BY NATHAN YOUNG ON 07/01/2018 AT 4:00 PM
Facebook Logo / The Memo
Facebook was one of the first companies to ban cryptocurrency advertisements back in January of 2018. At the height of the Bitcoin price surge, Facebook decided that crypto advertisements were misleading and causing individuals to believe in the get rich quick mentality cryptocurrencies portrayed. In a turn of events, Facebook has reversed course and begun allowing advertisements related to cryptocurrencies.
In a recent blog post released by Facebook, they explain the processes necessary to begin advertising cryptocurrencies on their platform. The application will allow the company to review any licenses, and if their business is formal and legit.
History
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Cryptocurrencies and Bitcoin in particular have been under scrutiny since the beginning. Facebook was the first company to implement the ban in 2018. From there, large companies such as Google, Twitter, and Snapchat followed suite in the coming months. The noble idea was by implementing this ban, it would protect individuals from the scams and less than ethical practices going on within the industry.
Despite the moves by these large corporations, not everyone followed and instead embraced the emerging industry. A driving factor behind that is the blockchain technology businesses are finding value in. As with any industry, there will always be the less than ethical individuals to ruin the party.
The Original Ban
Digging a bit deeper, the original ban was put into place during the mass coverage of Bitcoin and its price expansion. There are several ways to make money and one of those is playing on the psyche of the consumer. As the price continued to expand, advertisers were playing on the weakness of individuals.
Many of the advertisements were offering get rich quick schemes and using fear of missing out to pressure individuals into investing in their products or courses. Facebook recognized this issue and implemented the ban.
When originally implemented, many people where unhappy as it was seen to potentially hinder the growth of Bitcoin and the industry as a whole. As other big names followed, there wasn’t much the industry could do. Fast-forwarded several months, the Bitcoin market has cooled a bit, but the industry seems to be minimally affected by the ban.
Why The Reversal
First, Facebook admitted that the actions taken against cryptocurrency advertisements were broad. The company was also quoted as saying they want to improve the integrity of their advertisements. Understandably, the goal with the original ban was to dampen the hysteria around the explosive growth in Bitcoin.
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While Facebook did not explicitly state the reasons for lifting the ban, we can assume one reason is the ad revenue that was being left on the table. Currently, Facebook is one of the most popular places to advertise and certainly they want a piece of that pie. In 2017, Facebook generated $39.9 billion in ad revenue.
Another reason for the ban being lifted is the space has settled down quite a bit. People are no longer as hyped compared to six months prior. As with anything in life, it’s easier to say no at the beginning and then slowly let things get rolling, allowing for a bit of control.
Another reason for the ban being lifted is the space has settled down quite a bit. People are no longer as hyped compared to six months prior. As with anything in life, it’s easier to say no at the beginning and then slowly let things get rolling, allowing for a bit of control.
The Present
In the current state of the cryptocurrency market in relation to Facebook and other advertisement outlets, it appears people are taking a second look. It’s understandable for Facebook and these other companies to act on their desire to be noble, appearing to have the best interest of the consumer in mind.
However, the recent reversal of the ban should be an indication that Facebook only has one thing in the front of their mind and that is to make money. For example, if Bitcoin would have crashed from the highs and people lost all of their money, Facebook would have appeared smart in the eyes of the media. Now that they know the industry is here to stay, they realize there is too much money to be made in crypto advertising.
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Keep in mind though they are still approaching this industry with caution as they are making individuals complete applications to begin advertising. What we will have to wait for are the other companies to follow and lift their bans on crypto advertising as well.
Secondly, the fact that the bans are being lifted continues to bring credibility to the crypto space. Anyone who has been in the space knows how difficult it is explaining to others that Bitcoin or alt coins in general is more than the coin itself. The technology behind it and the processes involved are a large portion of why the adoption of Bitcoin is valuable.
Facebook reversing course is acknowledging that crypcurrencies are legit and here to stay. Large banks such as Goldman Sachs have been testing blockchain technology in an effort to bring efficiency to their company. Even though Facebook is allowing advertisements, they are still attempting to protect the consumer as they still are banning Initial Coin Offering ads, as well as binary options advertisements.
Summary
What this means going forward is the large companies are no longer dismissing Bitcoin or the industry as a fad. As with any new product or idea, it takes time for people to grasp and adopt the idea as legitimate. Facebook was skeptical at the height of the Bitcoin price expansion, but has since reversed course, bringing more validity to the cryptocurrency space.
What remains to be seen is if the other large names are going to follow and lift their bans as well. Facebook in my opinion recognized the profits being left on the table and reconsidered. First and foremost, they are a business and generate a significant portion of their revenue from advertising.
Also, those in the industry already know the practical applications of crypto and blockchain technology. However, it is up to the industry to begin advertising in a meaningful way, attracting new users. With the help of Facebook filtering out the scams and misleading advertisements, this is an opportunity for cryptocurrencies to take another step into the future.
Facebook implements a ban on advertisements in January of 2018
Google, Twitter, and Snapchat follow in the next couple months.
June of 2018 Facebook lifts ban on cryptocurrency advertising.
Applicants must pass a review of their business before being allowed to advertise.
This is positive for the industry as it brings validity while filtering out the scams.
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With years of experience in the financial sector, Nathan brings a diverse base of knowledge. From stocks to cryptocurrencies, he provides reputable analysis across many financial products.
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