Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.
Advertising is one of the most critical revenue models for any online business, but current centralized models for the $330 billion a year industry are inefficient. The Basic Attention Token is crypto’s way forward—it pays you for watching ads on the Brave browser, a web browser that’s similar to Google Chrome.
As a brief overview, the whole point of something like BAT is to take money out of the pockets of advertisers and redistribute it to the people who must suffer through those advertisements. It’s in the form of cryptocurrency, which means that it’s highly volatile, but, still, getting paid to browse Reddit is the kind of thing only the moderators of the subreddit r/WallStreetBets can dream of.
The BAT concept combines anti-Big Tech sentiment with the ethos of blockchain, which is all about decentralization and self-sovereignty.Buy and sell Bitcoin and Ethereum instantly with Wealthsimple. Sign up to trade here.
It’s about speculation, too—since BAT is a regular cryptocurrency, you can trade it on exchanges and buy it up in the hopes that it’ll appreciate. BAT trades on the open market, and the value of the token is indirectly linked to the popularity of the Brave browser. Should the browser, still in its infancy and nowhere near as popular as its “rivals” like Google Chrome, take off, then it could be worth a whole lot more. (Or could be worth zilch in a few years).
The problems with the online ad industry
Advertising used to consist of advertisers, publishers, and consumers. The advent of corporations like Google and Facebook, and the proliferation of bots, malware, and online fraud, has turned the ad industry into an opaque and unsustainable marketplace where consumers, publishers, and advertisers all suffer.
Consumers pay for ads they don’t want to see through their mobile or broadband bills. Their money goes toward bandwidth for ads and trackers. Popular websites have as many as several dozen trackers slowing down page-loading times, depleting batteries and consuming more energy than needed, all while increasing data costs.
Ad blockers emerged to satisfy consumers’ demands to not be constantly harassed by unwanted advertisements. More than 600 million desktops and mobile devices use ad blockers, and that number is rising. To counteract ad blockers, advertisers have gotten more aggressive and intrusive, increasing their presence by placing ads not just on websites, but in applications, in videos, and through pop-ups.
To make matters worse, online privacy is being compromised like never before. Users’ online activities are tracked by technology companies that analyse their behaviours and sell the data on to advertisers for a profit. Under the current model, bots, fraudsters and corporate go-betweens take the lion’s share of the profits.
Between them, Google, Facebook, and Amazon accounted for two-thirds of total US digital ad spending in 2020, simultaneously driving down the price of information. Publishers everywhere have lost credibility due to attacks by bots and malware. Advertisers have also taken a hit. They lack the means to market their products to their target consumers, since their functions are limited by the publishers hosting them.
Once installed and opened, the browser’s default settings block trackers and ads. That was the first salvo in Brave Software’s plan to decentralise the digital advertising industry. The next addition to the Brave ecosystem would change everything: the Basic Attention Token, or BAT.
Monetising mental engagement with BAT
The Basic Attention Token is an ERC-20 token, which means that it’s built on the Ethereum blockchain using a standardised smart contract template (smart contracts are bits of code that execute once a certain condition is satisfied). The BAT is a currency exclusive to, and enclosed in, the Brave ecosystem as its native utility token. Its value is derived from, and therefore commodifies, user attention.
Under Brave’s model, user attention is classed as sustained mental engagement with an advertisement. The categories that designate attention value include how long the user spends watching an advert and the number of pixels of ad content in view on screen.
When a Brave user goes into their browser’s settings to turn off ad blocking and initiate Brave Rewards, the browser automatically starts tracking their activity on their device’s local storage, logging the amount of time spent on each website the user visits. It does this to tally up how much BAT the user is generating.
Every month, Brave Rewards sends the corresponding amount of BAT from a user’s browser-based wallet to the websites that the user has visited, in proportion to their engagement with them. The more content creators manage to sustain user attention, the greater their revenue will be and the more desirable their ad space will get. Meanwhile, because advertisers are directly targeting their audiences, Brave says that the expected returns on advertising budgets are much greater.
Users can opt out of supporting websites and can directly tip the content creators they do want to encourage on platforms like Vimeo, Twitter, YouTube, Reddit, Github, and more. Brave users can also purchase gift cards for Walmart, Amazon, and Uber, to name a few.
Using Brave partner Uphold, Brave users can exchange users’ accumulated BAT for their currency of choice. The value of BAT is pegged to ETH and ultimately fluctuates with it. BAT can also be exchanged for services on the Brave platform and select premium content, although it is ultimately the content creators themselves that receive the most BAT.
The information that Brave tracks is logged on Ethereum’s distributed ledger to enhance the user’s privacy-focused ad engagement. Users experience fewer ads, and the ads they opt in for are curated according to their preferences and interests using a machine learning algorithm that doesn’t rely on traditional tracking and data collection methods. Since the user’s browsing data is only stored on their device’s local storage, the Brave browser doesn’t compromise their data privacy rights.
Thanks to Shields, the browser’s inbuilt tracker blocker, there’s a big increase in browser performance, too. On its website, Brave claims its browser loads pages three times faster than Chrome on desktops and up to eight times faster on mobile devices. Even with multiple tabs open, Brave’s browser uses 66% less memory than Chrome on average, and consumes 35% less energy in battery tests on mobile devices, amounting to an average energy saving of over an hour.
BAT as currency
The Basic Attention Token launched on May 31, 2017, and reached an all-time high of $1.37 on March 18, 2021. BAT is a unit of currency within Brave’s ecosystem, so its functionality outside of the ecosystem is limited, but nonetheless it shares certain features with other ERC-20 assets and can be speculated upon just like any other cryptocurrency.
BAT is supported on DeFi lending platforms like Maker DAO and Compound, where the token can be used as collateral to generate loans and earn interest. BAT became the second most used coin in the DeFi space in the second quarter of 2020 by generating the best returns on Compound. Its trading volume in the DeFi space that year came to $931 million, which was over $300 million more than Ethereum, though borrowing of BAT has since calmed down.
The total supply of BAT is capped to 1.5 billion tokens, which were pre-mined prior to its token sale in 2017. One billion tokens were sold during the Initial Coin Offering (ICO), with a further 500 million kept in reserve while the platform grew and developed. Although BAT can be bought and sold on various exchanges, there’s no real use for them outside of the Brave ecosystem, which means that as the platform develops, BAT will need some real world utility to give the tokens value.
Brave’s web browser is only growing in popularity, though. Over the course of 2020 it’s daily active user count rose from 3.8 million to 8.6 million, making for a 126% increase (but still peanuts compared to the billions of users on Google Chrome). In addition, the number of verified content creators using the Brave platform has risen to well over a million.
BAT is also receiving institutional support. On March 17, 2021, Grayscale CEO Michael Sonnenshein announced on Twitter that BAT was one of five tokens added to Grayscale’s inventory of digital asset trusts. This alone is momentous. Grayscale’s Bitcoin Trust is the biggest cryptocurrency trust of its kind, and a BAT Trust could also breathe new life into the coin.
The Bottom Line
Brave and its native utility token BAT offer an exciting and engaging alternative to the advertising industry today. Through blockchain technology, Brave software has created a platform that does away with the middlemen, circumnavigating fraudsters, bots, and malvertising, to provide a transparent alternative to current advertising models that is fairer to consumers, publishers, and advertisers.
Advertisers get around ad blockers and reach their target audience quicker. Consumers use less energy, all while keeping their data protected and only engaging with adverts they consent to. Finally, content creators get directly rewarded for their audience’s attention, while seeing the desirability of their ad space increase. Through blockchain technology, the Brave platform and it’s native BAT provides a fresh, decentralized model to redress the inequalities of the ailing ad industry.
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