First, Facebook banned crypto ads. Then, Google announced it would be banning them as well – many coins dropped when the news was released. Add Snapchat and Twitter into the mix and out comes an internet cocktail that is surprisingly light on crypto ads.
What does this mean for the future of crypto? The results may actually not be that bad.
Here’s a breakdown of the pros and cons of what it means for crypto to have limited advertising options.
One of the most immediate effects of the crypto ad ban was panic selling on the crypto market. The media has a tendency to overdramatize or generalize certain types of news, which can then lead to uninformed investors trying to drop out of a space they believe everyone will soon drop out of.
The actual effect of the crypto ad ban, in and of itself, probably wouldn’t have made much of an impact on the overall market were it not for the ensuing panic from nervous investors that this might cause the end of the crypto world. Is it the end? Of course not, but many coins were dropping as though it was, Bitcoin (BTC) included, which dropped below $9,000 on Google’s announcement. With Twitter’s recent announcement, Bitcoin has now dropped below $8,000. No doubt, the crypto market is suffering in the short-term because of the ad ban news.
Beyond coins losing their value, perhaps the most obvious con is that the crypto ad ban may make it more difficult for legitimate projects to take off and get the funding they deserve. Much of what is getting banned relates to ICOs. ICOs, or initial coin offerings, are bringing new projects to investors around the world. Pretty much anyone can invest in an ICO, which opens the door to a large number of funds for the project.
2017 was the year ICOs started to take off. With over $6 billion raised, ICOs seemed like they may never slow down – and things have picked up from there. Already in 2018, ICOdata reports that over $3 billion has been raised through ICOs. This year, there have already been 420 ICOs, compared to 2017’s total of 881. It’s become a highly competitive market, and the speculation of fraud and lack of regulations among ICOs is the main reason why ICO-specific ads are being put on the back burner for now.
What about legitimate projects though? Without the ability to advertise on the major platforms like Google, Facebook, and Twitter, new ICOs may have a tough time raising the necessary funds to jumpstart their projects. If people don’t know about the project already, then they won’t search for it.
Some people are rather upset about this. There’s a case in Russia where a man is trying to sue Google because he believes its ad ban will be detrimental to bringing awareness to his ICO and his project will struggle as a result.
However, many people believe that legitimate projects will find their way. They just have to get creative in how they do it. That’s where the pros of the crypto ad ban come in.
Yes, many advertising channels are getting shut down – but there are other ways to get the word out about a project.
The solution for Dean Anastos, founder and CEO of Blockchain Developers, is bounty programs.
“Bounty programs give incentive to token holders to pitch [the project] to the community, to push a certain product,” he explained in an interview with CryptoCurrencyNews, CCN.
A bounty program allows an ICO to spread the word about its project via organic means, without relying on advertising. ICOs, said Anastos, can allocate a certain amount of tokens to be paid as bounty for token holders to tell others about the project. The information is, therefore, coming from real people, as opposed to ads.
“Because of all the banning that’s going on with ads, those bounty programs are going to become much more popular and necessary to the success of an ICO,” stated Anastos.
Anastos’ company helps to launch ICOs. He says that they actually rely very little on advertising to do so: “Using the proper PR and the proper bounty campaign, you could get the word out.”
This shows that advertising isn’t the only way to spread the word about an upcoming crypto project. Despite the fears, legitimate projects will be able to find their way even with the ad ban.
Helping to reduce scams is the main pro, and main incentive, behind the crypto ad ban. Of course, bounty programs alone don’t solve the scam issue. This is where regulations, guidelines, are needed, according to Anastos. Hopefully, with large influential companies implementing these ad bans, the type of guidelines that will help to reduce fraud in crypto will be able to be put in place.
This will help to keep investors safe, which is what companies like Facebook and Google are claiming they want to achieve with the ad bans.
When announcing its ad ban, Twitter told CNBC that “We are committed to ensuring the safety of the Twitter community. As such, we have added a new policy for Twitter Ads relating to cryptocurrency. Under this new policy, the advertisement of Initial Coin Offerings (ICOs) and token sales will be prohibited globally.”
Facebook said that it wanted to prevent the spread of “financial products and services frequently associated with misleading or deceptive promotional practices.”
Will the crypto ad ban actually be successful in this? CEO and co-founder of the peer-to-peer Bitcoin marketplace Paxful, Ray Youssef, believe’s that it might.
Youssef told CryptoCurrencyNews, CCN, that the ad ban is “going to clean up a lot of the mess.” While in the short-term these bans may tend towards a negative reaction, Youssef said that in the long-term this move will be positive, so long as it helps to filter the product and make sure projects are legitimate, rather than be an outright ban of everything. The ad ban means that things like proper KYCs and AMLs can be better implemented. This will help to raise the overall bar of crypto.
Youssef, a long-time trader in Bitcoin, also pointed out that the crypto market will correct itself; it always does. The takeaway is that things will balance out in the end.
The Future of Crypto
The future of crypto will always be up in the air. However, even with such things as crypto ad bans by companies like Facebook, Google, and Twitter, the cryptocurrency world will continue to exist. ICOs will find a way to continue, and coins will continue to receive attention from investors.
If nothing else, hopefully, the ad ban will help to reduce the spread of fraudulent projects.
What do you think about the crypto ad ban? Share your thoughts in the comments below.
Featured image: Blockchain 24