The movie industry has for long been plagued with piracy problems. Recent data from the Theatrical Market Statistics report, released by the Motion Picture Association of America (MPAA), shows global box office revenues reached $38.3 billion in 2015, a 5% rise from 2014. Chris Dodd, chief of the MPAA, believes that if the piracy stops, it would add another $1.5 billion to the movie industry’s bottom line, Bitcoin Magazine reported.

In a bid to combat media piracy, Custos Media Technologies, a South African startup company, has come up with a system that uses Bitcoin to track pirated media. Custos recognized that it is possible to use cryptocurrencies to outsource difficult tasks, such as identifying the source of movie leaks, to anonymous helpers across the world.

Fred Lutz, chief operating officer at Custos, told Bitcoin Magazine that the process involves embedding an invisible and difficult-to-remove watermark – in this case a Bitcoin private key – into the digital content. If the watermarked content is then leaked on any pirate site, a small Bitcoin reward is offered that can be collected by the first person who finds it.

“The code that we embed throughout the movie is a Bitcoin private key, and we top-up the associated account with some bitcoins,” Lutz said. “We have a tool available publicly at Privateer.xyz with which anyone can read the watermark and extract the bitcoins. This means that a movie or ebook that goes out of the control of the intended recipient now has some vulnerability ‒ if it lands in the wild, the bitcoins will be extracted and we are notified through the blockchain that the funds were moved. We notify our clients of the identity of the customer that is associated with the private key and they can respond accordingly.”

Custos recently announced a second­ round seed investment of just under US$ 265 000. The new shareholders are a South African private investor, and Digital Currency Group (DCG). Based in New York City, DCG has been an active seed investor in the digital currency industry with 60 investments in 20 countries.

Van Rooyen, CEO of Custos, said that the capital will allow the company to reach the high­-risk media producers – for whom piracy can literally cut tens of millions of dollars from their production budget when a title is leaked. Custos is also testing a solution for protecting ebooks.

“We’re thrilled to partner with investors who can really take an active role in helping us reach our target market", Van Rooyen said.

This latest funding round follows a US$ 140 000 initial investment last year by Innovus, the Technology Transfer Office of Stellenbosch University, where the initial concept was developed.