Facebook’s Update on Crypto-related Ads – Why Should It Matter?

Facebook hit the news when it back peddled on its decision to ban cryptocurrency ads outright from the social media platform. This has now made technology companies, cryptocurrency and blockchain communities optimistic this move will set off a precedent for other advertisers to follow, particularly Google and Twitter, who earlier warned of a similar ban on cryptocurrency ads.

What are the implications of Facebook’s reversing its view on cryptocurrency, and what are we to expect about the future of blockchain technology?

 

What Changed After the Update?

Facebook now accepts cryptocurrency ads, but only from pre-approved advertisers who filed their cryptocurrency products and services onboarding request. ICOs and promotions associated with deceptive high-yield investment programs are still banned from advertising.

The update took effect after a six-month hiatus in cryptocurrency ads on Facebook. Apparently, the tech giant have found compelling reasons for reversing some of its decision after being dismissive on anything crypto-related. (uhhh… money of course!) There are also some rumblings Facebook plans on stepping into the cryptocurrency space with their own initial coin offering.

So far, legitimate cryptocurrency businesses like Cointelegraph.com have not been able to boost their posts a day after the ban was lifted. It’s very likely that Facebook is implementing more stringent rules and are, indeed, checking on the advertiser’s credentials with painstaking effort. We’ll learn more about the specific details of the screening process as they unfold.

 

Not a Complete Turnabout

Facebook didn’t go all the way, and instead chose to “loosen” some its policy on cryptocurrency advertising. A recent post from the product management director indicates an eligibility check, which takes into account licenses and pertinent documents submitted by each applicant. Facebook wants to avoid another Bitconnect incident or turn it a breeding ground for ICO scams (70% of advertised ICOs failed to materialize).

There’s no guarantee that every cryptocurrency and blockchain businesses would receive their stamp of approval. The least they can do for now is hope they don’t get screened out or send the wrong signal to the management and mistake them for ICOs or HYIPs. Facebook is open to the idea of revising this policy as they see fit and encourages everyone to give their feedback.

 

More KYCs and Background Checks on Advertisers

All advertisers in cryptocurrency must be “pre-approved” before posting ads on Facebook. To do so, they have to disclose information about their company such as:

 

  • purpose and nature of their business
  • Facebook ad account ID
  • website domain
  • licenses and credentials
  • company name
  • business address

You can apply for your pre-approval HERE

 

 

 

 

 

 

Facebook, basically, performs due diligence on advertisers on behalf of its users, which is a good thing for cryptocurrency. Done right, this might actually boost investor confidence. With stricter regulation in place, Facebook hopes to open more opportunities which could further mass adoption for cryptocurrency, and significantly increase ad revenue to the company.

Meanwhile, cryptocurrency and ICO scams might have a hard time after the update, but that doesn’t necessarily mean Facebook won’t have any of those. In fact several cryptocurrency and ICO scams were still able to get through, ironically, even after the ban on cryptocurrency ads.

 

What Changed Their Mind?

Facebook wasn’t so clear about the reason for partially lifting the ban on crypto-related ads. People have their own views and offer some explanation as to why this is the case.

Missing Out On Revenue. At times, Facebook is more worried about optics then revenue. This isn’t necessarily a bad thing but when it comes to crypto, Facebook has constantly missed the boat. This is evident when Facebook took a massive hit in market value recently. One of the main reasons for the price dip is the lack of awareness in its underlying technology; censoring out everything crypto-related from their platform could only serve to aggravate the situation. By encouraging users to learn more about the cryptocurrency through ads and meaningful social interaction, they might as well rack up huge profits along the way.

Facebook’s Launching Its Exploratory Blockchain Group. For a tech company this huge, it’s not difficult to imagine Facebook having its own native currency in the near future. Their announcement about the launching of an exploratory blockchain group has led to some rumours about their future involvement in the cryptocurrency space. If true, then this could mean adoption on a massive scale with its two billion plus users worldwide.

 

Conclusion

Facebook’s decision to lift the ban on crypto-related ads is a statement on cryptocurrency’s future utility as a store of value, or even as a medium of exchange. There’s no denying that cryptocurrency and blockchain technology has become a major force in shaping our current financial system. They might, as well, be a part of it instead of closing doors on an opportunity which could probably give them a decisive edge along the way.

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Why Airdrops Might Be the Next Big Thing for Cryptocurrency

A lot of governments are trying to regulate or censor cryptocurrency but closing doors on them only leads to new and innovative pathways to get around these obstacles. In fact, people can fly over these obstacles and drop them out of the sky – an airdrop.

Airdrops are free cryptocurrencies and tokens waiting to be claimed. As part of their initiative to spread the word, blockchain companies and startups have set aside a portion of their crypto-assets to do several of those –basically free coins for the taking.

 

Airdrops as an Effective Marketing Tool

Businesses use different strategies to get customers, but there is one particular method which always seems to make an impact regardless of the industry they’re in. Giving something valuable for free would almost always elicit a positive response from potential customers.

In the context of blockchain businesses, an airdrop is the equivalent of giving away product samples or gift cards to encourage buyers and users to take the next step. It might be as simple as coming back to learn more about the cryptocurrency or ICO (creating traffic to the website) or spreading the news about an airdrop. If the project seemed very promising, they might choose to join the ICO or buy more tokens to qualify for upcoming airdrops.

Airdrops have already been used for quite some time to raise awareness about a blockchain project or startup. They’re becoming more widespread as blockchain businesses move away from online and social media advertising and adopt censorship-free promotions. People can get information about airdrops from airdrop hosting sites like Airdropalert.com, Airdrops.io, ICOdrops.com, and forum sites like Bitcointalk.

 

Airdrops Target Specific Users

Despite recent advances in A.I., paid advertising is essentially a hit-and-miss strategy. Airdrops increase the likelihood of user engagement because they only target specific users. People who come to airdrop hosting sites might have learned about them through word-of-mouth, or they might have stumbled upon airdrops out of their own curiosity.

The target audience are most likely users with some experience dealing with cryptocurrencies. They’ll have their own Bitcoin, Ethereum, or wallets that support multiple currencies, and have already used them for quite some time. The other part are newcomers who wants to learn more about cryptocurrencies and get some free coins.

The chance of having successful adoption for every airdropped cryptocurrency or token is a lot better than if they were spent on paid advertisements which are a lot more expensive and don’t guarantee success. Think of it in terms of how Costco built their business. They didn’t (and still don’t) spend a lot of money on commercials or advertising. This ensures they keep their prices competitive with other large bulk discount stores. Instead, they use free samples of cheese, condiments, salad dressing etc as an incentive to increase sales and transactions in the store. Essentially airdrops allow crypto companies to become the next Costco.

 

How Airdrops Work

Airdrops use a different cryptocurrency or token (usually Bitcoin, Ethereum, or ERC20 tokens like EOS) as giveaways to promote their own. Blockchain startups and ICOs rarely publish airdrops on Google or Facebook, if at all. They’re usually listed in airdrop hosting sites where users can check the status of the airdrop and provide links to these sites.

There are basically three ways to airdrop.

Taking snapshots of the blockchain. Blockchain projects will set a date for taking snapshots of the blockchain. If you happened to make a Bitcoin or Ethereum transaction during the snapshot, you might soon find some free cryptocurrencies or tokens sitting in your wallet. In most cases, people are aware about the airdrop and learned them through airdrop hosting sites.

Requiring users to sign up for the airdrop. Some airdrops will require information about the recipients, especially their wallet addresses, emails, telegram, or twitter accounts. It’s basically a marketing strategy to get more users onboard and start a community. Unfortunately, not all airdrops are real or have value; some are used as a ploy to get information from users. Steer clear from airdrops asking for sensitive personal information or private keys.

During a hard fork. Blockchain projects can create free coins by forking an already existing blockchain. They usually have a community working on a blockchain project based on the original. Users get an equivalent amount of “free coins” depending on how much they own prior to the fork. They’ll get free cryptocurrencies tradable for fiat every time the blockchain forks. Bitcoin has had three forks since 2017: Bitcoin Cash, Bitcoin Gold, and Bitcoin Private.

Some airdrops will incorporate a referral system where users get additional coins free for every successful invite. Others require users to have a specific amount of cryptocurrencies or tokens to become eligible for the airdrop. Dapps which are set to launch on the EOS blockchain once EOS migrates from the Ethereum blockchain will give away tokens based on the amount of EOS tokens users have.

 

Conclusion

Cryptocurrency companies will always have a plethora of ways to market and promote themselves. But whatever strategy a company chooses, airdrops should like be included in that strategy, especially with the constant updates to advertising rules on Facebook and Google.  In fact, online and social media advertising might no longer be a huge traffic driver even if these companies choose to lift the restrictions on cryptocurrency. Try as they may, there seems to be no limit on the number of ways cryptocurrency communities can innovate and stay censorship-free.

The End of Currency as We Know It?

The growing optimism of financial institutions with blockchain technology has spurred a lot of interest within the cryptocurrency community. They’re now exploring the possibility of using cryptocurrency as a global currency, much like its real-world counterpart, but without the need for governmental intermediaries.

This, however, requires nothing short of a compromise since the technology used in cryptocurrencies, which were meant to cut off intermediaries, will now be used in the interest of banks and financial institutions they initially sought to eliminate.

 

Financial Institutions on the Use Blockchain Technology

The challenge with decentralized currency is the way which central banks create money. Cryptocurrency protocols which gave birth to Bitcoin, Ethereum, and Litecoin uses “proof of work”, hashpower/electricity to mine currencies until they reach a fixed limit. And, unlike central banks, anyone with adequate resource and hashpower can participate in the process of increasing money supply.

But not all cryptocurrencies follow this convention. Some currencies are neither mineable nor obtainable by any other means except through exchanges. Ripple (XRP), for instance, is one of those few currencies with such peculiar characteristics.

First, it has no need of miners to keep the system stable and secure, and does the exact opposite each time transactions are made: a specific unit of XRP is “destroyed” (around 0.00001 XRP or 10 “drops”) per transaction. Accordingly, this would discourage people from spamming the system. Maximum supply is programmed at 100 billion XRP, 55% of which is held in escrow.

Although “decentralized,” Ripple is backed by big institutions primarily Google (Google Ventures), and other venture capitalists such as Standard Chartered, Siam Commercial (SCB Digital Ventures), Japan’s SBI Holdings, CME Group, Seagate Technology, and Venture 51. The focus of blockchain adoption was not so much on creating a global decentralized currency envisioned by Bitcoin, but in making transactions “frictionless” and resistant to hacking.

Banks and financial institutions loved the concept and saw in Ripple the potential of using blockchain technology to make money transfers many times faster, a lot cheaper, and more secure than conventional banking and money service business. In fact, Ripple protocol is already supported by hundreds of banks and financial businesses across the globe, including American Express and SBI Holdings.

 

Use Cases of Blockchain Technology in Business

 

Banking & Money Service

Blockchain technology is the key to solving the age-old “Byzantine General’s Problem” when it comes to trust-based peer-to-peer transactions, one of which is the problem of “double spending.” In a traditional banking system, transactions between accounts and different banks have to be cleared to preclude the possibility of fraudulent transactions going through, especially now that most transactions involve digital cash and electronic money transfers over the Internet.

Although quite secure, they’re not essentially 100% hack-proof. The Bangladesh Bank Heist of February 2016 proves the vulnerability of a centralized method of transaction over the Internet (hackers employed the Dridex malware to send instructions to the Bangladesh Bank at the Federal Reserve Bank of New York through the SWIFT network.)

Banks and financial institutions are now looking to adopt a decentralized, consensual way of confirming transactions – one of the defining features of cryptocurrencies and distributed ledgers – to make cross-border, bank-to-bank transactions that are virtually hack-proof. To address the issue of congestion due to slow rate of confirmations, they’ve opted for cryptocurrency protocols which take mining out of the equation, i.e. pre-mined currencies.

 

Payment methods

The fact that tech giants, like Google, have invested in blockchain technology could be a strong indication that we are, indeed, looking into the future of cashless transactions. IBM also works with a pre-mined cryptocurrency, Stellar (XLM), to make cross-border payments more efficient and secure. Using this platform, they hope to eliminate the “costly, laborious, and error-prone process of making global payments.”

Microsoft retracted in their previous decision to stop accepting Bitcoin payments. Volatility and high transaction fees during peak hours can make Bitcoin payments troublesome for most businesses. But because of its high-yield potential for long-term investment, some businesses prefer Bitcoin over much stable but dormant pre-mined cryptocurrencies like Ripple and Stellar.

Several countries in North America, Europe, and Asia have brick-and-mortar businesses that accept Bitcoin payments with the same goal in mind. Since Bitcoin is regarded as a rare, highly-prized commodity, accepting them as payments is a viable way to make long-term cryptocurrency investments.

Some people went as far as using Bitcoin to acquire properties like one of Malaysia’s top entrepreneur who bought a piece of land for half a Bitcoin, and a property developer in the UK who sold two luxury homes for Bitcoin.

 

Internet Sites & Social Media

Blockchain technology can also have a positive impact on Internet sites and social media because of the massive traffic they generate. Having a cryptocurrency for users and subscribers seems to be the way forward. Facebook CEO, Mark Zuckerberg recognized the potential of having a cryptocurrency for its 2 billion users and subscribers.

Online stores and online services would also benefit from cryptocurrency payments for the very same reason banks and money service business are using it with the Ripple currency/protocol.

 

Implications of Institutionalizing Cryptocurrencies – Two Sides of the Story

Based on these observations, two possible scenarios are starting to emerge. Blockchain technology is undoubtedly the next generation of secure, peer-to-peer transactions. But as to the control of money supply and the ability of users to store value outside the realm of government regulation, the issue of decentralization could reach a stalemate between institutionalized cryptocurrency like Ripple, and a truly decentralized cryptocurrency like Bitcoin.

In such a case, we might be seeing two types of cryptocurrencies serving two different purposes – one as a fast and secure method of payment and money transfer (akin to fiat currency), and another as a store of value. Ripple has its merits as a payment method because of its liquidity, stability, and abundant supply. Bitcoin could also be used for the same purpose, but until it creates a permanent solution to scalability issues, transaction fees, and slow transactions, it might be best to keep it as a store of value or as an investment option.

Another possibility would be one of them prevails over the other. In the case of Ripple taking the lead as the dominant cryptocurrency, we might see a resurgence of centralized money in the form of a peer-to-peer currency based on trust. If Bitcoin, however, stays on top and manages to solve the issue, the other type of cryptocurrency could weaken or fall into disuse.

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