Custos Media Technologies, a South African startup aiming to combat movie piracy using the bitcoin blockchain, has raised $265,000 in seed capital from an unnamed South African investor as well as New York-based Digital Currency Group.

G-J van Rooyen, CEO of Custos, said in the press release that the new infusion of capital will allow the company to target indie film makers, which are very vulnerable to financial damages resulting from piracy.

Custos COO Fred Lutz says:

“Especially for small indie producers – the individuals who take it upon themselves to create beauty and entertainment in this world and push our culture forwards – a pirate leak can make the difference between being able to pay their employees and going bankrupt.”

Custos’ protection technology works by embedding the unique private key of a bitcoin wallet address in every single copy of a film that is distributed/sold. If a tagged film is pirated, the encoded key inside the pirated copy essentially reveals the source of the leak. Movie pirates, or anyone else for that matter, can extract the private key using a special tool provided by Custos, which then allows the individual to claim the prize inside the bitcoin address.

“Bitcoin allows the hunter to claim the bounty instantly and anonymously, from anywhere in the world”

Since bitcoin is a global network where everyone can see transactions on its blockchain, Custos can immediately determine when someone moves the bitcoin funds allocated to a protected media file.

The release explains:

“Custos can rapidly detect whose copy was infringed, and can report the event to the media owner for further action. By effectively using pirates to incriminate other pirates, the companies creates an environment where media recipients are strongly discouraged from distributing content, and where artists can be duly rewarded for their efforts.”

Last year, Stellenbosch University – where the company was initially formed – invested $140,000 to get Custos up and running.

Barry Silbert, CEO and Founder of the Digital Currency Group, said he is “excited” that there are companies such Custos, which are showing everyone how useful bitcoin’s blockchain is in solving real-world challenges.

While Custos’ main focus will be on smaller content producers, Van Rooyen is hopeful that the big movie studios in Hollywood will take notice.

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