Facebook Less Worried About Crypto Ads Now That Its Own Cryptocurrency Is in the Works

On Wednesday (May 8), Facebook announced a few important updates to its advertising policies related to "blockchain, cryptocurrency and financial products and services."

The Origin of the Outright Ban on Crypto-Related Advertising

On 30 January 2018, Facebook announced that it had created a new policy (called "Prohibited Financial Products and Services") that disallows ads that "promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency." It acknowledged at the time that this complete ban on all crypto-related ads was perhaps a bit too drastic a measure:

"This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices, and enforcement will begin to ramp up across our platforms including Facebook, Audience Network and Instagram. We will revisit this policy and how we enforce it as our signals improve."

Allowing Crypto Ads but Only From Pre-Approved Advertisers 

On 26 June 2018, Facebook said that it had updated its "Prohibited Financial Products and Services Policy" to "allow ads that promote cryptocurrency and related content from pre-approved advertisers" whilst still prohibiting "ads that promote binary options and initial coin offerings." Any business wishing to advertise crypto-related products and services had to prove that it was eligible by filling out a form called "Cryptocurrency Products and Services Onboarding Request" as well as as provide proof of ownership of the domain(s) associated with the application.

Facebook's Focus on Blockchain and Cryptocurrency

The first time we got a hint of Facebook's interest in cryptocurrency was on 4 January 2018 when CEO Mark Zuckerberg said in a post on his Facebook page that one of his personal missions for 2018 was to learn more about this subject. 

And then in May 2018 the world first found out that Facebook was getting serious about blockchain technology. On 8 May 2018, in a post on Facebook, David Marcus, the former head of Messenger, who was at that time also a board member (since December 2017) of crypto exchange Coinbase, revealed that he was leaving that role to set up a new group focused on exploring applications of blockchain technology across the whole of Facebook.

On 13 December 2018, Cheddar reported that Facebook’s blockchain group is planning to "potentially disrupt the entire payments industry":

"At a private dinner Facebook hosted during a recent crypto conference, one attendee told Cheddar that Facebook employees pitched the idea of creating a decentralized digital currency for the social network’s 2 billion users."

Several days later, Bloomberg reported that Facebook was creating its own cryptocurrency (a stablecoin) for money transfers within its highly popular messaging app WhatsApp. Roughly, two months later (28 February 2019), the New York Times confirmed Bloomberg's earlier story, and said that, according to its sources, this project was "far enough along that the social networking giant has held conversations with cryptocurrency exchanges about selling the Facebook coin to consumers."

Then, around one month ago, Nathaniel Popper, one of the two journalists who wrote the report in the New York Times, provided this update (on Twitter) about Facebook's cryptocurrency project:

And finally, one week ago, the Wall Street Journal reported that Facebook was "recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system," and that the core part of this initiative (code-named "Project Libra") is "a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet." Furthermore, this report said that, according to people familiar, Facebook was talking to "financial institutions including Visa Inc., Mastercard Inc. and payment processor First Data Corp." about investing in this project.

Facebook's Latest Thinking on Crypto Ads

On Wednesday (May 8), Facebook announced that since June 2018 it has been listening to "feedback", and that while those wishing to run ads that promote cryptocurrencies still need pre-approval, it was no longer demanding "pre-approval for ads related to blockchain technology, industry news, education or events related to cryptocurrency." It also said that it will "continue to ban ads for initial coin offerings (ICOs) as well as ads for binary options."

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Ampleforth Seeks to Become the Perfect Digital Asset for Portfolio Managers

A new token is seeking to change up the existing paradigm in the cryptoasset market.

Billing itself as “smart commodity money” - a token that has the benefits of commodity-monies like gold and silver, but can respond efficiently to changes in demand - Ampleforth is keen to emphasize that its token represents a new kind of asset in the space.

The Evolution of Money 

Money has been reinvented many times over: for many centuries mankind did without it, instead simply assigning value to particular goods in exchange for other goods. Then gold and silver formed the basis of money, whether coins were made directly out of these precious materials or "stamped" as a standard into baser metals.

Indeed, gold as a standard for global money transfer lasted for many centuries: the official gold standard was dropped by Britain and the US in the early 1930s and by 1971 the system was abandoned completely to be replaced fully by what we now call the fiat money system where global currencies (to a large degree) freely float against each other on foreign exchange markets.

The Crypto-Evangelists

Niall Ferguson is an expert in this field and, as an Oxford and Harvard lecturer, has written and spoken about money and capital many times. He may be a little late to the crypto party but is none-the-less evangelical about it: in a Bank of England seminar last year he called cryptocurrencies "the financial system of the future".

Ferguson has now thrown his weight behind the Ampleforth Project, which - on June 13 - raised $4.9 million in 11 seconds in its initial exchange offering (IEO) of its "Ample" (AMPL) tokens.

The digital asset explains in its white paper that it’s a "synthetic commodity" that aims to become truly uncorrelated from both traditional assets, stocks and currencies as well as from Bitcoin, other cryptoassets and other synthetic commodities. The problem with existing synthetic commodities, the paper explains, is that they have so far failed to do both. 

Ampleforth Explained

While Ampleforth seeks the price target of $1 for the Ample, instead of pegging directly to the dollar - like Tether - or to a basket of fiat currencies - as Facebook's Libra intends - the Ample will allow the quantity of assets a user holds to fluctuate, in addition to price, as it seeks a price supply equilibrium.

The system's protocol will actively seek this equilibrium by either proportionally increasing the quantity of tokens every user holds when prices climb, or proportionally decreasing the quantity of tokens every user holds when prices fall.

This is called money supply and has been one of the tools used by central banks to control inflation for many years. But Ferguson's criticism of this - in his book The Ascent of Money - is that it reflects human sentiment too much:

Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional volatility.

Ampleforth seeks to overcome these problems algorithmically by applying countercyclical pressures that dampen volatility, encouraging markets to self-correct. Supply updates will be freely visible in the market ahead of any changes, allowing the market to anticipate these changes and respond accordingly.

Ferguson explains his enthusiasm for the project:

The ingenious thing about Amples is that this they are not stablecoins, pegged in some way to existing fiat money. They are a special kind of digital asset, the quantity of which varies in response to the behavior of investors and traders.

Crypto Rivals

Ampleforth is unlikely to challenge Bitcoin any time soon as the number one crypto investment, but offers a compelling three-stage plan for the use of Amples. 

In the near-term, the token’s lack of correlation to both traditional assets and Bitcoin, will make it a useful portfolio diversifier. 

In the more medium-term, Amples may be used as reserve collateral in decentralized banks, such as Maker DAO.

Ultimately, the long-term goal however, is that Amples will serve as an independent alternative to central bank money. The team describes it as a “macroeconomically friendly” Bitcoin that averts the deflationary problems associated with fixed supply commodities when used as reserve collateral by banks.

Ampleforth Moves Forward

Such was the success of its first token sale on Bitfinex, that Ampleforth is conducting a second round of funding on the same exchange on Thursday.

The company aims to raise close to $5 million in this IEO, with a maximum contribution per investor of $5,000 and a minimum of $28, with each Ample token worth $0.98.