An ongoing pushback against cryptocurrencies by major platforms threatens to endanger start-ups' ability to finance their projects, but some players remain determined to push on.
Twitter, Facebook and Google have all imposed a blanket ban on any companies using their sites to advertise the sale of cryptocurrencies, particularly in the context of an Initial Coin Offering or Token Sale - an increasingly common means of raising funds ahead of a venture's launch.
Their decision to distance themselves from crypto vendors no doubt stems from the rapid devaluing of prominent currency Bitcoin, as well as studies that show more than half of all projects funded by ICOs last year have either failed, are on course to fail or disappeared entirely.
The ban means that any firms hoping to use a Token Sale to secure finance for games or games-related projects will need to seek alternative means now that paid advertising is no longer an option.
J. D. Seraphine - head of Vision Tree, the film production firm behind the upcoming cryptocurrency-funded biopic on Atari founder Nolan Bushnell - decried the move, stating that leading platforms shouldn't be swayed by the negative elements of what he deems to be a promising technology.
"It's a new disruptive market, and with that there will certainly be some bad players," he tells GamesIndustry.biz. "Cryptocurrency companies that act in an unethical way, while utilising deceptive and misleading practices to promote their projects and related fundraising campaigns should be targeted and held accountable.
"However, to blindly block all crypto companies from promoting their token sales on those platforms is short sighted and tantamount to throwing the baby out with the bath water. Investment bankers nearly tanked the entire global economy in 2008 while investors lost billions of dollars, yet these same platforms did not ban those companies from continuing to promote themselves to prospective investors and clients."
He went to accuse legacy platforms of being "understandably afraid" of a disruptive technology that could threaten their dominance, suggesting this ban is a step to "proactively stymie this innovation before it loosens their grip on their respective market sectors."
"The very nature of the cryptocurrency industry and space makes it very difficult to stop because it is largely decentralized with multiple major players who are adept at pivoting quickly to respond to market forces, and the shifting regulatory environment," he continues. "I believe they would be best served to embrace the change, though in reality, many of the major players are actively pursuing their own cryptocurrency and blockchain ventures while using the errors of a minority of bad actors as an excuse to clamp down industry-wide."
"There is a stigma over ICO 'scams' in particular and the cryptocurrency world in general. A little like when the internet first became the Next Big Thing, and it was tainted by the proliferation of porn."
Gary Bracey, Terra Virtua
Games industry veteran Gary Bracey tells us he "can understand" the reasoning behind the ban, although it speaks to a larger issue in the cryptocurrency space. Bracey is CEO of the newly-unveiled Terra Virtua, a subscription-based virtual reality platform due to launch later this year with a token sale kicking off this month.
"There is a stigma over ICO 'scams' in particular and the cryptocurrency world in general," he observes. "A little like when the internet first became the Next Big Thing, and it was tainted by the proliferation of porn.
"In a different way, the blockchain has become tarnished by the dark side of its use - money laundering, etc. In time, the legitimate businesses like ourselves, who can leverage genuine advantages from the technology, will become more widespread and the stigma will - hopefully - wither and die."
He stresses that this does not affect Terra Virtua's plans - the token sale is going ahead as scheduled. This is partly because direct advertising via Twitter, Facebook and the like was never paramount to the start-ups strategy.
"It's a pretty cluttered space and we are targeting more mainstream media and press in order to create awareness," says Bracey. "The challenge is conveying the legitimacy of your proposition, amongst the countless whitepaper nonsense that seems to be proliferating the space. Awareness is one thing; but unless it is backed by credibility then no amount of paid advertising is going to attract the serious investors."
Even Bitcoin's troubles, which could be argued as a black mark on the future of cryptocurrency in general, has failed to dissuade Terra Virtua or Vision Tree from banking on token sales - and both firms are confident their audiences have not been deterred either.
"Many crypto-investors have already become very wealthy and the smart ones are not backing away from the sector," says Bracey. "But they are however, becoming a lot more selective and diligent over what they want to put their money into."
Seraphine asserts that leading platforms such as Twitter, Facebook and Google aren't instrinsic to how crypto-investors discover their next venture anyway. Furthermore, he believes these platforms' days as a powerhouse are numbered as more people become aware of the potential blockchain technology holds.
"The efficacy and performance of paid advertisements for this market, especially on those social media platforms, is questionable," he says. "There is room for innovation driven by blockchain technology to create more efficient and transparent systems for major brands and ad buyers including those in the burgeoning cryptocurrency space to reach their audience directly.
"We expect that new ad engines powered by blockchain technology will revolutionize the digital advertising ecosystem."
In lieu of paid advertising on established platforms, Vision Tree opted for a more ambitious way to drive interest in the project's Bushnell Token. The firm created a digital engagement site that rewards users with cryptocurrency for promoting various partner products. Through this, the firm aims to generate community engagement around production on the film and spread the word via social media.
"All of which is largely unaffected by the changes announced by those platforms," Seraphine adds.
Similarly, Terra Virtua will be reaching out to potential investors via active engagement on Twitter, Facebook and YouTube, rather than paid advertising. The firm is also attempting to attract the mainstream press and media to gain broader coverage, having already started with an official launch event GamesIndustry.biz attended in London last week.
"When you have a tangible business to shout about and can demonstrate the ability and experience to execute and succeed then investors will take notice," says Bracey. "However, this is not such a simple task, nor is it inexpensive!
He continues: "There are a number of really smart, compelling and exciting ICO companies who will demonstrate the long-term viability of their proposition and prove to be a savvy investment. Unfortunately, I think these are still way outnumbered by the companies who see this as 'Kickstarter v2.0' and just looking for a way to make a quick buck without having any real substance other than a whitepaper and a bunch of pretty faces on their advisory team - this is creating the clutter, distraction and perpetuating the aforementioned stigma."