The Pros and Cons of Google Crypto-Ad Ban
Experts are confident that the lifting of the ad bans will one day happen.
It's now official: Google confirmed report by Cryptonews.com that it is set to ban cryptocurrency ads and join Facebook and Twitter in their bids to crack down on crypto-related scams and "misleading practices." We spoke to the industry players to find out the pros and cons of this decision.
Eliminating potential scams and misleading services may potentially help to inspire greater public faith in the crypto industry that remains. However, a removal of ads and 'suspicious' accounts may have at least two major downsides. For one, there's no guarantee that a ban will actually work, or that it won't unfairly discriminate against legitimate crypto businesses and services.
Secondly, simply removing all crypto-related ads will do nothing to help the general public differentiate between legitimate and deceptive cryptocurrency products and services. Instead, some analysts advise that it would be better to develop rigorous standards around crypto ads so that legitimate businesses can still advertise and the public can see the difference for themselves.
But even with these two downsides, it would seem that industry figures and commentators believe the bans are, on the whole, positive for the crypto industry. Not only is this because the crypto industry already has its own organic channels of growth and communication, but also because ad restrictions on Facebook and Google will affect scam operators much more than legitimate platforms and exchanges.
Benjamin Dives, the founder and CEO of the London Block Exchange, is one of these optimistic individuals, even if the London-based crypto exchange would seem at first glance to be disadvantaged by the bans.
"There are a number of businesses that are giving the crypto industry a bad name," he explained to Cryptonews.com, "and so the upside of a ban is that these are being filtered out."
Here, he's likely referring to such embarrassments for crypto as fake exchanges, as well as the many ICO scams that have cropped up in recent weeks and months. By placing a ban on all crypto-related ads, Facebook and Google – the two largest advertising companies in the world – would go a long way to reducing such bad apples, thereby protecting the general public from the kind of harm that might sour them on the idea of cryptocurrency.
This is essentially the view conveyed to Cryptonews.com by Windsor Holden, a crypto and blockchain analyst at Juniper Research. However, in contrast to Dives and other experts, Holden believes the ban is a good thing not only because it protects the public from scam businesses, but because it protects people from the riskiness of cryptocurrencies in general.
"Whether cryptocurrencies are legitimate or not, they are highly, highly volatile," he said, "far more so than any fiat currencies, far more so than the overwhelming majority of shares traded on exchanges. Added to that you have the issue that many of them are effectively “pump and dump” currencies, designed only to allow their progenitors to earn a quick buck or ten thousand."
In light of such volatility, Holden affirms that the bans "reflect a modicum of responsibility on the part of Google and its peers." Despite being largely driven by increasing government regulation, they will protect consumers, who have been wowed by bitcoin's precipitous growth without being made sufficiently aware that digital currencies can "fall by 20, 30 per cent in a day."
No effect on indirect ads
Of course, as recent news has indicated, many crypto businesses have found ways around Facebook's ban, and it's probable that they'll also find ways around bans from Google and (potentially) others. "It may be possible for firms to find a way around them," Holden notes, "although that will take time and the net result will be that the ads have a lower profile."
More importantly, commentators point out that crypto 'advertising' has been mostly sustained up until now by word-of-mouth, online communities, and more indirect means that don't rely on massive ad platforms such as Facebook and Google. As Mati Greenspan – a senior market analyst at a trading platform eToro – told Cryptonews.com, "cryptocurrencies themselves operate independently of the aforementioned tech giants and have their own strong community of advocates, so they do not necessarily need the attention of such advertisers to thrive."
Dives agreed. "While large companies like Facebook and Google provide a large reach, sheer word of mouth around the topic, not advertising, was what got crypto into the mainstream and you can't ban that."
However, despite having little potential effect on more grass-roots forms of 'advertisement,' recent bans may still have a significant impact on crypto's bid to become mainstream. In particular, it's likely that legitimate crypto exchanges and services will be caught in the crossfire as Google and Facebook attempt to take out the illegitimate ones.
"The obvious cons are that responsible exchanges like ours will be restricted in our choice of marketing channels," Dives of the London Block Exchange confirmed.
Similarly, Greenspan explains, "While it is possible to advertise with smaller platforms, it does require a lot more leg-work and so will hamper the efforts of both reputable and untrustworthy providers, that is why we think a blanket ban is not the right approach and we would instead advocate a more sophisticated method where legitimate providers can still market to consumers."
Another worry that follows from a blanket ban is that it might prevent the general public from becoming more exposed to and more knowledgeable about cryptocurrency, and therefore more able to tell the difference between reliable and unreliable crypto products and platforms.
"Removing adverts wholesale won’t help consumers differentiate between good and bad," Greenspan agrees, "and we’d advocate a more sophisticated approach to ensure legitimate opportunities can be promoted safely while other, perhaps less reputable, opportunities don’t slip through the net."
In other words, a ban might save Facebook and Google from leading people towards fraudulent crypto sites, but it won't make the general public any less susceptible to scams, especially if they continue to hear about bitcoin's massive growth in the press.
By depriving legit crypto exchanges and business of the two biggest advertising channels in the world, it's likely that the recent ad crackdown will deprive them of increased revenues (since increasing revenues is essentially what advertising is for). In turn, this will make it harder for the crypto industry to grow and to develop the kinds of standards that will make them more secure and trustworthy, which will ultimately make it less likely that the ad bans are one day lifted.
However, experts are generally confident that the lifting of the ad bans will in fact one day happen, even if said bans may potentially put exchanges and businesses in weaker position when it comes to becoming compliant with emerging regulations and standards. "This blanket ban will probably lead to the doors eventually re-opening but with better and healthier regulation," Dives predicts, "which we would welcome."
Likewise, Marieke Flament, the Europe MD at Circle, a blockchain payments company, told Cryptonews.com, "As crypto becomes more mainstream and is subject to more regulation, I wouldn't be surprised if those two platforms [Google and Facebook] were in a better position to revert on this policy."
Overall: good or bad?
Flament also confirms that Circle – which recently acquired the Poloniex exchange – doesn't expect the ban to "have any impact" on its business. Even though the value of cryptocurrencies have taken a significant hit since the ad restrictions were announced, it's largely this mood which characterises much of the thinking coming from crypto figures.
"Until [the bans are lifted], new consumers and crypto experts alike will continue to do what they've always done," Dives suggested. "[They'll] talk about this new technology with friends and colleagues, read trusted news sources and listen to respected industry players. In this regard, nothing is really changing."
This may be an overconfident assessment, but if it's closer to the truth than some of the pessimistic reports that have emerged recently, then it's clear that, overall, the ban is a good thing for the crypto industry. A lack of mainstream ad exposure will starve fraudulent 'businesses' of the oxygen they need to breathe, while the crypto platforms and business that actually offer something of value will continue to survive, since people will naturally still be drawn to use and to talk about them.
"Overall, this is a good move for us and for the consumer," Dives concludes. "We welcome greater regulation as we want a safer, more grown up, industry."