We live in the age of online advertising. With companies like Facebook earning almost 99% of their revenue from advertising, the market potential for advertising revenue is huge. However, this advertising is often intrusive, badly targeted and unwanted by the consumer.

So what has generated such interest in Basic Attention Token (BAT), an open-source, digital advertising platform and cryptocurrency with advertisers, consumers and cryptocurrency investors alike?

What is Brave and BAT Token?

Basic Attention Token is an open-source, digital advertising platform that is based on the smart-contract enabled Ethereum Blockchain. Its aim is to facilitate a better quality of online advertising that has benefits to the advertisers, publishers and consumers of online content. Basic Attention Token is supported by Brave browser, an open-source, privacy-based browser.

Its native token, Basic Attention Token (BAT) is an Ethereum-based, ERC-20 utility token, that can be used within the Brave browser. Like other ERC-20 tokens, BAT is set up on the Ethereum blockchain and benefits from all its features such as security, efficiency, decentralised finance. It is designed to be exchanged between advertisers, publishers and users.

The token is based upon the idea of user attention and engagement. The creators of BAT, Brendan Eich and Brian Bondy, realised that user attention was extremely valuable but had yet to be priced and utilised in an open, transparent and efficient system that benefited all involved. Users receive BAT in exchange for viewing ads within the Brave browser, while their data is kept secure and anonymous.

The Brave Browser and Basic Attention Token

To understand the Basic Attention Token ecosystem, we have to look at the browser in which it currently operates. In 2015 Brendan Eich, co-founder of the Mozilla Project, and Brian Bondy launched Brave web browser, a free and open-source browser with a focus on privacy. From the start it was launched with ad-blocking capabilities and designed to block trackers, cookies, malvertisements and malware. The creators announced plans for a new way to deliver ads with respect to the privacy of the consumer. This would lead to the development of the Basic Attention Token project as a way to fuel Brave.

Brave has grown massively since its initial launch in both capabilities and user base. In 2018 it added support for Tor in its private browsing mode. It has developed its ad-blocking algorithm multiple times, improving speed and capability. The Brave Platform uses blockchain technology for security and has developed its own non-tracking search engine. Importantly, Brave has an in-built crypto wallet that gives every user access to its cryptocurrency. Running on macOs, Windows, Linux and Android, its user base surpassed 36 million users in 2021.

The Need for Change in Online Advertising

The digital advertising landscape has become an over-saturated, inefficient market with a few big players such as Facebook or Google retaining the lion’s share of the revenue. Publishers have had their ad revenue dramatically decrease as these large companies bring down the price of information and pocket a huge portion of the advertising profits. Advertisers suffer from badly targeted ads and a lack of data as these larger companies harvest this information for themselves and are targeted by hackers and bots who fraudulently pocket huge amounts of advertisements fees every year.

The consumer also suffers with a huge amount of privacy invasion, tracking and malware issues. This combination has driven a huge amount of users to employ adblocking software. It is estimated that almost 40% of US web users have some form of ad-blocking software and this number is set only to grow as younger generations are the largest market for this software. This is a huge financial problem for publishers and advertisers. The market is primed for new innovations to tackle these problems.

BAT Use Case: Digital Advertising

Basic Attention Token hopes to tackle these problems and mitigate the privacy and tracking concerns of users by using blockchain technology based on Ethereum. The distributed ledger system underpinning it collects certain tracking data via the Brave browser to help improve the efficiency of ad targeting while keeping all personal information secure and private.

This anonymous data is then used to help advertisers target ads efficiently and as such increase revenue. Brave also reports which ads receive the most engagement to its advertisers.

Brave users can then opt-in to receive advertisements and in turn, receive Brave Rewards. Publishers are also rewarded for user interaction and traffic. The more sustained user interaction and engagement that they generate, the more they receive over time, this incentivises quality content. The Basic Attention Token Project sees this as a way to revolutionise the digital advertising landscape.

Underpinning all of this is Brave browsers native cryptocurrency, BAT. An ERC20 token, it is linked with attention (based on duration on-page and pixels in view). Advertisers pay for their advertisement with BAT (this can be purchased on exchanges) and this is divided up between the publishers, Brave and the user. Brave users receive BAT for the amount of attention they give, publishers and content creators receive the largest portion of BAT for driving consumer traffic and attention and Brave takes a small portion of BAT as a fee.

BAT Token Scalability

An important aspect of Basic Attention Token is its scalability. The exchange rate with Ethereum is 6,400 BAT per ETH to allow this. Designed to handle microtransactions, this enables the generation of revenue for all parties involved, especially the user, without significant cost. Normal systems do not facilitate the payment of minuscule amounts at a financially feasible level as would be needed for this platform.

A point to note is that BAT is a finite supply of 1.5 billion tokens and all these tokens were created at its launch. So as more companies use Basic Attention Token to advertise, the value of BAT will go up, the pool will not increase to lower the price and this is designed to benefit everyone already involved in the project. BAT can be traded for other cryptocurrencies, however the creators have intended it to mainly be used as a medium of exchange between the advertisers, publishers and users on Brave.

BAT Use Case: Monetizing Online Content

As well as users and content creators benefiting from advertisements, there is another use case built into Basic Attention Token. Essentially a tipping service for content creators on the Brave browser, active users can choose to set up a monthly donation or once-off donations to content creators and publishers that they would like to support. This donation comes in the form of BAT that the users receive for their attention. This is another way for websites and creators to monetise and there is the potential for this to expand in many ways.

One possibility is for users to pay for access to a small section of a website. Often with paywalled websites, the average user will choose not to pay the subscription fee. This can be due to the cost or that the user only needs to access a small section of the website.

The micropayments system built into Basic Attention Token to facilitate exchange between users and publishers could be used to pay for access to singular articles, videos, posts at a low enough cost to make it worthwhile. Examples could include paying to watch a singular movie on a streaming service or read one article on a news website. This could provide a new form of revenue for premium online content providers who have been using just a subscription model to date. Recently, Basic Attention Token has started working with Youtube, which is a major step in reaching mainstream acceptance.

A Brave Future

Relatively unique in its design and function, Basic Attention Token seeks to change the way we approach marketing and advertisements. It aims to “solve the endemic inefficiencies and privacy violations hobbling the digital ad industry”. Due in part to the notoriety of its founders and its focus on privacy, its browser, Brave, has grown hugely worldwide. The future of Basic Attention Token is intrinsically linked to the success of this browser as the ecosystem in which it operates. Users benefit from both the privacy and the Brave Rewards system.

Its ability to provide revenue for content creators is a major part of its appeal. Before Basic Attention Token there was no feasible way to make micropayments to content creators in an efficient and fast way. This makes BAT a very useful cryptocurrency for content creators.

However it has to be noted that even extremely targeted advertising has yet to prove itself as a major revenue increase for advertisers. It remains to see if the digital advertising industry will adopt the Basic Attention Token model at the larger scale needed. Overall though, as long as Basic Attention Token can remain a leader in its field, there is huge potential for this cryptocurrency.