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.

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