With over 1,300 cryptocurrencies currently on the market, it seems that a new digital currency is launching almost daily with its own purpose, USP and objective. However, for an industry that is seemingly growing, the marketplace is not without its critics.
Back in January, Facebook announced that it was banning cryptocurrency advertising from the platform altogether; citing that “there are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith.” Then, just two months later Google followed suit and announced the same ban across its platforms, that will go into effect from June, with Twitter following closely behind banning cryptocurrency ads immediately.
As many cryptocurrencies use social media to build their following as their first point of call in marketing and advertising, this move can be significantly damaging to existing currencies operating in this space and new cryptocurrencies looking to operate within the industry. Whilst Cryptocurrencies are still free to use these platforms tools to engage with their audiences, the fact they banned crypto ads shows a clear distrust which may leave some cryptocurrencies with a bad taste in their mouth as they look elsewhere to reach their following.
Was this a justified move from a companies trying to protect its users? Or simply these global technology giants demonstrating its lack of understanding of an emerging and disruptive technology and therefore highlighting the need for more mainstream education? If anything, it is clear that this movement is highlighting the need for the crypto market and its players to work harder than ever before to ensure a greater level of transparency that will instil trust from its audiences.
Increasingly utilised by various mainstream industries and markets over previous years, blockchain technology has trust and security at its heart. Yet, for a technology that enhances transparency across multiple sectors, cryptocurrencies, which are built around the very same technology, continue to instill a lack of trust and transparency.
It can be hard for investors to trust cryptocurrencies due their decentralised nature, meaning no government body, bank or authority has control over it. There’s also the factor extreme volatility where prices aren’t regulated, and as more investors enter the market, the price continues to soar.
Of course, this is not entirely unjustified as it doesn’t take much effort to locate stories about less than legitimate ICOs or fraudulent cryptocurrencies, one of the reasons social media have been putting a stop to advertising. However, it does mean that those within the industry need to work harder to not only demonstrate that their projects and currencies are legitimate, but also to educate the wider audience to be able to identify viable investment opportunities on their own. This is particularly important because of the sheer amount of circulating news telling users not to invest in cryptocurrency if you simply ‘do not understand it’.
As more and more cryptocurrencies appear in the market everyday, there is further demand for transparency and verification from investors both new and existing. For companies who are looking to launch a brand new cryptocurrency, they will be expected now more than ever before to demonstrate reliability for potential investors, in order to advise them to buy into the ‘crypto’ space and its values.
Proving the potential
Transparency should be enlisted even before an ICO launches to start building a relationship with potential investors. To ensure this, it is essential that businesses create a detailed technical white paper that features all information and project plans, profiles for all leaders and developers involved in the making of the ICO and a timeline of events so investors can keep track of the project’s developments, boosting trust and empowerment.
Due to cryptocurrencies seemingly volatile and unreliable nature, and in a bid to instill some level of trust back into the industry, the Digital Currency Index was launched in July 2017. Aiming to be the first widely accepted market index for tracking the cryptocurrency industry, the index tracks the marketplace based on a variety of qualitative and quantitative prerequisites; including the cryptocurrency team, development, expected return and the degree of volatility.
The Digital Currency Index has presented crypto investors with a range of insights and analysis into the market which were previously unavailable. The index is freely available to mainstream audiences and works as a tool that is able to track the value of certain currencies and enables potential investors to see which digital currencies are the most viable.
Whilst the launch of the index is a step in the right direction for the market to promote transparency, is it enough to instil trust in an industry that is so heavily plagued with cautionary tales?
In order to promote a greater level of transparency within the cryptocurrency market, it is up to the currencies themselves to prove their potential to investors. Previously, social media was a tool that many utilised to engage directly with their audiences and update them on their project’s development. However, with Facebook, shortly followed by Twitter and Google, seemingly turning their backs on cryptocurrencies and ICOs, it remains unclear how these platforms will play a role going forward.
However, with the launch of the Digital Currency Index it is clear that the cryptocurrency market is focused and determined to put transparency and trust back into this eruptive and uncertain market, and be able to welcome investors with open arms, which subsequently could help put an end towards the volatility of this market.
Aside from providing a detailed, strategic white paper, profiles on the team behind the cryptocurrency and promoting a high level of communication, cryptocurrencies can start to build a strong foundation of trust and promote a higher level of transparency in the market through consistent communication with investors and continue to dominate in this new era of technology.
Drew Bell, Chief Developer at Ethercoin
Image Credit: Make-Someones-Day / Pixabay