A South African startup is using bitcoin to turn digital pirates against each other

The scholarly environs of the New Media research lab at Stellenbosch University in South Africa gave rise to a diabolically clever plan to deal with video piracy in 2015: Lure pirates with bitcoin to find out the source of the contraband material.

That project has become the basis for a startup called Custos. Its Privateer product helps movie studios and book publishers detect the source of leaked copies of upcoming movies or ebooks using a bitcoin bounty. Custos embeds imperceptible bitcoin private keys in the digital files, with different keys for different advance copies of a movie or ebook. A private key is essentially the password that lets someone claim the bitcoin held at a particular address.

At the same time, Custos makes a piece of free software that screens movie files for these private keys and markets the screener to content pirates. Pirates now have an incentive to check pirated movie files in case they contain a key. If a key is detected, the pirate can claim the bitcoin bounty—usually between $5 and $10—and is free to keep it. But once a bounty is claimed, Custos is alerted, and can begin the process of figuring out the origin of the leak.

“Whether you call it a post-capital economy or a new peer-to-peer economy, it’s magical,” says G-J van Rooyen, a Custos co-founder and formerly an associate professor at Stellenbosch University. “We can employ a community of anonymous individuals, doing things that have tangible value … for all the excitement about the blockchain, there’s a heck of a lot you can do with traditional cryptocurrencies like bitcoin.”

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One rotten apple

Van Rooyen says the most financially damaging form of pirated material is a movie that’s leaked between the final cut and its cinematic release. Tens of thousands of advance copies of a film are sent to festival judges and movie reviewers during this period. Custos uses the bitcoin bounties to try and figure out which of these parties leaked their copy. “You just need a single rotten apple in that group,” he says.

Van Rooyen claims once a leaked copy containing a bounty hits the dark web, it takes just five minutes on average for the bounty to be claimed and Custos and its client to be alerted. On social networks it takes 42 seconds; and offline, like if a movie is copied or shared on a DVD or USB drive, it’s 28 minutes.

Embedding rewards for pirates within the contraband files themselves is the sort of model that would have been difficult, if not impossible, to enact without a cryptocurrency like bitcoin. Its pseudonymity means pirates don’t expose themselves when they claim a bounty. Bitcoin’s decentralized, market-based ethos cleverly aligns the interests of multiple parties who are usually at odds—in this case, the the content owners and pirates.

Creating this sort of overlap in interests could give Custos an edge over established digital rights management technologies, says George Howard, a professor of management at Berklee College of Music. Howard notes that DRM mechanisms are too blunt: they punish customers in favour of rights holders even when no illicit activity is going on by making it difficult to legitimately share content, or other by imposing other restrictions on customers.

“As evidenced by the ongoing rampant piracy of works, no DRM has proven to be terribly effective,” Howard says. “What [companies like Custos] are trying to do is add an incentive or game-mechanic layer, to shift the burden of DRM from rights holders to the community at large.”

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A South African startup is using bitcoin to turn digital pirates against each other

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