The Basic Attention Token is the unit of currency used on the Brave browser, a web browser that emphasizes customer privacy, data usage, and time. Currently, the internet advertising economy is plagued by foul play ranging from unwanted scripts being injected through ads in order to track user activity to bots creating websites and generating fake traffic in order to charge advertisers extra money. The Brave browser aims to protect all parties by working directly with publishers, advertisers, and users in order to create an ecosystem with no middle men or foul players to spoil the digital advertising market. The browser automatically blocks ads and website trackers and gives the user the option to block scripts. However, users are allowed to opt in to seeing ads in exchange for Basic Attention Token. All ads are approved through the Brave ecosystem and targeted towards individual users based on locally stored user data. In other words, Brave does not track user data, but uses machine learning with locally stored data to give users ads that they might be interested in rather than using third-party tracking. The new economy will only involve advertisers, publishers, and users. Advertisers pay publishers to display their ads and users to interact with the ads. Publishers receive contributions from users for premium content and from advertisers to show their ads. Users receive BAT for viewing ads and can either buy premium content or subscriptions from the Brave browser or withdraw their tokens for other use on a cryptocurrency exchange.
UTILITY AND INCENTIVE SCHEMES
BAT is the utility token behind the digital advertising economy on the Brave ecosystem. BAT is a means to access to the Brave ecosystem and a unit of account for all participants. There are four parties: Users, Publishers, Advertisers, and Brave. In order to establish an incentive scheme for each party, we must first understand each party’s goal.
1. The Advertiser – The advertiser’s goal is to gain interaction and attention from as many interested users as possible. The advertiser is thus incentivized to use the BAT token to pay publishers and users on websites that have a matching targeted demographic for their product. Furthermore, in order for the advertiser to display an advertisement on the Brave browser, the advertiser needs to be vetted by Brave. As Brave’s usership continues to grow, more and more advertisers will want to partner in order to optimize both spending and targeted traffic for their ads.
2. The Publisher – The publisher’s goal is to gain as much traffic as possible and find some way to monetize it. The publisher can monetize traffic by partnering with Brave to become Brave-verified so that they can show advertisements and take a cut of the BAT payment. Publishers are now incentivized to make great content in order to draw as much traffic as possible.
3. The User – The User’s incentive scheme is very straight forward. The user can earn BAT by viewing ads, but also be comfortable that there are no injected scripts or malvertisements. The user can simply enable ads, earn BAT, and then either buy premium content from publishers, buy products from advertisements, or simply exchange their BAT for another currency on an exchange.
4. Brave – Brave earns a piece of the BAT payment from the Advertiser. Thus, Brave is incentivized to create the best possible web browsing experience for users, publishers, and advertisers alike. Brave will be focused on keeping out foul players, saving time and data for users, and matching advertisements to ideal users via machine learning.
CONSENSUS ALGORITHM & SCALABILITY
BAT is an ERC-20 token, so all transactions take place on the Ethereum blockchain and BAT is subject to Ethereum’s scalability and security protocols.
BAT is an open-source project with a repository on Github for everyone to see. Brave is a private company, but they have been very transparent throughout development with clear roadmaps and a regularly updated blog on their website where the head developers and chief officers share their thoughts and answer the community’s questions. On top of this, BAT has a strong reddit presence with over 19,300 members.
In the cryptocurrency space, the largest competitor to BAT is AdEx which offers a similar solution of removing the middlemen from digital advertising. The project is currently in beta-testing phase and only has a market capitalization of $12.4 million USD as of September 6th, 2018. The total supply of AdEx implies that the company has about four million USD left over for development, which doesn’t seem to be enough considering they claim to not take any fees from advertisers or publishers. Considering the millions of users on the Brave browser, it seems that BAT has a clear advantage over digital advertising solutions in the cryptocurrency space.
When we view the entire market opportunity, we see that there are over 500 million people using AdBlock in the world and ad fraud is still rampant. The digital advertising market is worth an estimated $88 billion USD and Facebook and Google have the most power over it. Ad fraud contributed $7.2 billion in 2016 and on top of all of this, the BAT whitepaper claims that the amount of data wasted on mobile users downloading ads could cost the average user around 23$ per month. The value for a viable solution is unbelievable and if the BAT/Brave combination can not only save users’ money but also give every party in the digital advertisement ecosystem the ability to make more money, the market opportunity for BAT alone could be in the billions.
ADOPTION FRICTION & EASE OF USE
We are already seeing some mainstream adoption as many popular YouTubers and Twitch Streamers become Brave-verified. Other notable partnerships include Washington Post, Vimeo, and Vice. Brave’s quantity of users is growing at a rapid pace and there is no barrier to entry for the common user, which is rare in the cryptocurrency universe. The mobile web browser is an application on all mobile platforms. The desktop application can be downloaded from the Brave website for Mac OS and Windows. The desktop application comes integrated with a BAT wallet. Advertisers and Publishers will have their own desktop (and likely mobile) applications for controlling their income and payments within the BAT ecosystem.
The only real barrier to entry is the initial purchase of BAT by advertisers to pay for advertising space and perhaps by users to pay for subscription services if they decide not to view ads. The initial purchase of BAT must happen on a cryptocurrency exchange and the general public is not yet comfortable with this. An easy fix is for Brave to implement a BAT purchase user interface on their browser, but that might come with extra regulatory risk.
The biggest challenge in this space will be stealing a piece of the market share from Google and Facebook. Facebook has come under scrutiny since the revelation that user data was not as safe as users demand. Brave will need to promote their protection of user data in order to keep growing at a faster and faster pace.
Current Status and Roadmap
Brave currently has over 5.5 million monthly active users and 28,000 verified publishers. They have achieved every milestone on their roadmap up to now and have started beta-testing the integrated BAT wallet featuring opt-in ads with an early access community of Brave users. There are a few programs in place for Brave to increase its usership including a creator referral program where websites can refer users to Brave in exchange for money. Also, Brave gives all new desktop users $5 USD to give to the publishers of their choice in order to kickstart the ecosystem. These promotions seem to be paying off as the number of active users gained per month has increased from 300,000 in July to 500,000 in August.
Their roadmap is available at https://github.com/brave/brave-browser/wiki/Roadmap. Two major objectives on the roadmap are a two-way wallet, in which users who generate BAT will be able to withdraw it rather than leave it on the Brave browser, and the full launch of the opt-in ads program in November.
It is also worth noting that Brave and BAT are considered different projects. BAT is not limited to Brave and in the future can be implemented on other web browsers. Brave is not only kickstarting the adoption of BAT but also proving to the public that it is a premier web browser.