Digital currencies such as Bitcoin have been making headlines recently as the price soared over thirteen fold last year. However, sites such as Facebook and Google have decided to ban advertising for cryptocurrency amid scrutiny of the financial products that have become a rapidly growing market. Concerns about cryptocurrency have motivated these sites to protect their users from ads persuading them to purchase products like Bitcoin.
Google employees responsible for the decision have stated that cryptocurrencies are “unregulated” and speculative in nature which could prove to be a threat to the user experience. Facebook made a similar decision as part of an effort to rebuild trust with its users on the platform. Google chose to ban all ads about cryptocurrency-related content including initial coin offerings, wallets and trading advice on the ad platforms.
As a result of these bans, even companies with legitimate cryptocurrency offerings won’t be allowed to run ads using any of Google or Facebook’s ad products. The websites believe that there has been enough consumer harm or potential for consumer harm as a result of cryptocurrencies to warrant the ban on advertising. Cryptocurrency scams are the main concern that could negatively affect users and put them in financial danger.
Cryptocurrency products like Bitcoin are essentially used as an electronic cash system that doesn’t rely on banks or third parties to verify transactions and create new units. Transactions are instead confirmed using cryptography on a publicly distributed ledger called the blockchain which enables peer to peer payments. Cryptocurrency transfers can happen more quickly than with traditional banking systems which may take days to transfer money while crypto transfers happen in minutes.
In the same way that credit cards require a signatures, cryptocurrencies also require a digital signature. The transactions are secured through a system called public key encryption which allows each user to have a private key and a public key on their account. The private key is used as a digital signature for the user to prove who they are and authorize a transaction.
Bitcoin users were able to profit significantly from using the cryptocurrency which is making these financial products highly sought after. Unfortunately, scammers have become an issue with cryptocurrency and many are losing money as a result of investing in fake currencies. Scammers are making millions off of unsuspecting investors who believe they are paying for a currency similar to Bitcoin.
Countless high profile scams are what led Facebook and Google to ban advertising for all cryptocurrencies to prevent users from investing their money in a fake financial product. Google has been known to crack down on advertising that doesn’t follow its rules and the company said that it took down more than 3.2 billion ads in 2017 that violated its policies. Since cryptocurrency has become less trustworthy, banning all ads was their solution to protect users as much as possible.
Legitimate and Scam Cryptocurrencies
The reason Google chose to ban all of these types of ads from their site is because they find it nearly impossible to identify legitimate projects versus scam artists. People have been inundated with fraudulent advertisements claiming that users can make money by investing in new forms of cryptocurrency. There has been a major backlash against cryptocurrency products and especially ICOs or Initial Coin Offerings.
An ICO is a way for start-ups to crowd fund investment and ask people to invest in a cryptocurrency in exchange for a token that’s issued by the start up. The digital coin can then be used in exchange for future services offered by the company. There is also the possibility of the value of the coin climbing much higher than the initial investment as was the case with Bitcoin.
Although there are legitimate possibilities for people to make money and benefit from investing in an ICO, there are plenty of scammers online because ICOs are unregulated and investors don’t have the same protections as with other assets like stocks. People can invest in something that seems legitimate until they begin to see warning signs such as a lack of correspondence from its founders and failed attempts to recoup lost funds. These scams take people’s investments, don’t develop anything and eventually cut ties with investors.
Because there is no way for Google or Facebook to tell which cryptocurrency ICOs are real and which ones are going to steal from users, they have banned all ads across the board. This may protect people from being swayed by an ad asking for their investment in a false cryptocurrency. Some believe that Google may eventually modify their ban to include legitimate crypto ads once ICOs become more regulated.
For the time being however, users will not see any further advertisements on Facebook or Google for cryptocurrency starting in June of this year.