At the start of the year, Facebook issued a ban of cryptocurrency-related advertising on their platform. Google and many others have followed their lead. It has thrown a monkey wrench into all innovative start-ups built on blockchain technology.
Now six months later, whether seeing the light or smelling the money, Facebook has loosened (but not totally lifted) their ban. Will others make the same correction?
The Cryptocurrency Ad Ban
It’s been a tumultuous 2018 for Facebook. In January, still reeling from investigations of Russian tampering and weeks away from the Cambridge Analytica scandal, Facebook banned all cryptocurrency-related advertising.
In June, Google rolled out a blanket ban on any ads related to cryptocurrency. Instagram and Bing also issued a complete ban. Twitter and Snapchat allow some types of crypto ads but none relating to initial coin offerings (ICOs).
They all cite the possibilities of phishing scams as their concern and there is some merit to this claim.
The Federal Trade Commission reports that over half a billion USD was stolen in crypto-scams in the first two months of 2018 and it estimates that figure to hit $3 Billion by year’s end.
Bitcoin.com tracked 902 ICOs from 2017 and found a failure rate of 46%. These failed companies blew $233 million. For perspective, this is significantly better than the 75% failure rate of startups who use traditional venture funding.
With most new technologies that are widely hyped but narrowly understood, come a few bad apples. But such a severe ban is throwing the baby out with the bathwater.
Facebook’s Ad Ban Reversal
Perhaps realizing the potential ad revenue it was neglecting, or because they’ve recently launched their own internal blockchain division, Facebook lifted its ban last month. Well, with a few caveats.
Would-be advertisers must go through an application process and show “licenses they have obtained, whether they are traded on a public stock exchange, and other relevant public backgrounds on their business”. Exactly how Facebook will interpret these applications to grant or deny permission remains unclear.
Ads promoting binary options and initial coin offerings (ICOs) are still banned.
Bad Policy Stifles Innovation
Imagine starting a small business with no chance of advertising on Google, Facebook, Twitter, and other aforementioned platforms. That is a serious handicap.
Online advertising is usually step one. It’s how a startup gets off the ground in those critical early days when the company’s future is unknown.
The kiss of death, which Facebook still preserves, is the ICO ban.
In an overwhelming majority of cases, the business model of blockchain-based startups is to raise public funding by selling their own crypto-tokens in an ICO (as opposed to a traditional company’s IPO).
By banning cryptocurrency ads – especially ICO ads – they’re taking emerging businesses that leverage the blockchain and cutting them off at the knees.
What’s Worse Than $3 Billion in Fraud?
If the amount of cryptocurrency fraud does climb to $3 Billion in 2018 as estimated, that’s terrible. What’s worse than $3 Billion in fraud?
How about $51 Million every day?
That’s the amount of ad fraud stolen every year via spambots, click farms, and other hallmarks of current digital advertising networks. It’s a fraud that tribeOS will eradicate with AdShield, the technology that’s, you guessed it, blockchain-based.
Yes, these major networks should have measures in place to vet the legitimacy of their ad-clients and root out the bad actors. But it needs to be applied intelligently and shouldn’t stand in the way of progress.
We urge Facebook to expand its ban reversal to restore ICO advertising. We also urge Google and other companies to follow Facebook’s lead and reverse their bans on cryptocurrency advertising.