Twitter jumps onto Bitcoin 'ban-wagon'
Micro-blogging site Twitter is reportedly looking to restrict all financial advertisements on the site to exclude any ad from a crypto-currency exchange.
Twitter will be the latest in a string of online platforms to make such a move. Last week, Google updated its policies to prohibit advertisers from promoting unregulated financial products like crypto-currency or initial coin offerings (ICOs). In January, Facebook made a similar move.
According to Sky News, Twitter will update its policies within the next two weeks to prohibit advertisements for ICOs, token sales and crypto-currency wallets globally.
These bans are in response to the lack of regulation in the crypto-currency space and the fact that ads are being used to promote scams that promise users double their money in 10 days, or ICOs that don't exist.
Earlier this month, a scam involving a company called BTC Global and nearly 30 000 South Africans saw people lose more than R500 million collectively. ITWeb interviewed a couple who lost R260 000 in the scam.
Interest in crypto-currencies surged last year as their prices rocketed, before plummeting this year. Regulators across the globe have since warned consumers about the risks of investing in crypto markets, but Internet companies are introducing outright bans because they worry there is not sufficient protection for consumers.
"With interest in crypto-currency and ICOs growing, scammers are rapidly moving in to exploit new investors. The lack of regulation around these markets has made it easy for criminals to prey on the naive and those with little understanding," says Lorien Gamaroff, CEO of Bankymoon, a local blockchain and crypto-currency consultancy.
"Social media networks are inundated with queries and complaints around the schemes that are being advertised on their platforms and so they are taking the radical move to ban advertising. These bans will persist until the regulatory environment has matured."
However, Angus Brown, co-founder of Centbee, says: "I think a ban is unfortunate and reactionary. There is massive interest in Bitcoin, not just as a speculative investment, but as a means of payment.
"People need to be protected against scams; however, education is the best mechanism. This ban may well drive scammers to use different mechanisms."
World Wide Worx MD Arthur Goldstuck says: "Most crypto-currency schemes ARE scams. It just needed the major advertising platforms to catch up to reality. While some of the crypto-currencies are legitimate, numerous others make unrealistic promises, or lure people into an investment which is really a gamble.
"Even where the cryptos and trading platforms are legit, third-party ads luring people to these or to investment in associated activity are dishonest, or do not tell the full story.
"Advertising is not synonymous with freedom of speech. It is primarily designed to influence people's spending. Where it is dishonest, misleading or preying on ignorance, it should not be allowed."
Farzam Ehsani, blockchain lead at Rand Merchant Bank, says: "We are dealing with a technology that is extremely powerful. With any tech that is transformative and new, it is often used for illicit purposes first."
He gave the example of the advent of the Internet: "In the beginning we saw banks saying it was irresponsible for other banks to expose their clients' data to this thing called the Internet."
But, he says, after the initial growth pains, these new technologies generally flourish.
"If this was not such a powerful technology, no one would ban it or restrict the flow of it. We wouldn't see large institutions wasting their time to put policies in place for tech that is not transformative."
Ehsani says large social media companies want to protect their users from scams, but also lack the education to understand the industry as a whole, let alone the nuances of what is a scam and what isn't.
"Rather than taking the risk, they are stopping it all together."
He says: "There are many consumers who have gotten into this frenzy of buying crypto to get rich quick, which is dangerous, and these bans may temper their enthusiasm. But crypto-currencies have such potential to add great value to the world, that I am not concerned the bans will have an effect on crypto at large in the long run."
Gamaroff echoes this sentiment: "I have no doubt there will be a general collapse in confidence for the majority of these assets in the coming weeks and months similar to the dot-com collapse in the early-2000s. There were some companies that survived the tech boom and bust, and similarly, so will some of the companies who are building value around these new technologies.
"It is important for investors to understand what they are investing in and not to trust claims that are too good to be true."