Cryptocurrency companies and trading platforms took a sucker punch to the belly in early 2018, when behemoths like Facebook, Google and Twitter announced they would ban crypto advertisements from appearing on their platforms.
Facebook was the first to pull the plug, but Google’s announcement in mid-March was the haymaker, as what many consider the world’s number-one website banned content on initial coin offerings (ICOs), wallets and cryptocurrency investing advice.
“We don’t have a crystal ball to know where the future is going to go with cryptocurrencies,” Google rep Scott Spencer said in an interview. “But we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution.”
In less than two months, countless legitimate organizations in the cryptocurrency industry — as well as the scams that these bans were primarily targeting — saw two major advertising streams swept away.
Cryptocurrency may be unique in what it is and what it does, but I believe the apprehension displayed by these media giants is strikingly similar to the reception that previous tech movements have received. Consider this four-stage process that new technology often goes through, in which it is both uplifted and challenged before finally being accepted: mystery, buzz, clampdowns and maturation.
For cryptocurrency, these ad bans, coupled with CNBC’s report of scrutiny and changing regulations from the SEC, IRS and international regulators, suggest to me that it has firmly entered the stage of clampdowns.
But a ray of hope has emerged recently, as both Facebook and Google have begun to walk back their bans. Facebook came first in June 2018, and Google just announced in September that it would be doing the same. Do these reversals indicate that cryptocurrency is advancing to the maturation stage?
In this article, I’ll examine the potential outlook for cryptocurrency by looking through the lens of its history and current state as a tech movement.
When Bitcoin became part of the public conversation about a decade ago, the immediate response I saw from many financial pundits was that it was a scam, with an oft-cited reason being that it had no inherent value. Perhaps even worse, The Balance reported that Bitcoin was tied to illicit activities such as buying drugs and making shady transactions on the dark web. A lot of this criticism came from a lack of knowledge, in my opinion; a loud voice is often the favored tonic, and that seemed to be enhanced by the Wild West environment surrounding those early days. Bitcoin was often seen as either the genius revolution that would send fiat currency the way of the dinosaur, or it was the world’s biggest bubble — waiting to explode in the face of anyone foolish enough to invest time and money on it.
This inability to grasp the technology behind the concept is nothing new. In the early-to-mid 1990s, the world’s reaction to the Internet was strikingly similar. An infamous 1995 Newsweek article, titled “Why the Web Won’t be Nirvana,” claimed that such futuristic ideals as “telecommuting workers, interactive libraries, and multimedia classrooms” were “baloney.” Twenty-three years later, it’s a simple case of “open mouth, insert foot.”
While established financial industry leaders might not have believed in Bitcoin and its followers, the power of the Internet allowed the new technology to find its base through discussion boards and email chains. It was accepted first on an individual level, and I believe this was because people were sick of corruption from financial institutions — particularly after the housing collapse — and were looking for other means of transacting their business. As these early adopters brought crypto and blockchain concepts into their own businesses, they exposed the technologies to a wider and wider audience.
Because of the organic way it became part of people’s lives, cryptocurrency seemed to be largely ignored by government entities that could provide regulatory oversight. Too few people were involved at this point, and no big businesses were interested in reshaping how they accepted payments or stored information.
Soon enough, Bitcoin and other cryptocurrencies began to generate more public attention due to several factors, such as massive increases in value, alleged ongoing issues with payments for illicit activity, and increased adoption from big corporations like Microsoft and Paypal. I’ve observed that this heightened awareness also attracted opportunists to the space with ill intentions of making a quick buck by exploiting the system. Some ICOs became cash-grab schemes, as explained by CNBC. As this happened, cryptocurrencies began to fall under more intense scrutiny from regulators like the SEC. And as an apparent reaction to the bad publicity, advertising networks like Google and Facebook backed away.
As the first to re-enter the cryptocurrency advertising space, Facebook has taken a tactful approach by requiring would-be advertisers to fill out an application that details what licenses they hold, what sort of company they are and a slew of background-check-type requirements.
I believe the Facebook ad reversal is only the beginning for cryptocurrency to start fully attaining acceptance and legitimacy among the general public. The IRS has begun to lay down hard, fast rules on how crypto is taxed, and while its explanations might be a little rough around the edges, at the very least a base has been created. And, three months after Facebook’s reversal, Google announced that it would start to allow regulated crypto exchanges to advertise in the U.S. and Japan. The fact of the matter is that crypto is a whole new animal that likely can’t be quantified by existing rules and best practices; I believe it needs its own set of handcrafted policies that are flexible as time passes.
For an innovation still just about a decade old, cryptocurrency has made astonishing progress from Internet myth to legitimate industry. While early pioneers might eschew the idea of government mandates and hard-and-fast regulations for the industry, I believe they’re the only way to make it last long term as a safe, stable investment market.