The Backpage Effect: Why the Sex Industry Thrives on Bitcoin

Backpage.com is a website like Craigslist, although it is more scandalous and provocative. The site was well-known for allowing sex workers to post solicitations. In 2015, the site was alleged to be permitting prostitution and propping up a sex trafficking ring involving youths. These charges were never validated, but the fallout caused a shift in the way the peaceful sex industry uses money and does business. Bitcoin is now one of the main forms of currency fueling this enterprise. So how did this happen? 

Also read: Research Shows How Bitcoin Can Be Attacked Via Internet Routing Infrastructure

Following a several months of alleged Backpage solicitations, the U.S. government got a whiff of this supposed illegal activity. The government claimed they found evidence of a child sex trafficking conspiracy. They immediately took legal action against the website. They arrested the CEO and other executives, and leveled charges of pimping. After an ongoing legal battle, the charges were eventually dropped.

The judge said, “Congress has precluded liability for online publishers for the action of publishing third party speech and thus provided for both a foreclosure from prosecution and an affirmative defense at trial. Congress has spoken on this matter, and it is for Congress, not this Court, to revisit.”

For anyone unfamiliar, this occurrence is reminiscent of Ross Ulbricht’s story. Ulbricht supposedly ran the underground market called The Silk Road. He was condemned as the “Dread Pirate Roberts” and given to two consecutive life sentences, because people on the website allegedly sold drugs and other contraband. Why was Ulbricht sentenced and the Backpage CEO’s charges dismissed? This act was believed by many to be a grave miscarriage of justice.

Needless to say, the “adult” section of Backpage was promptly removed by the company, because they could not combat the State’s extralegal action against them. For clarification, Backpage removed their adult section not because of any wrongdoing, but because government agencies kept bullying and harassing them. It is obvious the voluntary sex workers still use the page under the dating section, but that is part of a broader, evolving story.

Insult to Injury on Backpage; The Counter-Economy

Adding insult to injury, MasterCard and Visa shut down transactions on Backpage.com. It appears they also cancel many transactions that have anything remotely to do with the industry. The credit card companies did this because they fear getting tied up in child pornography or trafficking, especially in the United States. A Motherboard article verified this move:

VISA and MasterCard pulled out from Backpage.com, the second largest online hub for classified ads behind Craigslist.

This action caused a ripple effect. Countries, where prostitution is legal, felt the repercussions. This was especially true in Australia. The actions of government, as well as major credit card’s rejecting transactions, caused sex workers to migrate underground and embrace the counter-economy.

This underground railroad of workers has brought with it a chain of negative repercussions. Sex workers and prostitutes now rely on roaming the streets, discovering pimps, risking their life with random clients, or taking their chances using the dark web to promote their business. When they had more direct and public access to their clientele online, there was less risk involved.

In response to government and central credit card holders thwarting their business, sex workers have also turned to Bitcoin to fund their activities.

This consequence of government action on the sex trade has been referred to as the Backpage Effect. The Backpage effect posits that after Backpage solicitation was thwarted, all workers returned to the streets—or more furtive online markets—armed with Bitcoin to fuel their licentious enterprise.

Bitcoin and the Sex Market

Even though sex workers have had to submit themselves to working the streets and or secretive online markets, bitcoin has helped conceal their activities. It is true that bitcoin is not fully anonymous, but it has allowed for quasi-concealed payments in the sex trade. It has indeed helped protect the sex workers and maintain some semblance of privacy.

Additionally, credit card industries have also affected the legal sex conglomerates in the U.S. These industries have also started using Bitcoin. For example, the adult firm Naughty America has teamed up with Descent in order to make transactions much easier with less legal risk.

The industries have turned to cryptocurrency, namely bitcoin, because it is not centrally controlled, and a central institution like a creditor cannot shut down the transactions. The sex business retains control over their funds regardless.

A Breitbart article said,

“Bitcoin cyber currency seems to have taken over the sex trade. With no central bank or embarrassing payment processing trail for authorities to follow, bitcoin provides the ultimate financial anonymity.”

The Thriving, Crypto Love Industry

There has not been a lot of developments in the industry as of late, but we do know the Backpage effect has altered all facets of the sex trade. It has caused Bitcoin to become a force in the sensual markets. Many acts of prostitution or underground lovemaking occurs through channels within cyberspace, helping to curb violence and prevent sex workers from possibly having their money stolen.

Some workers said they even prefer digital coins to cash, because trading cash after a romp in the sheets seems “dirty.”

Thenextweb.com publication captured a sex worker make this comment back in a 2014 article. The worker said, “It would make me a lot more comfortable if they took any form of cryptocurrency that is semi-anonymous. It feels dirty passing cash at the end of our time together.”

Not to mention, the semi-anonymous nature of Bitcoin keeps most sex workers safe from law enforcement. In an economic ecosystem where governments crush businesses that leverage online resources that make the sex industry safer, the natural fallout is for escorts and prostitutes to scamper underground and use new methods of payment.

Cryptocurrency, especially Bitcoin, has thus become a staple. It will likely remain this way, even if websites like Backpage are allowed to return to business. Matter of fact, things would probably improve even more for sex workers. They would be able to keep their affairs public and use bitcoin. This would greatly reduce harm to the escorts and prostitutes involved in this trade.

What do you think the future of the sex industry looks like? Let us know in the comments below. 

Images courtesy of Shutterstock and Backpage.com

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