start screaming "no please! don't run me over!" Get off the tracks you idiots!

Maybe its just the nature of people to not treat upcoming disasters as real until those disasters are already upon them. If so, then I'll also say that its in my nature to have no sympathy for them when their lack of preparation bites them in the ass.

You make good points. I usually balk whenever I see crypto as the only option for payment, but if these businesses actually invested in a bit of digital infrastructure to make stablecoin payments hassle-free then it'd probably be fine. And considering the other option is "go out of business", it seems kind of strange that they haven't done this yet.