By David Drake
Many cryptocurrency experts were not surprised when Twitter and Google announced that they will be banning all crypto-related ads starting June 2018. Earlier this year, social media giant, such as Facebook made a similar announcement. This plan, according to the tech giants , is intended to crackdown on crypto scams.
Regulators in countries like the U.S., China, Japan and Russia, have been warning investors to be more vigilant about crypto investing schemes advertised on social media platforms. But for those who mean well for the cryptocurrency industry, this is a welcome move to protect the industry and help it prosper.
Scams in the Crypto Industry
The popularity of cryptocurrency has been on the rise over the past few years and there are no indications it will stop any time soon. This rapid boom of the industry has attracted both legitimate and fraudulent activities or projects.
The fact that the market is relatively new and unregulated, and involves convoluted technology, shady, highly hyped and often fraudulent crypto ventures have found their way into the cryptocurrency industry. Hackers and scammers leverage these gaps to steal money from investors by creating appealing crypto projects, advertising and marketing them widely online.
They invite investors to contribute money then they disappear with the money. Scamming in the cryptocurrency industry are real, taking the form of fraud, hack, theft, exit scam and phishing. On average, it is estimated that $9 million is lost per day in crypto scams. This situation leaves developers and crypto business owners with the sole responsibility of formulating their own operational frameworks.
Jean Pierre Rukebesha, CFO and co-founder of GN Compass, says, “Protecting customers is a concern for everybody, but it seems a little bit late because the industry is slowly figuring out how to identify ICOs with fundamental and clear value proposition. The biggest concern is stifling the growth of this industry; for the first time in human history, a layman with little computer skills is able to participate in digital based economy on the other side of the world, yet some powerful people don’t like it. Where is that drive to wealth distribution?.”
An immediate impact the crypto ban will have on the cryptocurrency industry is disruption of marketing strategies. Legitimate crypto businesses that want to take their projects ahead will have to develop alternative marketing strategies to reach and convince potential investors.
Andrei Huseu, CEO of Wealthman says, “Today, when internet giants, like Facebook, Google or Twitter, limit marketing opportunities for ICO projects, the latter are actively looking for alternative marketing strategies. And it’s not just about offline marketing. Because roadshows and participation in thematic conferences are essential, as they allow you to communicate with the audience directly. On the internet, the main types of promotion are either thematic resources (such as Bitcointalk or ICO aggregators) or alternative strategies (partisan marketing and hidden promotion). These is also a huge number of traditional channels of communication with investors, such as crowdfunding platforms, brokers, etc.”
Following this ban, we expect to see a complete overhaul of marketing strategies in the cryptocurrency industry.
Denis Farnosov, CEO and founder of AlfaToken says, “Also marketing through increased community engagement on social platforms, message boards and forums should be implemented. This means ICO founders must engage with the community. Tools like AMAs are effective for telling the story directly with the audience. Press releases can be used as a marketing tool if they are written in a news style where value is added for the reader. I believe these channels will profit from this decision of Google and Facebook.”
The crypto ban creates an opportunity for regulators to identify the most fundamental security concerns that investors and other players in the cryptocurrency industry have. This will help them formulate policies, guidelines and regulations that protect legitimate stakeholders in the industry against scamming.
Currently, numerous risks exist in the cryptocurrency market, especially for investors. Moving forward, we will see ICO companies adopt more diversified marketing tools. Regulators, such as the U.S. Securities and Exchange Commission (SEC) will focus more on formulating policies and regulations to protect all players in the industry leading to a safer, scam free environment.
On the other hand, investors will start conducting due diligence to determine the legitimacy of crypto ventures before investing their money. All this will boost confidence in the industry and spur growth.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.