It has been rough for bitcoin investors after Alphabet’s Google joined Facebook in banning cryptocurrency-related ads. The price of bitcoin has tumbled more than 13 percent in the past week and is now down more than 55 percent from its December highs. Investors have been dumping bitcoin after Google said it will no longer allow cryptocurrency-related ads starting in June, including ads for initial coin offerings, cryptocurrency exchanges, digital wallets and cryptocurrency trading advisors. Following news of the ban, more than $60 billion of value disappeared from the global cryptocurrency market in less than 24 hours. Some bitcoin investors feel they are being unfairly penalized by such a general advertising ban.
“My only concern is that in banning all crypto ads – legitimate and not – you are painting the entire industry with a single brushstroke, which is troubling and reminiscent of big brother,” says Larry Heinzlmeir, vice president of marketing and communications at HashChain Technology.
Despite the sell-off, Ivan Suhharev, director of software at peer-to-peer bitcoin marketplace Paxful, says the ban may actually be good news for bitcoin and other legitimate cryptocurrencies in the long term.”Overall, it is a good start to bring more order to the growing cryptocurrency industry because once the scam companies have been removed organically, the legitimate ones can take their rightful place,” Suhharev says.
Bitcoin and other cryptocurrencies have struggled with negative headlines throughout 2018 related to increasing regulation and security problems. A January report by Ey Research found that hackers steal as much as 10 percent of the initial coin offerings of new cryptocurrencies. Consumer protection is one of the primary reasons Google and Facebook are distancing themselves from cryptocurrencies.
The recent volatility in bitcoin and other cryptocurrencies has made many investors wary along with the continued hacking of the exchanges where people buy and sell the digital currencies. The lack of security has raised concerns about the risk of owning these virtual currencies as hackers continue to breach the exchanges, forcing one bitcoin exchange in South Korea, Youbit, to file for bankruptcy in 2017. The uncertainty emphasizes the hazards investors face daily in their attempt to profit from bitcoin, ether and other cryptocurrencies. The debate on whether bitcoin is actually a currency or an investment continues as the Securities and Exchange Commission considers it a security, the IRS treats it as property and the Financial Crimes Enforcement Network says bitcoin is a currency.
The price of bitcoin, the No. 1 digital currency with a market cap of $158.7 billion, crumpled from a high of nearly $20,000 at the end of 2017 to less than $7,000 in April. It’s now trading at about $7,480. Bitcoin and the other digital currencies remain a sought-after target for cybersecurity criminals because they can easily hide their tracks and remain unregulated by a central bank or a government. Since cryptocurrencies are not backed by a physical commodity, investors who have been hacked lack any legal or criminal recourse. One of the largest issues is that the criminals are hard to catch since they are anonymous and the heists are prolific. As the number of initial coin offerings (ICOs) has risen, the incidences of hacks into the exchanges such as Coinbase or the personal wallets have mirrored them, cybersecurity experts say. While the technology used to create cryptocurrency remains sound and has not been compromised yet, investors must be “very vigilant with the exchange websites they use as they are vulnerable to all the same kinds of attacks that every other website on the internet faces,” Wenzler says. “Only now, the stakes can potentially be higher as it won’t solely be credit card information that’s insured and protected, but rather the very valuable cryptocurrencies that when lost, users have essentially no recourse to recoup their losses.”