Adult Entertainment and Blockchain Technology

Dominik Hurum BACHELOR THESIS
Bachelor Thesis
From Stigma to Legitimacy:
A Theoretical Paper on the Combination of the Adult-
Entertainment Industry and the Blockchain Technology
Touro College Berlin
Written by: Dominik Hurum
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Abstract
There are numerous studies that go into detail about stigmas and legitimacy, but most of these have
failed to take into consideration how a combination of two industries might influence each other.
The adult entertainment industry has long been suffering from being stigmatised, greatly restricting
its potential, whilst the Blockchain a rather new and exciting technology has not yet been able to
build up legitimacy. In this paper I have analysed various theories, and have used these in order to
support my theoretical hypothesis that the combination of the adult entertainment industry with the
Blockchain will allow the adult entertainment industry to lose its stigma, whilst allowing the
Blockchain to move towards legitimacy. Through the integration into an already established
industry the Blockchain is able to create awareness and spread its use throughout various markets,
ultimately allowing the Blockchain to gain legitimacy. On the other hand the adult entertainment
industry can benefit from the Blockchain by changing its core attributes, allowing its users to
consume content without the fear of being associated to the negative stigma. The historical
background of the adult entertainment industries technological drive highlight how the adult
entertainment industry could once again act as a driving force of technological development
potentially spreading the Blockchain technology throughout various industries.
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Table of Content
Abstract 3
Table of Content 4
Introduction 5
Methodological Approach 8
The Blockchain Explained 9
What is the Blockchain? 9
How does it work? 10
The Seven Design Principles of the Blockchain Technology (Tapscott & Tapscott, 2018) 12
Blockchains Lack of Legitimacy 16
Controversial Industries and their associated Stigma 19
The Stigma of Adult Entertainment 20
Combination of the Adult Entertainment Industry and the Blockchain 22
Stigma Dilution 23
Tribal Stigma 24
The need of Legitimacy 30
Eroiy 32
Pornography as a Driving Force of Technological Development 34
Causal Eﬀects 37
Conclusion 43
Appendix 46
References 48
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Introduction
Technology evolves very rapidly, every year the products we buy are faster, more convenient and
even smarter. One of the biggest steps in today’s technology has been the development of the world
wide web. In 1989 Tim Berners created a document in which he laid down his vision for the internet
as we know it (Berners -Lee). Now 30 years later another world changing technology is grasping
more and more attention, the Blockchain. The Blockchain technology has the potential to impact
entire industries. One of the many things that the Blockchain enables are cryptocurrencies, which
will be explained thoroughly throughout the paper.
In order to show why this topic is so interesting I would like to give some background
information of myself. I started investing into cryptocurrencies approximately two and a half years
ago, back then I did not really know what I was doing, but I became very enthusiastic about it . The
more and more I read about this great technology, the more fascinated I became. I educated myself
rather thoroughly, reading a lot and having a lot of discussions with colleagues. I loved it, after a
while the prices of almost all coins had exploded and I felt like I was going to be rich. I was wrong,
as fast as I made the money it was gone again. But by that time cryptocurrencies was more than just
a way to make money, it became clear to me that the technology behind cryptocurrencies, the
Blockchain could have a huge impact on the future, which is why I believe everybody should get to
know about this fascinating technology and its great potential, as I believe it will be part of
everybody’s life sooner then later.
Frederick Hayek, a free market economist believed that the government should step back
and not intervene with the economy, as less intervention by the government would lead to more
economic freedom (Kangüleç). He believed that when people are free to choose, the economy
would run more efficiently, as all the government is doing is distorting price signals which are send
to buyers and sellers, which therefore doesn’t show the actual supply and demand of the market,
leading to inefficiency of resources (Kenton, 2019). Furthermore he believed that the government
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should not have the power over currencies, and therefore over money but rather that companies,
individuals, everybody basically should have the right to create their own currencies (Library of
Economics).This is exactly what cryptocurrencies do, they are individual currencies which compete
which each other. The market regulates itself and people have the right to choose which currency
they would like to use, shifting the power from the governments back to the people.
A change like this can have a huge impact on many different industries. This implementation
of cryptocurrencies is only one example of the many things the Blockchain could enable. The
Blockchain, especially cryptocurrencies are not very trustworthy to a lot of people, especially after
the recent collapse in prices, people have difficulties trusting a technology which they know so little
about. This lack of trust and knowledge brings me to the conclusion that the Blockchain is suffering
from a lack of legitimacy. Legitimacy is defined throughout a lot of different papers, Parson (1960)
defines legitimacy as the „appraisal of action in terms of shared or common values in the context of
the involvement of the action in the social system“ (Parson, 1960: 175) whilst Maurer (1972) and
Suchman (1995) have slightly different definitions, leading me to define legitimacy as a generalised
perception or assumption that the actions of the entity is desirable, proper, trusted, or appropriate
within some socially constructed system of norms, value, belief and definitions, in regards to its
past, present and future. The definition of legitimacy will further be examined in the section
„Blockchains Lack of Legitimacy“. Although legitimacy has been defined throughout a lot of
literature such as Maurer (1972), Suchman (1995) and Parson (1960) there is a lack of a clear
understanding of whether or not a company or industry can be called legitimate, whether or not the
Blockchain falls under this definition will be examined further in this paper.
The Blockchain is a rather controversial technology, which led me to formulate my research
question in order to figure out how such a controversial technology could impact controversial
industries. Controversial Industries is a broad term so let me explain what defines a controversial
industry. According to Cai, Jo and Pan (2011) controversial industries are industries such as
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„tobacco, gambling and alcohol, as well as industries involved with emerging environmental, social,
or ethical issues“(Cai, Jo, & Pan, 2011 : 468). As controversial industries and the actions taken by
them do not fit into the society’s norm, people would rather avoid being associated within this
industry, as this could be damaging for their reputation (Vergne, 2012). In other words an industry
that is not accepted by certain parts of the society could be called Stigmatised. According to the
research paper of Hudson and Okhuysen (2009) a core stigma is „when some social audiences
discount or discredit an organisation because of core attributes, such as outputs, routines, or
customers, that are in perceived violation of social norms“ (Hudson & Okhuysen, 2009 : 134). The
definition of Stigma will be further explained in the section „Controversial Industries and their
associated Stigma“. In order to get a more in depth understanding of how controversial industries
are suffering from stigmatisation I will be mainly focusing on one controversial industry, online
adult entertainment.
Due to the reason that I am personally also working in a rather controversial Industry I am
highly interested how a technology such as the Blockchain which is in need of legitimacy, could
impact controversial industries. I believe that the combination of a stigmatised industry and a
technology that is in need of legitimacy can solve each others problems, helping the Blockchain to
gain legitimacy and controversial industries to lose its stigma, as just like in maths negative
multiplied by a negative equals positive.
In the upcoming pages I will be explaining my methodological approach as well as stating
my hypothesis. Furthermore I will be explaining the Blockchain in order to create a greater
understanding of it’s huge potential, as well as showing its unique design principles and elaborating
its need of legitimacy. Moreover the adult entertainment industry will be introduced, and the stigma
associated with it will be evaluated. After having introduced the main areas of research I will be
discussing the possible combination of the adult entertainment industry and the Blockchain
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technology, as well as showing a possible real life scenario. Furthermore I will be sum up the causal
effects in order to assure a better understanding.
Methodological Approach
Many controversial Industries such as the adult entertainment industry are suffering by being
categorised as a stigmatised industry (Arlidge, 2002). People do not want to be brought in
connection with this kind of industry as they don’t want to be a part of the Stigma. For the adult
Entertainment industry it is highly interesting how they can get out of being associated with a
Stigma. On the other hand the Blockchain does not suffer from a Stigma but rather from the lack of
legitimacy. Throughout this paper I will be using theories in order to support or argue how the
Blockchain can move towards legitimacy, and how the adult entertainment industry can lose its
stigma. I believe that the combination of both of these industries might be the solution to the
problems they face due to the associated stigma and lack of legitimacy. Extensive research, such as
scientific articles from Hudson (2008), Hudson & Okhuysen (2009), Vergne (2012), Suchmann
(1995) and Dowling & Pfeffer (1975) in combination of my own experiences and gained knowledge
throughout working in both industries have brought me to following theoretical hypothesis:
H1: Both the Blockchain and the adult entertainment industry will benefit from their merger,
reducing the stigma associated with the adult entertainment industry, as well as increasing
legitimacy of the Blockchain technology.
I will be supporting and arguing my hypothesis using existing theories. Furthermore I will
introduce the Blockchain, as one needs a certain understanding of its huge impact, as well as
explain why it is in need of legitimacy. Moreover the stigmatisation associated with the adult
entertainment industry will be evaluated thoroughly throughout this paper.
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The Blockchain Explained
In 2008 a person apparently called Satoshi Nakamoto released a Whitepaper for a peer to peer
electronic cash system called Bitcoin. This technology was supposed to be a purely electronic cash
system which was released in a time of great uncertainty and unrest, shortly after the housing
bubble in the USA (Baghla, 2018). At that point in history a lot of people were blaming the
government and banks for the crises, giving Bitcoin the chance to unravel itself (Baghla, 2018). In
a time of little trust towards the government, Satoshi offered a solution which takes the power away
from the government and gives it back to the people. With the invention of Bitcoin came the truly
marvellous technology that ran the cryptocurrency Bitcoin, the Blockchain. Over that last years this
technology has developed into a life changing technology that has the potential to impact entire
industries, from „financial to manufacturing to educational institutions“ (Marr, 2018: 1). Although
the Bitcoin was the first major technology that used the Blockchain, this is only a minor use case of
the technology. Bernard Marr refers to a great example from Sally Davies, FT technology reporter,
in his article for Forbes Magazine „ Blockchain is to Bitcoin, what the internet is to email. A big
electronic system, on top of which you can build applications„ (Marr, 2018: 1).
The Blockchain is a rather complicated technology that one has to spend time researching
about in order to fully understand it. For your understanding I will be explaining what it is and how
it works.
What is the Blockchain?
„A Blockchain is an incorruptible digital ledger of economic transactions that can be programmed
to record not just financial transactions but virtually everything of value“ - Don & Alex Tapscott,
authors of the book Blockchain Revolution (2016)
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When breaking the Blockchain down to a more simple level, one can see it as a chain of
blocks, in which a block illustrates digital information and a chain represents a public database in
which this information is stored. These blocks are made up of digital pieces of information which
have three parts (Fortney, 2019) , I will be using an example from investopedia (Fortney, 2019) as I
find that this example is very useful to understand how the Blockchain works:
1. Information about transactions, such as the date, the time and the amount of your recent
purchase is stored on Blocks. (Fortney, 2019)
2. Blocks store information about who is participating in transactions. If for example you would
buy a product from amazon, the block would record your name along with amazon.com, Inc.
but instead of using your actual name, such as a credit card would do, your transaction would be
recorded without any identifying information using a unique „ digital signature“, which is
basically like a username. (Fortney, 2019)
3. Blocks store information that distinguishes them from other blocks. A unique code called a
„hash“ is stored in each block which allows each block to be held apart. For example if your
current purchase would still be in transit, but you would be buying another product, although
the details of the new transaction would look nearly identical the unique code enables one to tell
the blocks apart. (Fortney, 2019)
How does it work?
The Blockchain is made up of multiple blocks that are string together, when a new block stores new
information it is added to the Blockchain. In order for this to occur four things must happen
(Fortney, 2019) :
1. There must be a transaction
2. This transaction has to be verified. In the past there have been a lot of attempts of people to
invent electronic cash systems, that allow transactions to be made throughout the internet
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without a third party. No technology before the Blockchain has manage this, due to a fraudulent
technique called double spending in which the same amount of money is spend twice. Until
now a trusted third party was responsible for this, documenting records and transactions.
However with this method a central authority was always in control of all of your personal
information. Whereas on the Blockchain, this job is done by a network hundreds or even
thousands of computers, that could be spread all around the world, according to Blockgeeks
(2019) this verification could even run through millions of computers (Blockgeeks, 2019).
When you make a purchase, the network of computers checks that the transaction and confirm
the details of the purchase, including the amount of money, participants and the transaction
time. Every computer that runs this verification is then rewarded.
3. The transition made is stored on a block. Once the transaction is verified, your digital signature
as well as the Digital signature of the other participant of the transaction together with the
amount of money is stored in a block.
4. The Block has to be given a hash. As soon as all of the transactions within a block have been
verified, it is given a unique hash in order to identify it. The block is given the hash of the most
recent block added to the Blockchain. As soon as the Block is hashed it is added to the
Blockchain. Once the block is part of the Blockchain it becomes publicly available and can be
seen by anyone (Fortney, 2019). This also means that it is not possible to falsify a record, as
„falsifying a single record would mean falsifying the entire chain in millions of instances. That
is virtually impossible“ (Blockgeeks, 2019: Blockchain Explained, para 1).
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The Seven Design Principles of the Blockchain Technology (Tapscott & Tapscott,
2018)
According to the Book Blockchain revolution written by Don Tapscott and Alex Tapscott there are
seven principles which are implicit in the new era of the digital economy. These principles should
be a guide for you to understand the potential of the Blockchain and its potential to revolutionise
entire industries. I will be using these principles throughout my paper to argue how the combination
of the Blockchain and the adult entertainment industry could work, creating legitimacy for the
Blockchain and reducing the stigma for the adult entertainment industry.
1. Network Integrity
The Blockchain can ensure that when exchanging value directly with somebody the other party will
act with integrity. Acting without integrity is close to impossible, as the „Blockchain contains data
integrity and authenticity characteristics that can guarantee trust among untrusted parties as they
conduct digital transactions“ (Blockchain: A Matter of Trust : 1). The Blockchain solves the
problem of double spending, without the need of a central authority, using Proof of work
mechanism. Furthermore everything that is stored on the Blockchain is irreversible, and will be
preserved forever (Tapscott & Tapscott, 2018).
„Implications for the Blockchain Economy: Rather than trusting big companies and
governments to verify people’s identities and vouch for their reputations, we can trust the network.
For the first time ever, we have a platform that ensures trust in transactions and much recorded
information no matter how the other party acts“ (Tapscott & Tapscott, 2018: 33) Imagine being able
to save everything, 100% secure for everyone, who owns what? Who graduated ? Who made any
product? How many owners of a car have there been? The opportunities are endless.
2. Distributed Power
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Power is distributed across the entire peer to peer network, with no single authority in control. This
means that the system can not be shut down by a single party.“Perhaps we could save the crisis of
confidence and even legitimacy in today’s institutions by shifting the real power towards citizens,
equipping them with real opportunities for prosperity and participation in society, rather than
through PR trickery“ (Tapscott & Tapscott, 2018: 35). By using the Blockchain there is no need for
a central authority, imagine you want to send somebody money, the need for a bank vanishes as you
can interact with anybody you want, without the need of a central authority, disrupting the power of
the banks and other authorities and giving it back to the people (Blockgeeks, 2019).
3. Value as Incentive
In the Blockchain people who work, use or believe in it are rewarded. In the financial world as we
know it, managers often act in self interest, having damaging impacts on many people, which is
shown by Rutledge and Karim (1999), „a conflict of interest arises when individuals are contracted
in the economic interest of the firm yet are motivated to reach decisions which maximise their own
economic interests“ (Rutledge & Karim, 1999: 174). For example a company might sell personal
information about its clients in order to benefit from greater revenues. With the Blockchain, acting
in self interest directly benefits the entire Blockchain. When participating in the process of a
Blockchain one is rewarded with coins that run in this Blockchain, making the participant an owner
of this coin. As he wants this coin to be successful in order to benefit himself he has an incentive to
ensure the Blockchains success. The Blockchain offers „a platform where people and even things
have proper financial incentives to collaborate effectively and create just about anything“. (Tapscott
& Tapscott, 2018: 38)
4. Security
The Blockchain is extremely secure, by being a decentralised technology and using cryptography to
secure the Blockchain, it is close to impossible to be hacked. Furthermore it removes the need for
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made up passwords, which are often weak and easily hackable, and replaces them with private keys
which are a random combination of numbers and letters (Lisk Academy).
„Safety measures are embedded in the network with no single point of failure, and they
provide not only confidentiality, but also authenticity and nonrepudiation to all activity. Anyone
who wants to participate must use cryptography-opting out is not an option-and the consequences of
reckless behaviour are isolated to the person who behaved recklessly“ (Tapscott & Tapscott, 2018:
39).
5. Privacy
With no need for a central authority to control every transaction, there is also no need to know the
identity of the person you are interacting with. This means that people control their own data and
get to choose when or what parts of their identity they want to share with others. „It’s a short from
big data to private data“ (Tapscott & Tapscott, 2018: 45). When taking part in a transaction, your
name is not revealed, only your public address will be seen. A great example was made by
blockgeeks (2019), „ a person’s identity is hidden via complex cryptography and represented by
only their public address. So, if you were to look up a person’s transaction history, you will not see
„Bot sent 1 BTC“ instead you will see „1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1
BTC”.“(Blockgeeks, 2019: Pillar #2: Transparency , Para 2).
6. Rights Preserved
The Blockchain confirms the ownership of every single coin in circulation. Furthermore every
transaction made in irreversible, and can not be changed. This means that it is impossible to trade
what is not yours or what is not authorised to trade on behalf of somebody else (Tapscott &
Tapscott, 2018).
7. Inclusion
According to Forbes (McCarthy, 2018) 1.7 Billion adults don’t have access to a bank account. The
fees that are associated with micropayments are not only impractical but vastly overpriced making it
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extremely inefficient and expense. With the Blockchain there is no need for a bank account,
everybody that has access to a mobile can use this technology. The Blockchain significantly lowers
the barriers to having a bank account, reducing the transaction costs of every transaction to a
minimum no matter how high or low it is, allowing more people to participate in global trade
(Tapscott & Tapscott, 2018).
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Blockchains Lack of Legitimacy
Legitimacy is a very interesting topic which has been researched and written about a lot throughout
the last years. Although parts of the research address the same issues the definition of legitimacy
varies slightly throughout research papers. Maurer (1972) defined legitimacy as being the process in
which an organisation is justifying its right to exist to a peer to superordinate system (Cartwright &
Maurer, 1972), whereas Suchman defines legitimacy as „a generalised perception or assumption
that the actions of the entity is desirable proper, or appropriate within some socially constructed,
system of norms values and definitions“ (Suchman, 1995: 574). I believe that Suchman’s definition
is very accurate and appropriate in defining legitimacy, as his definition combines the most
important aspects of legitimacy stated by Cartwright & Maurer (1972) as well as from DiMaggio
and Powell (1983) which set the theoretical basis of legitimacy, but I would like to modify his
definition slightly. For me legitimacy is defined as:
Legitimacy: a generalised perception or assumption that the actions of the entity is desirable,
proper, trusted, or appropriate within some socially constructed system of norms, value, belief and
definitions, in regards to its past, present and future.
Admitting that my definition is nearly identical to the definition of Suchman, I believe that
the addition of „trust“ in the definition is crucial. How can a company that is not trusted be
legitimate? A lot of people are scared off the unknown, and wish to not interact with things that they
do not or have not heard of. Carleton (2016) defines this fear of the unknown as“ an individual’s
propensity to experiment fear caused by the perceived absence of information at any level of
consciousness or point of processing“ (Carleton, 2016 : 5). Imagine a company that acts
legitimately, according to Suchman’s definition, but lacks trust as it is rather new or is acting within
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a sector that is not entirely trustworthy. A perfect example for this scenario would be the
Blockchain.
The Blockchain technology, acts legitimately but is not understood by large amounts of the
population due to a lack of awareness (Mougayar, 2017). The vast majority of the population does
not know what the Blockchain technology is (Mougayar, 2017). In the past years the
cryptocurrency Bitcoin, which is running on the Blockchain, has gotten more media attention,
creating more awareness for itself and for its use. More and more people have slowly educated
themselves about this new fascinating currency, some have even invested into it (D, 2019). The
prices of Bitcoin had increased significantly throughout 2017, motivating more people to get
involved with it. Whilst educating themselves some people will have come across the technology
that drivers the currency, the Blockchain, whilst most people didn’t even know the difference
between the Blockchain and the Bitcoin. In December 2017 Bitcoin has reached its all time high at
close to 20,000$, after having increased in price from approximately 3500$ in September 17, 2017 (
Raw Data retrieved from tradingview.com). This immense increase in price has lured many people
into investing into the Bitcoin (D, 2019). After reaching its all time high in December 2017 the
Bitcoin had dramatically plunged in price to a low of approximately 3100$ in December 2018,
( data retrieved from charts using tradingview.com). This harsh fall in price has caused huge
amounts of people to lose devastating amounts of money. With this failed investment, the loss of
trust into the Bitcoin, and the Blockchain was inevitable (Annagolubova, 2018). On the next page
in Figure 1 you can see the trend of Bitcoin from September 2017 to the present, April 2019.
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Figure 1: Price Trend of Bitcoin throughout September 2017 to the present, April 2019 (Retrieved
from coinmarketcap.com)
The Blockchain is made offers many improvements and could benefits huge amounts of
people, but even so due to the lack of knowledge and the association to Bitcoin, the Blockchain is
not seen as trusted (Annagolubova, 2018). Therefore I perceive the Blockchain as lacking
legitimacy. This example also supports my definition of legitimacy, as although the Blockchain acts
according to social norms, values and beliefs, it is not perceived as legitimate as people do not fully
understand what this technology is capable of, as well as having a lack of trust.
„Legitimacy affects not only how people act towards organisations, but also how the
understand them. Thus, audiences perceive the legitimate organisations not only as more worthy,
but also more meaningful, more predictable, and more trustworthy“ (Suchman, 1995: 575). I
believe that the Blockchain will be able to move towards legitimacy, when combining itself with
controversial industries. This can work in many ways which I will explain and discuss later on, but
before doing that I will explain what controversial industries are and how they suffer from Stigma.
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Controversial Industries and their associated Stigma
Whether or not an industry is seen as controversial can vary between person to person. According
to Cai, Jo and Pan (2011) controversial industries are industries that are involved with social,
environmental or ethical issues as well as industries such as tobacco, gambling and alcohol (Cai, Jo,
& Pan, 2011). I would define Controversial industries as:
Controversial Industries: any industry that is not perceived as positive by the majority of the society
or is involved in emerging, social or ethical issues, as well as being harmful for a person and the
people around this person. This could include tobacco, alcohol, gambling, adult entertainment and
prostitution.
There are huge amounts of controversial industries, of which some are more accepted by the
society and some are less accepted. Although being stamped as being controversial and therefore
possibly not working to their full capabilities, these industries are still able to create huge amounts
of revenue (True, 2017). Being associated with a controversial industry can have negative impacts
on individuals which is why many people prefer to not be seen in connection with these industries
(Vergne, 2012). This is because certain parts of the society do not approve of the actions within
these controversial industries, due to this I believe that most controversial industries are suffering
from being core stigmatised.
According to the research paper of Hudson and Okhuysen (2009) a core stigma is „when
some social audiences discount or discredit an organisation because of core attributes, such as
outputs, routines, or customers, that are in perceived violation of social norms“ (Hudson &
Okhuysen, 2009: 134). This definition of core stigma would support my argument that
controversial industries are suffering from a core stigma, as well as the definition made by Cai, Jo
and Pan (2011).
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One can add to these definitions by also taking into account the distinctive nature of
industries that are considered stigmatised, due to the attributes that they support. Hudson (2008)
defines a core stigma as „an evaluation held and often expressed by some social audience that an
organisation or set of organisations is discounted, discredited, and / or tainted in some way owing to
some core attribute or attributes“. (Hudson, 2008: 254). From this definition one can conclude that
being core stigmatised indicates that some core element, core attribute or core trait of the
organisation is not seen as normal within the society but rather seen with scepticism. This makes it
look as if the organisation or company is not trustworthy, not accepted and even despised.
Furthermore from this definition we can retrieve that a core stigma lies in in the eyes of the
beholder, „it is an evaluation by social audience external to the organisation“ (Hudson, 2008: 254) ,
and that there is some sense of disapproval in the fundamental nature of the business that allows it
to be stamped as being negative. When engaging in a organisation the audience compares the values
and beliefs of the organisation with their own values and beliefs, in addition to the accepted values
and beliefs the society displays. By doing this the audience compares the beliefs and „evaluate the
appropriateness or moral / cultural acceptability of the organisations activities“ (Hudson, 2008:
255). The organisation becomes stigmatised if it is evaluated as being morally unacceptable or
inappropriate, reducing the social support, displaying the organisation as negative.
The Stigma of Adult Entertainment
As this theoretical paper is supposed to tackle the stigmatisation of the adult entertainment industry,
it might be interesting for the readers to understand why the adult entertainment industry is
suffering from a stigma. The adult entertainment industry has long been enjoyed by huge amounts
of people all around the world (True, 2017). Although it is widely used, being associated with adult
entertainment is not liked (Arlidge, 2002). Whether it is the Idea that the viewed content is
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something very intimate, which people are not comfortable with talking about, or whether the
reason is the way this content was made, which may be morally questionable, or if it is seen as
sexist, there are many reasons why adult entertainment is stigmatised. A perfect example to prove
this are the special arrangement that payment provider have with adult entertainment companies.
Online Adult entertainment is seen as a high risk businesses, increasing the restrictions and
regulations for companies acting within this industry (Paylobby). These strict regulations may cause
banks to refuse cooperating with payment providers active in the area. This reduces the
attractiveness of the industry for payment providers and therefore reduces the amount of payment
providers available for the adult entertainment industry making it harder for retailers (Paylobby).
Furthermore „some payment service providers and banks do not wish to be associated with the
industry because of its controversial content which can not be reconciled with other business
segments. In general, traders and payment providers must adapt themselves to a large number of
cancellations, rebooking, charges of fees and frauds and therefore prepare an excellent fraud
management system“(Paylobby).
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Combination of the Adult Entertainment Industry and the Blockchain
Throughout a wide range of research papers such as the papers from Vergne (2012), Hudson and
Okhuysen (2009), Hudson (2008) and Dowling & Pfeffer (1975), there are several theories
suggesting ways through which a company can gain legitimacy, as well as theories on how
companies lose their stigma. I will be stating various theories suggested by researchers and will be
trying to implement several of these ideas in order to support and argue my hypothesis that through
the combination of the adult entertainment industry and the Blockchain, the adult entertainment
industry will manage to lose its stigma, while the Blockchain will move towards legitimacy.
„Keeping disapproval at a minimum may be particularly crucial (albeit more difficult) for
firms operating in stigmatised industry categories such a tobacco, arms and pornography“ (Vergne,
2012: 1030). If a firm is suffering from a high level of disapproval it attracts public attention, but
not in a positive way but rather in a sceptical way, in which the public is keeping an eye on this
industry waiting for a problem to occur, something that supports their disapproval (Vergne, 2012).
This will also have negative impacts on the stakeholders, creating doubts and suspicions among
them. Moreover this disapproval has major impacts on the members of this controversial industry as
they are being publicly challenged, possibly harming their reputation (Vergne, 2012). In stigmatised
industries such as the adult entertainment industry, „firms capable of keeping disapproval low
perform better, as they enhance customer loyalty and avoid most regulatory threats, but this
capacity carries from firm to firm“ (Hudson & Okhuysen, 2009).
How a company deals with stigmatisation can be crucial and have direct impacts on the
success of a business. Often it is impossible for a firm to lose the stigma associated with itself as the
activities or behaviour of the company is simply not accepted by a wide range of the society.
Changing the entire business concept in order to lose its stigma, is not something reasonable that a
company can do. In the past businesses had to make the best out of their situation, meaning
renounce on certain aspects of possible profit, including marketing in limited sectors (Hudson &
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Okhuysen, 2009), as well as suffering from stricter regulations such as the lack of possibilities in
regards to payment providers that greatly increase the costs of high risk businesses such as the adult
entertainment industry. (Paylobby) With the invention of the Blockchain a lot of these struggles can
be tackled, possibly greatly reducing the stigma associated with the adult entertainment industry, as
well as helping the Blockchain gain legitimacy.
Stigma Dilution
Vergne (2012) states a very interesting theory in the paper Stigmatised Categories and Public
Disapproval of Organisations: A mixed Methods Study of the Global Arms Industry, 1996-2007
(2012), he mentions a mechanism called stigma dilution. According to Vergne (2012) Stigma
dilution is when a firm that is associated with a stigmatised category, is also working in a non
stigmatised category this can „deflect attention from the stigma and dilute the vilifying
association“ (Vergne, 2012: 1032). This mechanism could for example explain why Philipp Morris
disapproval decreased after his firm entered the food industry, despite the continued growth of his
tobacco company. Another great example is Boeing, one of the biggest airplane producers in the
world. In the media the image of Boeing is mostly displayed as being a manufacturer of airplanes,
but at the same time Boeing „is constantly ranked among the top three largest arms producer
worldwide“ (Vergne, 2012) . Although producing gigantic amounts of weapons the image that one
has from Boeing is rather popular, supporting the theory of Vergne, that due to stigma dilution
Being is able to reduce the stigma associated with the production of arms.
The adult entertainment industry could possibly also use the theory of stigma dilution in
order to shift the viewpoint of the stakeholders. The combination of the stigmatised adult
entertainment industry and the Blockchain could possibly also allow the adult entertainment
industry to dilute its stigma. Although this might be possible, the problem associated with this
23
solution is that the Blockchain lacks legitimacy. How could a technology that lacks legitimacy have
a strong enough image to dilute the stigma associated with the adult entertainment industry. Despite
being possible it is rather unlikely. On the other hand Vergne (2012) also argues that „when
straddling helps a firm to dilute its association with a stigmatised category, the result is a decrease in
disapproval, regardless of the associations strength“ (Vergne, 2012: 1028) this would imply that
although the Blockchain lacks legitimacy, the association with it might result in a decrease in
disapproval of the adult entertainment industry, supporting my hypothesis.
Tribal Stigma
„Recent research has elaborated the so called „tribal Stigma“ , originally suggested by Defleur &
Goffman (1964), as a categorisation process among industries that results in a negative label for its
members (Vergne, 2012). A stigmatised category is then said to carry „a persistent liability that
prompts out-group members to keep their distance to avoid potentially harmful
associations“ (Vergne, 2012: 1030) . People consuming goods from controversial industries such as
adult entertainment also suffer from tribal Stigma. It is very clear that people would rather not
openly share that they consume certain material or services as they would be associated with a
negative and possibly harmful label, which could potentially have impacts on their careers and
private life. Due to this reason people would rather be anonymous and therefore not associated with
this tribal stigma as according to Vergne (2012) a stigmatised category is then said to carry „a
persistent liability that prompts out-group members to keep their distance to avoid potentially
harmful associations“ (Vergne, 2012: 1030).
The problem of the tribal stigma is spread across the entire adult entertainment industry, as
until now people have had to share their personal information when consuming content, whether it
is to confirm their age or pay for something. This need of personal information is a core attribute
24
that plays a huge role in the stigmatisation of the adult entertainment industry as, the disapproval of
stigmatised industries results from the core attributes associated with the industry (Vergne, 2012).
The Blockchain might offer the solution for one of the main core attributes forming the
stigma associated around the adult entertainment industry. When going back to the seven design
principles of the Blockchain (Pages 12-15) we can recall that with no need for a central authority to
control every transaction, there is also no need to know the identities of the person you are
interacting with. This means that people control their own data and get to choose when or what
parts of their identity they want to share with others. The Blockchain allows partially anonymous
payments, showing only a wallet id when paying for a certain content, meaning you could
potentially pay on every adult entertainment platform using cryptocurrencies such as the Bitcoin,
without sharing your personal information (Blockgeeks, 2019). It would theoretically even be
possible to implement an age verification within the Blockchain. When creating a wallet, an age
verification process could be implemented, making sure the owner of the wallet is above 18. In this
step the personal information of the user would have to be confirmed in order to verify the age,
when this is done the wallet could be marked with a stamp, saved on the Blockchain, showing the
verification of the age. When paying at any website, the Blockchain would verify the age of the
consumer without having to give a name or a date of birth, with a simple yes (above 18) or no
(below 18). The possibilities of this implementation are endless, the Blockchain can be modified
and adjusted as basically anybody can write their own Blockchain (Coral Health, 2018). With this
anonymous payment solution one of the core attributes forming the stigma of the adult
entertainment industry would be lost. This would greatly reduce the stigma of the adult
entertainment industry as it would allow people to consume whatever they want without the fear of
being associated with the negative image of the tribal stigma, supporting my hypothesis.
Dowling and Pfeffer (1975), refer to a study that further supports my theory, in a study of
adult education in California, they provide an example of the change in values occurring as a
25
consequence of an organisational adaptation to the environment. „In the process of transforming
initial values to adjust to problems, the organisational change may shape the values of the larger
society“ (Clark, 1957: 327). This point again shows that when an organisation that suffers from a
stigma adapts to the environment or the problems within the stigmatised area then it might be able
to cope with it and move towards legitimacy. In the case of adult entertainment this would once
again underline the argument that with the introduction of completely anonymous use of the
stigmatised content the problem in the industry would be reduced decreasing the associated stigma.
Siltajoa, Lähdesmäki, Puska, Kurki and Luomala (2015) further support my hypothesis in
their paper „From Shame to Fame: A Model of Destigmatisation Process in Media Disclosure“ with
the theory of clarifying messy boundaries. „Although being a rather enduring label, stigma is not
necessarily a permanent construction. The boundaries of different categories are thus negotiable,
and renegotiable“ (Siltaoja, Lahdesmaki, Puska, Kurki, & Luomala, 2015: Theorizing Categorical
Stigma and Stigma Removal, para 4) The values, and associated meanings can be redefined, or
reshaped in order to be more accepted within the society. „ Strategic categorisation can thus bear
significant for stigma removal: the new category building or the clarification of messy boundaries
could aim to separate the stigmatised attributes of the previous category but maintain or create
linkages to the possible valued features in the industry“ (Siltaoja, Lahdesmaki, Puska, Kurki, &
Luomala, 2015: Discussion and Conclusion, para 3). Adult entertainment is perceived as disputed,
making people not want to show the public that they use it, as this this could lead to potentially
harmful associations (Vergne, 2012). What if we could clarify the messy boundaries, associated
with the stigma. The need to fear this association with the negative image received with the usage of
adult content, is no longer relevant when one does not have to reveal their identity. This boundary
greatly affecting the adult entertainment industry could be clarified, reducing the stigma associated
with it. Why would one have to fear being brought in connection with the negative image, if there is
no possibility of this happening? Although this clarification of the messy boundaries concerning the
26
privacy of the members, will greatly decrease the fear associated with consuming adult
entertainment content, and therefore possibly decrease the stigma, this clarification would not match
to the definition of destigmatisation „a process in which an industry category is reconstructed and
made salient so that the core attributes of the industry appear in manner in keeping with the
surrounding social and moral order“ (Siltaoja, Lahdesmaki, Puska, Kurki, & Luomala, 2015:
Discussion and Conclusion, para 5), arguing against my hypothesis, as this change does not
necessarily affect the surrounding social and moral order. On the other hand Hudson and Okhuysen
(2009) use the example of stigmatisation of bathhouses and argue that boundary arrangements
greatly reduced stigmatisation as this allows the bathhouse to hide from stigmatising audience, just
as the Blockchain would enable the users of adult entertainment content to hide from stigmatising
audience. Here clear similarities can be seen as both industries have to hide from stigmatised
audiences. The Bathhouses do this using several methods such as discrete locations or through the
use of discrete membership cards in which the association to a stigmatised organisation is not
shown therefore people can use these cards without having to fear the association (Hudson &
Okhuysen, 2009). The Blockchain also enables this, as all that is shown is a wallet. The wallet is not
connected to a name but only to a wallet ID which could be owned by anybody, supporting my
hypothesis that the Blockchain will help the adult entertainment industry to decrease or even loose
its stigma.
The method of hiding from stigmatising audience is used throughout the paper from Hudson
and Okhuysen (2009) as well as in the paper from Hudson (2008). He argues that „the greater the
expressions of core stigma, the more likely core stigmatised organisations will operate using hiding
strategies“(Hudson & Okhuysen, 2009: 260). He believes that these hiding techniques „help to
decrease or limit the awareness of core stigmatised organisations and thereby minimise the potential
negative consequences of core stigma“ (Hudson & Okhuysen, 2009: 260) . Although I understand
the point made by Hudson I believe that hiding can be interpreted in different ways. There is a
27
difference whether the entire industry is hiding from attention in order to decrease the consequences
of stigma, or whether the audience of the stigmatised industry is able to hide, and therefore the
industry can act even more freely as members of this industry do not need to fear to be associated
with it. But on the other hand, why would you want to hide, supporting the image of the stigmatised
industry as it decreases the opportunities available to the businesses working within the stigmatised
industry such as limited range if possible marketing, when you can also challenge a stigma. „The
greater the expression of core-stigma, the more likely core stigmatised organisations will challenge
negative evaluations“ (Hudson, 2008 : 260/261). „Many adult bookstores and strip clubs use
signage and names that directly bring attention to the organisation and so challenge the
stigmatisation of their core attributes“ (Hudson, 2008: 260). By challenging the issues associated
with the stigmatised industries it may be possible to overcome them. For example advertising
aggressively showing how the combination of the Blockchain and the adult entertainment can solve
many problems such as anonymous payments, would challenge the stigma associated with the adult
entertainment industry and allow marketing to a greater audience.
Want to watch adult content but are afraid to share your information, use the Blockchain to enjoy
whatever you want completely anonymously!
This aggressive marketing supports my hypothesis, whilst on the other hand Hudson (2008)
argues against my hypothesis. In the paper „Against All Odds: A consideration of Core-Stigmatised
organisations“ Hudson (2008) argues that core stigmatised organisations face huge difficulties
when trying to operate in multiple lines of business, due to the increased amount of attention these
organisations will draw upon them. He believes that „ Operations in multiple Core stigmatised
domains are likely to increase the expressions of stigma either by increasing the size of stigmatising
audiences, owing to the larger size of the organisation, or by allowing a coalescence of multiple
28
stigmatising social audiences. Either way, the increased awareness that comes from the increased
exposure will likely intensify the expressions of stigma faced by the organisation leading to
increased negative consequences, and so will restrict the ability of the core stigmatised
organisations to operate in multiple domains“ (Hudson: 2008: 259). Moreover Hudson believes that
not only the combination of two stigmatised organisations would lead to a failure but he argues that
when a core Stigmatised organisation operates together with a non stigmatised organisation the
stigma could possibly transfer from the core stigmatised organisations to the new lines of business.
This opposes my hypothesis to a certain extent as according to this theory the stigma associated
with the adult entertainment industry could transfer to the Blockchain harming the reputation of the
new technology and possibly even decreasing the trust towards it, potentially even causing the
Blockchain to be seen as stigmatised. On the other hand Hudson (2008) argues that this occurs
when an core stigmatised organisation tries to expand into other lines of businesses, however the
adult entertainment industry would not be operating in a different line of business but it would
rather combine two industries, or even just make use of a technology, making me doubt whether this
theory would actually have an impact on this scenario. Nonetheless the possibility that the stigma of
the adult entertainment industry could spread to the Blockchain technology exists and therefore
opposes my hypothesis. Yet if due to the Blockchain the Adult entertainment industry would lose its
stigma, there would be no existing stigma that could be transferred to the Blockchain.
29
The need of Legitimacy
Organisations strive towards legitimacy throughout their entire business life, but often face severe
difficulties in gaining and maintaining it (Pellow, 1971). Pellow (1971) has pointed out that
legitimacy is problematic for organisations, and it is likely that organisations take actions to ensure
their continued legitimacy. Dowling and Pfeffer (1975) believe that there are three things that an
organisation can do in order to become legitimate. „First, the organisation can adapt its output,
goals, and methods of operation to conform to prevailing definitions of legitimacy. Second, the
organisation can attempt, through communication, to alter the definition of social legitimacy so that
in conforms to organisations present practices, outputs and values. Finally, the organisation can
attempt, again through communication, to become identified with symbols, values, or institutions
which have a strong base of social legitimacy“ (Dowling & Pfeffer, 1975: 127).
When recalling my definition of legitimacy: a generalised perception or assumption that the
actions of the entity is desirable, prosper, trusted, or appropriate within some socially constructed
system of norms, value, belief and definitions, in regards to its past, present and future, one has to
analyse which of these aspects the Blockchain lacks in order to reach legitimacy. I believe that the
Blockchain fulfils the definition of legitimacy with the exception of the aspect of trust. Due to the
lack of trust and knowledge associated with the Blockchain people fear to use it, therefore showing
the need of legitimacy. Using the theory of Dowling and Pfeffer (1975) we could say that the
Blockchain could attempt, through communication to become identified with symbols, values or
institutions which have a strong base of legitimacy. However my hypotheses does not suggest the
combination with an organisation with a strong base of legitimacy, but rather the combination with
organisation that suffers from a stigma. Regardless the adult entertainment industry does not
necessarily lack legitimacy, one should not forget the huge use of this content throughout the entire
world.
30
There are many difficulties especially for new businesses and technologies to gain
legitimacy (Suchman, 1995). Suchman (1995) believes that „upon embarking on a new line of
activity, particularly one with few predecendents elsewhere in social order, organisations often face
the daunting task of winning acceptance either for the propriety of the activity in general or for their
own validity as practitioners“ (Suchman, 1995: 586), which he defines as liability of newness. This
problem addressed by Suchman (1995) is clearly relatable to the Blockchain, the need of winning
acceptance, in order to increase awareness and knowledge about this new, and complicated
technology, which will then ultimately lead to increased trust. Aldrich & Fiol (1994) argue that
when new operations are technically problematic or poorly institutionalised, a lot of energy has to
be devoted into sector building. Furthermore Ashford and Gibb (1990) noted that both constituents
and supporters are likely to prove most grudging when organisational technologies are uncertain or
risky, supporting the theory stated by Aldrich and Fiol.
A possible solution to this is stated by Zucker (1983), as he suggested that this „arises
primarily through the integration of new activities under the umbrella of pre-existing taken for
granteds“ (Zucker, 1983: 25). The integration of the Blockchain into the already existing and taken
for granted adult entertainment industry, would be a clear example of his theory which suggested
that by doing this the new technology is able to gain acceptance and therefore legitimacy. By
integrating the Blockchain into the widely used adult entertainment industry, people would gain
huge amounts of awareness and the use of the Blockchain would spread to a wide range of users.
Benefitting from the advantages the Blockchain brings to the users of the content the acceptance
and knowledge about the Blockchain would increase dramatically, ultimately creating legitimacy.
31
Eroiy
An example of this possible scenario of the integration of the Blockchain in the adult entertainment
industry is Eroiy, a company in which I am working in and I strongly believe in its success. In order
to explain what Eroiy is and how it works I will be taking certain parts of the official Eroiy
Whitepaper (Eroiy, 2018). Eroiy is a Blockchain based Cryptocurrency which was originally
designed to be specifically an anonymous payment method to protect the privacy of the buyers form
the online entertainment industry. „The beauty of it is that it allows for anonymous transactions and
an independence from financial middlemen and their associated fees. This is a revolutionary
development and is the key to an approximately USD 100 billion market worldwide (NBC News,
2017)“ (Eroiy, 2018: 8).
„Both customers and merchants of the online entertainment industry have a strong demand
for discreteness when paying for online content, including video content, e-commerce related to
goods, gadgets and tools, live streams and chats. The Eroiy and the Eroiy Ecosystem meet
consumers’ needs: data protection, anonymity, protection from financial fraud, low transaction costs
and payment convenience (e.g. one-click payments). All the usual payment methods, such as credit
cards and phone transactions, leave a trail that can be traced back the purchaser. The possibility of
identification creates pervasive anxiety among customers and acts as an enormous obstacle to
growth in the category. Nobody wants the purchase to create an embarrassing personal or business
situation, and many people are deterred by the security risks involved in providing their credit card
information to online sites. Consumers understandably do not want their financial details to be
available online, not only on online entertainment websites, but also on websites in general.
The Eroiy also appeals to merchant and service providers of the online entertainment
industry and other target industries. The Eroiy provides for low transaction costs, a limitation on the
potential charge-backs, protection from data piracy and financial fraud, and independence from
32
credit card companies. Merchants are also concerned about the technical integration that is needed
across hardware and software platforms, as well as the lack of interface between diverse processing
systems leading to delays and liquidity issues. Multiple payment modes like mobile payments, e-
wallets, credit/debit cards, as well as cross-border transactions require merchants to develop an
intricate infrastructure to ensure streamline transactions. Merchants have a strong need for being
increasingly independent from central payment means, for which cryptocurrencies are the perfect
solution. The Eroiy and the Eroiy Ecosystem can successfully address all the above concerns – as it
does not allow charge- backs, is completely safe from data piracy and financial fraud, and gives
absolute privacy to customers“ (Eroiy, 2018: 8/9)
The payment system of Eroiy greatly benefits from the use of the Blockchain, solving
several problems within the adult entertainment industry, greatly reducing the stigma associated
with the industry as the core attributes of the adult entertainment industry can no longer be
stigmatised. Furthermore the Blockchain benefits from being implemented in an already existing
taken for granted industry with an astonishing amount of users, which according to Zucker (1983)
creates legitimacy as „through the integration of new activities under the umbrella of pre-existing
taken for granteds“(Zucker, 1983: 25), new technologies can gain legitimacy. This real life example
greatly supports my hypothesis that both the Blockchain and the adult entertainment industry will
benefit from their merger, reducing the stigma associated with the adult entertainment industry as
well as increasing legitimacy of the Blockchain technology.
33
Pornography as a Driving Force of Technological Development
Pornography has been playing a crucial role in the development of a vast amount of technologies,
amongst other things pornography has made the internet big (Baker, 2013). I will be showing how
pornography has in the past been a driving force of technological development, by giving some
short examples of technologies the porn industry has already promoted. „The internet is for porn, as
the cheeky Avenue Q song reminds us and the statistics back that up - around 30 perfect of
worldwide internet traffic is porn, and 12 percent of all websites“ (Baker, 2013: para 1) are
dedicated to pornography. It is rather unknown how much pornography has contributed towards the
creation of huge amounts of technologies, but „in fact, much of the technology we enjoy today is
because of porn. From the iPhone touchscreen to the sexual driving force behind VR, pornography
laid the groundwork for some of today’s most important technologies“(Gilmore, 2016: para 2), such
as:
Improved Internet Infrastructure
„Penthouse led the charge when it began distributing 2400-baud modems to its reader so they ouch
have faster access to the company’s XXX bulletin boards. As porn dominated the internet and the
demand for more, different, better and now, high-definition pornographic products, bandwidth was
forced to grow.“(Gilmore, 2016: „Faster, faster, faster, para 2)
Streaming
„In 1994, Dutch porn company, Red Light District, developed the first workable internet based
video streaming. The company helped shape the internet as we know it today“.(Gilmore, 2016:
Sensual streaming, para 2)
34
Business Models
The first commercial website launched on the internet was a software porn website, opening the
doors for many other companies. Many companies were inspired by the adult entertainment
industry and its use of affiliate marketing, click to pay and play and ,any other systems (Gilmore,
2016).
Many recent articles, such as Baker (2013), Gilmore (2016) and Gross (2010) report about
the importance of the porn industry in the development of new technologies but reaching back more
than 15 years ago this had already been a topic. The Article „The dirty secret that drives new
technology: its porn“, published in the Guardian 17 years ago, in 2002 shows how the Arlidge
(2002) is impressed by how analysts and executives had for the first time acknowledged the porn
industry and how important it is when it comes to driving technological advance. A senior manager
stated: „For years it has been a dirty secret that one of the key drivers of new consumer technology
is sex, pornography. The need to make 3G technology work - and work fast - is exposing that
secret“ (Arlidge, 2002: para 8). The adult entertainment industry is one of the most lucrative
industries throughout the entire internet, and it always has been. According to the guardian the most
popular word searched when the internet was launched was ‚sex‘ and ‚porn‘, showing its great
demand (Arlidge, 2002). „Technology is demand driven. Cutting-edge dorms develop products they
think will sell fast. Some of the strongest demand comes from porn manufactures because each
hitch leap forwards helps them get over the one big problem their industry faces,- the shame
factor“ (Arlidge, 2002: para 8). More than 17 years ago the porn industry was already suffering
from its stigma, which Arlidge (2002) calls „the shame factor“, he argues that this stigmatisation is
the reason for the constant strive of technology in the industry, the fight against stigma. „Demand
for porn is high, but it doesn’t travel well, explains Malcolm Hutty, general director of the
Campaign against Censorship of the Internet in Britain. People want porn, but they want it in the
comfort of their own home, not seedy backstreet cinemas or sex-shops, and they don’t want anyone
35
else to know about it. Technology helps bring it straight to you. Each advance seems, at least, to
bring you closer to the fantasy, and guarantee more privacy“(Arlidge, 2002: para 21).
This next huge advance in technology is the Blockchain, bringing the privacy that the adult
entertainment industry has so long strived to achieve. With the past innovative power of the adult
entertainment industry it is pure logic to assume that the industry will grasp this new technology
and use it in order to once again leap forward in order to once and for all lose its stigma.
CNN claims the widely acknowledged but seldom-spoken truth of the technological world:
„Whenever there’s a new content platform, the adult entertainment industry is one of the first to
adopt it - if they didn’t help create it in the first place“ (Gross, 2010: para 3). Now it is time for the
porn industry to adopt the Blockchain, spreading its use throughout the entire world, giving it
legitimacy just as how it has given the internet legitimacy by spreading its use 20 years ago.
36
Causal Effects
After having analysed numerous theories throughout the paper, and the possibilities of how these
theories could be applied to the scenario of the combination of the adult entertainment industry and
the Blockchain technology, there are several different outcomes which could occur. These outcomes
could possibly decrease the stigma associated with the adult entertainment industry whilst
increasing the legitimacy of the Blockchain. In order to gain a clear picture of these possible
outcomes the causal effects of certain theories will be analysed. According to Maldonado and
Greenland (2002) „In 1748, the renowned Scottish philosopher David Home wrote we may define
cause to be an object followed by another…. Where, if the first object had not been, the second
never had existed“ ( Maldonado & Greenland: 2002, 423). Basically this means that something has
happened because something else had happened. On the upcoming pages you can see Figure 2 and
Figure 3 which show the causal effects of the combination of the adult entertainment industry and
Blockchain technology. Figure 2 (Page 38) shows the causal effects from the view of the adult
entertainment industry whilst Figure 3 (Page 41) shows the causal effects from the view of the
Blockchain.
As seen on Figure 2 the adult entertainment industry would be implementing the Blockchain
Technology, which would lead to two possible outcomes:
A; the change of a core attribute as well as the clarification of messy boundaries. According to
Hudson (2008) a core stigma is when some core attribute of an organisation is „discounted,
discredited, and / or tainted ( Hudson, 2008: 254), with the implementation of the Blockchain users
will be able to benefit from far greater amounts of privacy which changes one of the core attributes
associated with the stigma, whilst at the same time redefining the values of the industry creating
greater acceptance of the society, or in other words clarifying the messy boundaries that make the
industry stigmatised (Vergne, 2012).
37
A -> B; Advertising aggressively showing how the combination of the Blockchain and the adult
entertainment can solve many problems such as anonymous payments (change of core attribute),
would challenge the stigma associated with the adult entertainment industry and allow marketing to
a greater audience.
Figure 2 - Causal Effects to the Adult Entertainment Industry (Figure made using Pages)
B -> C; Being able to market with less restrictions, will allow a greater reach of potential users.
C ->D; The increased amount of users as well as the open style of marketing, makes it seem as if it
is normal to use the adult entertainment industry which will therefore decrease the stigma associated
with it.
38
A -> H; The need of personal information is a core attribute that plays a huge role in the
stigmatisation of the adult entertainment industry, as the disapproval of stigmatised industries
results from the core attributes associated with the industry (Vergne, 2012). Due to the change of the
core attribute people don’t need to fear being associated with the industry, as they are able to
consume adult entertainment partially anonymously, which solves the problem of tribal stigma
(Vergne, 2012) as people do not have to fear the potential harmful association to the industry.
H -> I; As there is no need to fear an association to the industry the stigma decreases.
A -> M; Stigma lies in the eyes of the beholder „it is an evaluation by social audience external to
the organisation“ (Hudson, 2008: 254)“. But with the change of the core attribute, the users of the
stigmatised industry are mostly anonymous making it not possible for them to be stigmatised.
M -> N; As there is no one to stigmatise the audience the stigma associated with the industry
decreases.
From the change of the the core attribute (A) we can conclude that the stigma associated
with the adult entertainment industry decreases as the Industry is able to advertise freely (D), people
don’t have to fear its association eliminating the tribal stigma (I), as well as not giving an external
audience a chance to stigmatise the users of this content (N).
The second outcome of Figure 2 is; 1: Stigma Dilution, which according to Vergne (2012) is
when a firm that is associated with a stigmatised category, is also working in a non stigmatised
category this can „deflect attention from the stigma and dilute the vilifying association“ (Vergne,
2012: 1032). The combination of the stigmatised adult entertainment industry and the Blockchain
could possibly also allow the adult entertainment industry to dilute its stigma (2). Although this
might be possible, the problem associated with this solution is that the Blockchain lacks legitimacy.
On the other hand Vergne (2012) also argues that „when straddling helps a firm to dilute its
association with a stigmatised category, the result is a decrease in disapproval, regardless of the
associations strength“ (Vergne, 2012: 1028) this would imply that although the Blockchain lacks
39
legitimacy, the association with it might result in a decrease in disapproval of the adult
entertainment industry, decreasing its Stigma (3).
Figure 3 shown on the next page (Page 41), shows the possible outcomes from the view of
the Blockchain, when being integrated into the adult entertainment industry. When being
implemented in the adult entertainment industry there are three possible outcomes, a -> b -> c, 1 ->
2 -> 3 -> 4 and I -> II -> III.
a; As the Blockchain is integrated in a already established and widely used market, or in other
words is implemented „under the umbrella of a pre-existing and taken for granteds“ (Zucker, 1983:
25), it is able to benefit from a huge amount of people that will potentially be using the technology.
Through this increased awareness the Blockchain is able to solve the problem of liability of
newness (Suchman, 1995) which is explained on Page 31.
a -> b; As huge amounts of people will be using the technology, people will start to understand the
benefits it brings, such as the an increased amount of privacy which will lead to c increased trust,
and if we recall my definition of Legitimacy (Page 16), this will therefore allow the Blockchain to
gain legitimacy.
1: The adult entertainment industry has the chance to once again act as a driving force for
technological development and adaptation. As explained in the section „Pornography as a Driving
Force of Technological Development“ (Page 34-36), the adult entertainment industry has proven
itself to be an engine of technological improvement. By implementing the Blockchain into the adult
entertainment industry, the industry can once again push this technology to be used and understood
throughout various markets.
1 -> 2; Being implemented in a gigantic market, gives the Blockchain the chance to prove its
functionality, ultimately leading to the adoption of the Blockchain in other industries (3) due to the
success in the already established adult entertainment industry. This could potential spread the use
of the Blockchain in industries all around the world causing the Blockchain to gain legitimacy (4).
40
I; On the other hand according to Hudson (2008) the stigma associated with the adult
entertainment industry could potentially transfer to the Blockchain. This could possibly damage the
reputation of the Blockchain and decrease its trust (II). Ultimately this transfer of stigma could
stigmatise the Blockchain, moving it away from being legitimate (III).
Figure 3 - Causal Effects to the Blockchain
Figure 2 and 3 show many possible outcomes of the combination of the adult entertainment
industry and the Blockchain, most of which strongly support my hypothesis that the combination of
the adult entertainment industry and the Blockchain will help the adult entertainment industry to
lose its stigma, whilst moving the Blockchain towards legitimacy. On the other hand there is also a
41
possibility that the stigma of the adult entertainment industry shifts to the Blockchain damaging its
reputation and decreasing the trust towards it. But as mentioned previously the adult entertainment
industry would not be operating in a different line of business but it would rather combine two
industries, or even just make use of a technology, making me doubt whether this theory would
actually have an impact on this scenario.
42
Conclusion
Many controversial industries suffer from negative effects caused by the stigma that is associated
with these industries (Vergne, 2012). One of these industries is the adult entertainment industry
which has suffered from being stigmatised for ages, causing the members of this society to fear it's
association. This Stigma has not only restricted the industry in a way that it can not act according to
its full capability, such as limited possibilities of marketing, but it has also decreased the
profitability within the industry, due to a lack of suppliers or possible partners, creating costs and
additional work for businesses that want to work within the industry. This great suppression is best
seen in the special restrictions and regulations concerning payment providers for the adult
entertainment industry (Paylobby). I believe that the adult entertainment industry is able to lose its
stigma by using the Blockchain technology, not only allowing the adult entertainment industry to
work to its full capabilities but also spreading the use of the Blockchain and therefore moving the
Blockchain towards legitimacy.
Although there is a wide range of research many papers focus little on the combination of
different industries and the possible outcomes. A wide range of papers on Stigma and legitimacy
were available to me, whilst for a few papers I had to request special permission of the authors,
which took some time but enabled me to use a large range of sources without having any major
shortcomings throughout the research. However finding scientific articles related to adult
entertainment has been rather difficult, as few articles have specialised on this industry.
In the past the adult entertainment industry has been acting as a driving force of
technological development, not only to become profitable but to cope with the stigma that they are
being associated with. Throughout many research papers such as Hudson (2008), Hudson and
Okuhysen (2009), Vergne (2012) there are theories concerning how an industry can lose its stigma,
what actions they have to take to become legitimate and the negative influence this stigma has on
the people using it, such as the tribal stigma which was originally suggested by Goffman (1963), as
43
a categorisation of process among industries that results in a negative label for its members (Vergne,
2012). All of these research papers go into great depth about the problems these industries face, as
well as how it might affect the expansion of an stigmatised industry into a different businesses. The
theory of a stigmatised organisation expanding its businesses into an industry that is not stigmatised
is discussed throughout a number of research papers, such as Phillip Morris and his move into the
food industry although being active in the tobacco industry. But scholars have focused little
attention at all towards the possible combination of two industries, rather than the expansion into
another industry. The research that has been conducted in this area is rather one sided, concluding
that if an organisation that is not stigmatised is working with a stigmatised company the stigma may
shift and spread towards the non stigmatised company (Hudson, 2008). There is a great need for
scholars to close this gap of knowledge, and I believe that my theoretical paper can serve as a step
towards filling this gap of knowledge.
The combination of a technology that is considered new, disputed and not entirely trusted, or
in other words lacks legitimacy with the stigmatised adult entertainment industry could possibly be
the solution to the long aspired fight against stigma that the adult entertainment industry has
suffered from for so long. With the implementation of the Blockchain within the adult entertainment
industry, the usage of the Blockchain could possibly expand to millions of people, creating great
acceptance and therefore trust and awareness, allowing the Blockchain to move towards legitimacy.
Which is supporting by a theory from Suchman (1995) who believes that „upon embarking on a
new line of activity, particularly one with few predecendents elsewhere in social order,
organisations often face the daunting task of winning acceptance either for the propriety of the
activity in general or for their own validity as practitioners“ (Suchman, 1995: 586), which he
defines as liability of newness. The Blockchain would gain this acceptance and solve the problem of
the liability of newness, as with its implementation within the adult entertainment industry it would
benefit from huge acceptance, all around the world. This integration of the Blockchain in an
44
already existing and taken for granted industry, is supported by Zucker (1983) who believes that
legitimacy can be gained through the integration of new activities, such as the Blockchain, in the
„umbrella of pre existing taken for granteds“ (Zucker 1983: 25). With this implementation of the
Blockchain in the adult entertainment industry, there is no more need for personal information,
eliminating one of the core attributes that form the stigma, as the disapproval of stigmatised
industries results from the core attributes associated with the industry (Vergne, 2012).
The adult entertainment industry has the possibility of once again acting as a driving force
of technology. With the implementation of the Blockchain, the core attributes of the adult
entertainment industry could be changed, allowing its users to hide from the stigmatising audience,
ultimately removing the stigma associated with the adult entertainment industry. By doing this the
adult entertainment industry will create great acceptance and knowledge of the Blockchain
throughout the entire world, possibly doing to the Blockchain what the industry has already done
for the internet, driving technological advance. This combination of a stigmatised industry and a
technology that lacks legitimacy could be the solution to their entire problems, allowing the adult
entertainment industry to abolish its stigma whilst creating legitimacy for the Blockchain,
suggesting that with the use of several theories my theoretical hypothesis is strongly supported.
45
Appendix
Figure 1: Price Trend of Bitcoin throughout September 2017 to the present, April 2019 (Retrieved
from coinmarketcap.com)
Figure 2 - Causal Effects to the Adult Entertainment Industry (Figure made using Pages)
46
Figure 3 - Causal Effects to the Blockchain
47
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Adult Entertainment and Blockchain Technology

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Dominik Hurum BACHELOR THESIS

Touro College Berlin

Written by: Dominik Hurum

potentially spreading the Blockchain technology throughout various industries.

The Blockchain Explained 9

What is the Blockchain? 9

How does it work? 10

Blockchains Lack of Legitimacy 16

Controversial Industries and their associated Stigma 19

The Stigma of Adult Entertainment 20

Combination of the Adult Entertainment Industry and the Blockchain 22

The need of Legitimacy 30

Pornography as a Driving Force of Technological Development 34

will be explained thoroughly throughout the paper.

everybody’s life sooner then later.

The Blockchain is a rather controversial technology, which led me to formulate my research

discount or discredit an organisation because of core attributes, such as outputs, routines, or

multiplied by a negative equals positive.

In the upcoming pages I will be explaining my methodological approach as well as stating

my hypothesis. Furthermore I will be explaining the Blockchain in order to create a greater

effects in order to assure a better understanding.

categorised as a stigmatised industry (Arlidge, 2002). People do not want to be brought in

throughout working in both industries have brought me to following theoretical hypothesis:

legitimacy of the Blockchain technology.

entertainment industry will be evaluated thoroughly throughout this paper.

What is the Blockchain?

„A Blockchain is an incorruptible digital ledger of economic transactions that can be programmed

authors of the book Blockchain Revolution (2016)

purchase is stored on Blocks. (Fortney, 2019)

basically like a username. (Fortney, 2019)

the blocks apart. (Fortney, 2019)

How does it work?

1. There must be a transaction

time. Every computer that runs this verification is then rewarded.

amount of money is stored in a block.

is virtually impossible“ (Blockgeeks, 2019: Blockchain Explained, para 1).

preserved forever (Tapscott & Tapscott, 2018).

& Tapscott, 2018: 38)

which are a random combination of numbers and letters (Lisk Academy).

„Bot sent 1 BTC“ instead you will see „1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1

BTC”.“(Blockgeeks, 2019: Pillar #2: Transparency , Para 2).

(Tapscott & Tapscott, 2018).

Maurer, 1972), whereas Suchman defines legitimacy as „a generalised perception or assumption

definition slightly. For me legitimacy is defined as:

definitions, in regards to its past, present and future.

& Pan, 2011). I would define Controversial industries as:

from being core stigmatised.

and Pan (2011).

appropriateness or moral / cultural acceptability of the organisations activities“ (Hudson, 2008:

255). The organisation becomes stigmatised if it is evaluated as being morally unacceptable or

inappropriate, reducing the social support, displaying the organisation as negative.

The Stigma of Adult Entertainment

capacity carries from firm to firm“ (Hudson & Okhuysen, 2009).

well as helping the Blockchain gain legitimacy.

disapproval of the adult entertainment industry, supporting my hypothesis.

prompts out-group members to keep their distance to avoid potentially harmful

harmful associations“ (Vergne, 2012: 1030).

to the definition of destigmatisation „a process in which an industry category is reconstructed and

entertainment industry and allow marketing to a greater audience.

whatever you want completely anonymously!

When recalling my definition of legitimacy: a generalised perception or assumption that the

risky, supporting the theory stated by Aldrich and Fiol.

2017)“ (Eroiy, 2018: 8).

wallets, credit/debit cards, as well as cross-border transactions require merchants to develop an