Verge & PornHub: Who Pays For Porn?

Vlad Costea
  • Verge's partnership with Pornhub has resulted in a slump in the XVG price
  • The privacy coin can be used to buy premium subscriptions on the porn site, but are people really willing to pay for porn?

The recent Verge fiasco, which saw the Verge price increase 300% over a month due to a promised partnership with a "global organization with a vast network of high traffic sites” has come to a inveitable end. Upon hearing the partnership with PornHub, the price of the coin had nearly halved within an hour.

Verge's crowdfunding effort technically wasn’t an ICO, but last month the developers had asked for 75 million XVG coins. While it’s admirable that they requested their own cryptocurrencies instead of the traditional Bitcoin or Ethereum (though Verge is mostly acquired on exchanges where you trade your big cryptocurrencies), it was hard not to look at the initiative with a grain of skepticism. The announcement was worded in a mysterious, elusive, yet positive and promising way which implied that you may be partaking in something massive.

Buy The Rumour, Sell The News

The PornHub partnership certainly didn’t erect the candlesticks, and the price had a somewhat flaccid performance, nearly halving within an hour after the announcement.

The “Buy the rumors, sell the news” principle, which had already been mentioned in the technical analysis, applies in the case of Verge. High volatility was already expected, but lots of hopeful investors thought the mystery announcement would bring about the largest cryptocurrency collaboration to hit the market.

Verge XVG partner

Who Pays For Porn?

PornHub, Brazzers, and the entire members of the MindGeek conglomerate really are big players of the internet and run multi-billion dollar businesses. However, the biggest problem can be found in the business model itself: these websites make most of the money from advertisements and affiliate programs, not membership purchases. As many Twitter users have already pointed out, nobody really pays for porn. 

Verge XVG partner

Sure, the prospect of getting involved into this new and exciting world of cryptocurrencies is great for a business like PornHub and to them it’s nothing but free publicity in the tech world. The fundraiser that the Verge developers have undergone must have financed the integration of payments, the cheesy YouTube video which hyped the partnership in a strangely futuristic way, and all the subsequent media campaigns which hype Verge as the first crypto to become part of a huge payments deal (it’s rumored that Asa Akira, Bridgette B, and Alex Lynx will be a part of the high-profile activation campaign in Silicon Valley and New York). 

But its unlikely to increase the demand for XVG unless Verge fans deliberately start purchasing PornHub Premium memberships just to prove their point, which doesn’t do much good to the world of cryptocurrencies.

Had the partner been Amazon, eBay, Netflix, or any big retail website which has an economic model that’s exclusively based on sales, it would have been a huge deal. But as long as the largest majority of people simply watch porn for free and contribute only to the ad revenue, this partnership is just another dose of hype which paves the way for the real upcoming partnerships.

But hey, what do we know? The Litecoin founder Charlie Lee seems to also be interested in making Litecoin a payment option on PornHub. But unlike the Verge guys, if the partnership comes true, the Litecoin Foundation won’t pay a single dime and just be happy that their coin has found a new utility among the others already available.

What Exactly Is Facebook’s ‘Libra’ Cryptocurrency? What Are Its Challenges?

The new decade is set to launch with one of the most ambitious cryptocurrencies yet, with the social media giant Facebook’s ‘Libra’ expected to start trading in a few months. The new coin certainly has the muscle behind it: in fact, it has an entire Libra ‘Association’ that consists of companies such as Spotify, Farfetch, Uber, Lyft, PayU (Naspers’ fintech arm), and Calibra. Along with a plethora of other venture capital firms spanning the blockchain and telecommunication networks, and some non-profit organisations.

The ‘vision’ of Libra is put in no uncertain terms on its official website. That is to create: a stable global cryptocurrency built on a secure network… enabling a more inclusive global financial system.

Libra’s Ambitions, and How It Will Work

What Facebook and the other giants hope to achieve is to connect everyone in possession of a mobile phone to the global financial infrastructure. These are what Facebook considers the ‘unbanked’, those who do not have access to a bank, but who do have a mobile phone.

Libra would give these unbanked masses the ability to transfer money across the world instantly, on a secure network and at a low cost. If implemented, Libra would be an example of ‘leapfrogging’ technology, in which developing societies bypass what traditionally would have been a necessary technological evolution (i.e. the establishment of more banks) in order to get to an end point.

Libra’s Security Other and Concerns

Current proposals put Libra on a blockchain that encompasses around 100 computer servers, at least that’s the ambition. The blockchain algorithms will be programmed to work as what’s known as a “command-line programme”, something that will make scripting and interactive usage possible; with an interface of consistent options and file formats. For further security, Libra is also thought to be using Byzantine fault-tolerant consensus approach. This means that, in theory, the wider blockchain cannot be compromised even if one of the servers is disrupted.

But not everyone has faith in the new cryptocurrency, even with all the financial backing it has. Again, in theory, it should be almost impossible for a cyberattack to disrupt Libra’s blockchain, as a third of its 100 servers would have to be disrupted before such an attack could even be launched.

The Libra Association has also stressed that each of its members will have their own server, and that it will be supported independently by them and secured. Furthermore, the blockchain will have its own consensus-based algorithm. Meaning that transactions must be approved by two-thirds of all the servers before going ahead. This should make transactions more measurable and efficiently processed. Facebook has even said that Libra would be capable of processing a thousand payments per second, which would make it about 500 times more efficient than Bitcoin is today.

Libra and the Issue of Regulation

Despite the proposed ambitiousness of Libra, the United States and European Union regulatory bodies are yet to be won over. They already do not like the strength of pre-existing cryptocurrencies. Some countries have even outright banned them.

To get round this problem, the Libra Association has marketed its currency as one that has been specially designed to be friendly to regulators from the get-go. They insist, for example, that Libra is a stablecoin. If true, then this should alleviate some national fears for its potential implications on monetary policies. Still, there are concerns that if the Libra is very popular, it could become “Too Big To Fail”, which of course is a phrase still haunted by the 2007-08 economic crises.

The reason for these TBTF anxieties lies in the fact that Libra is intended to be collateralised by other currencies and some debt obligations. If there was ever a run on Libra, it would lack a centralised bank to mitigate the damage.

Libra’s special status means it will be a global currency and not specific to any one nation. So it is only natural that some national governments have expressed concerns about how it will impact on their unilateral monetary policies. Libra’s global status assures that it will fluctuate differently to any one other currency, meaning it will be shaped by its underlying assets, and may even resemble something like an index in volatility.

One way to address these fears may be found in a report conducted by the Association of German Banks. The AGB has suggested restricting Libra for payment transfers only, and not giving it the ability to provide loans. this would prevent the cryptocurrency from becoming a money creation system in its own right.

Libra — Will It Be Safe to Invest In?

Cryptocurrencies have enjoyed successful investment status and investment is predicted to keep increasing until 2020 at a minimum. Blockchain investments in the Libra cryptocurrency should be considered as a hedge in a diverse portfolio to protect against falls in other types of investments. Of course, at the moment Libra is not an asset that can be invested in… yet. But once it comes online, there’s no reason it won’t enjoy the success of others (not including the decline of Bitcoin, which may be in response to more competition from other cryptocurrencies).

Once online, Libra should be safe to invest on optimised cryptocurrency trading platforms that can handle automated and manual trading.

Libra and the Future Market

iven other fears including loss of tax revenues and transaction fees, traditional banks have already acknowledged that change is coming. In its ‘Future of Finance’ report, the Bank of England has already said that “hard infrastructure” needs to make room for, and can work with, “soft infrastructure” (cryptocurrencies). But what needs to be in place is a “well-respected” judicial and legal system, along with clear regulations, standards and rules.

As for the Libra cryptocurrency, no one can doubt the ambition of such a project. But whether it is something that the market actually needs is still a question that no one as of yet has an answer for.

Featured image by Tim Bennett on Unsplash.


This article was written by Neil Wright of Oakmount Partners Ltd, an investment consultancy firm based in Essex, UK.