Why Crypto Needs to Start Taking SpankChain Seriously

On New Year's Day, Giselle Palmer, scantily clad, turned on her webcam, and started her sexy show.

Offhandedly she told her hundreds of viewers that she had studied computer science and math in college, and from that moment on the chat room was filled with questions about non-sexy topics from computer science to calculus. If that seems strange for a group watching a camgirl seductively striptease — it normally would be, but Palmer was posing in front of a group of crypto enthusiasts.

"I don't think Giselle was prepared for how nerdy our community is in crypto," said Ameen Soleimani, CEO and co-founder of SpankChain, a blockchain-based startup focused on the adult entertainment industry, which sponsored the show as a technical stress test.

As the mathematical comments continued, eventually Palmer teased the audience, asking what they wanted to get out of the cam session – boobs or math?

"There was just a wall of people being like 'Math! Math! Math!' in the chatroom," Soleimani said.

He called it a hilarious experience, one that aligns with how most people (that only hear about the idea at a high level) view the project: hilarious in that it mashes together something geeky with something explicit.

But that'd be callow way of looking at the project.

While there's been a handful of adult entertainment-based ICOs proposed, SpankChain is the one that gets mentioned privately fairly regularly, primarily because the project's underlying technology – running micropayments through payment channels – is solid.

Yet, SpankChain remains on the fringes of the public conversation surrounding ICOs.

Soleimani told CoinDesk:

"Even though we crush it in word of mouth, people aren't willing to publicly take a position on our business, because they fear it will have an impact on their reputation, even though they will shill shitcoins to the ends of the earth."

And true enough, none of the investors CoinDesk spoke to would go on-the-record about their interest in SpankChain.

This is obviously frustrating for the SpankChain team, especially with the silence coming from a community that touts itself as financial rebels and digital anarchists. Nevertheless, the company was able to raise 19,840 ETH (worth $6 million at the time) selling roughly 30 percent of the one billion total "spankcoin" pool in an ICO that ended in mid-November.

And the company is using that money to continue developing its payment system and the livestreaming site it will use to show that system off, whether the world is ready or not.

Give me that booty
"Saving it in the spankbank" wasn't a double entendre before Spankchain.

But to the company, SpankBank is just one part of a technology stack that makes cheap, quick and easy micropayments to performers possible.

It starts, though, with the company's spankwallet (formerly called "vynos"), an in-browser wallet that connects to an ethereum payment channel. This wallet allows users to load ether into a payment channel with SpankChain and use that value to tip performers.

Ethereum's fee mechanism, gas, is only charged when users open a new payment channel or exit a payment channel, otherwise users can make as many transactions as they want (or can with the amount of value they put into the channel) without a fee from there.

In building this, SpankChain seems ahead of ethereum developers more broadly (like those behind Raiden or FunFair) who have been working on building useful payment channel technology for the blockchain for some time.

The spankcoin token then is used for staking to the SpankBank, and it then regularly emits another token called "booty."

Booty can also be used to tip performers, which helps becuase it's the only token that can be used to pay the service fees accrued by using the SpankChain cam site.

SpankChain's service fees, for hosting the site and doing administrative work, such as verifying all performers are of age, are slated to be 5 percent of the performer's revenue, which compared to the up to 50 percent mainstream porn sites charge, is likely very attractive to talent.

Performers can also stake their own spankcoin to receive booty or exchange ether for booty to pay their fees.

More information about the economics under SpankChain can be found in the white paper, but Soleimani is proud to have built such a complex system while others around the team, including ethereum developers themselves, struggle to go live with payment channels. though it basically works now, user experience has been a key concern.

"A lot of work has gone into just designing it," he said, adding:

"This project is led by a team of technologists who have been thinking about and figuring out scaling over the last year and a half."

Micropayments eruption
But as other crypto-based micropayments efforts have displayed, getting people to make small value payments frequently is easier said than done.

"Micropayments is a thing that is deemed kind of impossible," Sergey Ukustov of Machinomy, the Russian payment channels startup that SpankChain partnered with to build its platform, told CoinDesk. "There is too much psychological burden."

In other words, a person is always going to ask themselves if any form of media is worth whatever amount of money a site has asked them to pay for it. And that burden generally prevents them from ever spending anything.

Yet, Ukustov believes content of a sexual nature is more highly valued by consumers and will, in turn, push consumers into going ahead and making the payment.

"That makes porn related use case the most ideal use of micropayments you could ever get," he said.

As such, Soleimani sees the platform and its token being broadened out to other adult content sites using what he calls a spankcard. As long as the sites are integrated with SpankChain, users will one day be able to use the same payment mechanisms to tip and spend from site to site.

That's a longer term initiative. First and foremost, even before the entire SpankChain system goes live, Soleimani is focused on showing adult entertainment stars that they can earn better money by adopting crypto.

A spunky stunt
To this end, SpankChain has developed a preview game called CryptoTitties, a pun of the insanely popular cat breeding ethereum application CryptoKitties.

The concept is simple: performers will post an image of their decolletage on the site with an ethereum address and fans will tip the ta-tas. The image that gets the most tips will win.

"The tips will go straight to their browser wallet," Soleimani said.

Soleimani and his team spent their time at the Adult Video News Awards in Las Vegas in January taking topless photos of adult entertainment stars and setting them up with ethereum wallets, so the site will have plenty of photos to choose from right away.

"We just want them to experience receiving money and not having them go through anybody," Soleimani explained. "For them it's going to be incredibly powerful to receive payments straight to their wallet."

While he, and the rest of the community, wonder whether CryptoTitties can get as much traction as CryptoKitties did, Soleimani said really the project is about community building and recruiting performers.

Because above all else, Soleimani wants to see SpankChain live in the next couple months.

And he's willing the trade some decentralization for that. He pointed to the company's use of a centralized video streaming solution, and the fact that users will have to trust SpankChain in some regards since there will initially only be one payment channel to pay into. SpankChain will then send the correct amount of crypto to each performer directly.

"A lot of these decentralized protocols are going to take some time to get going. I am willing to make every single tradeoff for centralization just to get this thing out faster," he said, adding:

"I want it out in two months not three years."