April is all about ringing in rebirth, watching wildflowers bloom and, apparently, giving cryptocurrency the boot.
In early April, Twitter, Facebook and Google banned some types of cryptocurrency-related ads in an effort to minimize fake news and fraud-riddled products. In response to the initial dramatic announcement, Bitcoin fell six percent. It would seem the digital Spring Cleaning may cause wider ripples.
What’s Included in the Advertising Ban?
Twitter has banned a number of products, including initial coin offerings and token sales.
It will, however, allow advertising from exchanges or wallets that are provided by companies that are listed in the major stock exchanges. The logic behind this goes a bit like this: companies that are listed on major stock exchanges are also subject to lots of transparency rules, making it easier for Twitter Bitcoin enthusiasts, for example, to know if they’re purchasing what they think they’re purchasing.
The banned products, including ICOs, have too much potential to become cryptocurrency scams. Take the ICO released by a messaging app company called Telegram. The app is positioning itself as a company that doesn’t make money and is entirely self-funded. The ICO is an attempt to raise money for expenses.
This behavior has caught a lot of attention, with numerous scam websites popping up that claim to be able to get users special access to the Telegram ICO before it launches. These users will make lots of money, no doubt. Except that once the user has moved their Bitcoin or Ether to the helpful broker, said broker disappears with as much of the user’s money as it can.
Telegram is an Example of What Not to Do
Telegram isn’t wholly innocent in this process, though.
It has been selling pre-ICO “allocations,” which has, in turn, birthed a derivatives market. The allocations would allow holders to purchase tokens after the ICO, kind of like a futures contract. But it’s not enough to just hold on to a contract for future tokens; some holders are selling their futures at a profit, creating a sort of micro derivatives market.
All of this becomes a house of cards and whoever is left when it comes crashing down can have all the valueless tokens they want, because investors will run away screaming. Many already are calling Telegram’s behavior “crazy;” Michael Jackson of Mangrove Capital Partners told Forbes that “It makes normal crypto look blue-chip.” Ouch.
Avoiding Crypto Scams
If you’ve had any interest in buying into cryptocurrency, you may already be world-wise enough to avoid problems accessing the markets. Hopefully, the changes in Bitcoin advertising announced by Facebook, Twitter and Google will go a long way to help prevent digital ad fraud from here on.
Just like with any site where you enter personal information, it’s always best to type in the address to the market you want to access. These scammers are getting really smart, registering websites that look remarkably similar to legitimate crypto exchanges.
Check these items to be absolutely positive you’re in a safe zone before so much as typing your username:
- Secure site. Left of the web address in your browser, you’ll see a little box that has a lock in it. If the lock is green and the message says “Secure,” it’s a sign that you’re on the right track.
- Subtle changes to the site name. Look very carefully at the website name (again, type it in whenever possible), noting any special characters that have accents or other marks above or below regular letters from the English alphabet. If you find these, that’s not a trick of the eyes, it’s a scam site.
- Bitcoin marketing. Since the Internet has chosen to self-regulate who can and cannot advertise their Bitcoins and other cryptocurrency, seeing ads for specific exchanges can clue you in to which may be safe to use. This isn’t a guarantee that Facebook, Twitter or Google won’t make a mistake and let one bad apple slip in here and again, but it can help point you in the right direction.
One More Step Toward a Safer Internet
The cryptocurrency advertising bans that have just been put in place are yet another effort to shield users from fake news and scams that they seem primed to fall for.
This isn’t enough to undo a lot of the damage that has been done with online marketing abuses, but it’s a good start. It’s finding the balance that’s going to be difficult. When does fringe start getting tossed into the “scam” pile? When does the opposition view become “fake news?”