CoinGrades

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Basic Attention Token

By Victor & Grayson
September 17, 2019

Disclaimer

The following review is not financial advice. Coin Grades’ ratings and letter assignments reflect the technical and practical viability of these cryptocurrencies in the eyes of the Coin Grades team. As always, we encourage you to do your own thorough research from multiple sources before choosing to invest in any cryptocurrency.

Overview

Basic Attention Token (BAT) is the cryptocurrency native to the Brave browser. Released in 2016, Brave hopes to create the ideal combo of a browser that offers user privacy and also delivers value for advertisers and publishers using a unique business model to generate this outcome.

Brave comes with a built-in adblocker and other privacy features. Naturally, the increasing popularity of adblockers presents a threat to the advertising industry. Brave sees the current state of the advertising industry as flawed, as every entity is rewarded except for the actual viewers of the advertisements. Brave seeks to fix this by offering their Basic Attention Token model where users of the browser can opt in to view ads and are paid in BAT for every ad they see. The BAT received can then either be kept and sold on the open market, or can be used to tip content creators through the incredibly friendly user interface.

Brave was created by Brendan Eich, the pioneer of the Javascript language and co-founder of the Mozilla Corporation. By far one of the most widely used blockchain applications, Brave now has 250,000 verified publishers on their platform, including Wikipedia, Vimeo, Reddit, Twitter, YouTube, and us - Coingrades! Brave is also now the most downloaded web browser in Japan and continues to grow exponentially in popularity world wide.

If you are interested in trying out the Brave browser, you can use our referral link to give it a shot and help support our website at the same time.


Security 8/10:

BAT is an ERC-20 token on the Ethereum blockchain, so it is vulnerable to the same security concerns that face Ethereum. While the Brave Browser itself has superb ad-blocking and anti-tracking capabilities, BAT itself, when used for payments, has the same potential security flaws as its parent blockchain, though this has never proven to be an issue with any ERC-20 token thus far. For a better understanding of how BAT and Ethereum related, read our Ethereum review for a more detailed look.


Decentralization 7/10:

BAT has 1.5 Billion coins in existence, with over 1.3 Billion currently in circulation. Brave owns 13.3% of tokens, according to their whitepaper. 1 Billion BAT have been distributed to the public, and are meant to be used in the Brave ecosystem. The remaining 19.7% is reserved for expanding their user growth, i.e. incentivising publishers to use Brave. The BAT ICO occurred in mid-2017, and they raised roughly $35 Million, even though their maximum goal was stated as $24 Million.

Since BAT runs on the Ethereum blockchain, the security concerns associated with centralization are not as important as they would be if it had its own blockchain. However, the distribution of these coins in sync with market trends is something to be aware of, as projects giving away their cryptocurrency can create a constant downward selling pressure on the price as the amount in circulation continuously inflates.


Scalability 6/10:

Since BAT is built on Ethereum, it shares the same scalability issues. Hopefully, with the upcoming improvements on Ethereum, BAT will benefit. However, scalability isn’t really a primary concern for the BAT token, since its goal is to simply be used within the ecosystem. Developers are not building on top of BAT. The blockchain does need to keep a permanent ledger in order to be as decentralized and transparent as possible (as a digital ad exchange), however this is largely irrelevant to the front end user experience and only something that should be looked at from a technical perspective.

That being said, BAT being built on the Ethereum blockchain could present several problems further down the road. As the Brave user base expands, so too will the Ethereum user base. If Ethereum fails to deliver its scalability fixes, this could slow down transactions to the point where it becomes a nuisance to the front end user experience and would discourage users from engaging in tipping activity as the transactions lose their seamless touch.


Speed 7/10:

Sharing Ethereum’s speed, BAT is not the fastest of cryptocurrencies. It is also not particularly unique in its architecture as an ERC-20 token, but it does the trick when it comes to its intended purpose, the act of tipping within the Brave browser. Tips are managed through the browser, so users will often not need to concern themselves with the transaction details such as Ethereum GAS fees or the like.


Energy Consumption 8/10:

Since Brave operates on the Ethereum blockchain, its energy consumption is managed by Ethereum miners. Since Ethereum is looking to switch to Proof-of-Stake sometime in 2020, this will decrease the energy consumption that BAT contributes to the overall ecosystem.

Brave can actually be thought of as an efficiency catalyst, that could decrease energy costs in the advertising industry by streamlining the relationship between advertisers, publishers, and consumers. This may have an eventual positive effect on how many resources are consumed throughout the entire process. According to their website, Brave actually uses 35-39% less battery power than Chrome (on mobile), even though it’s built on Chromium itself. If the BAT system incentivizes more people to use Brave, and the browser becomes more widely used, a lot of computing power can be saved globally giving Brave an additional green benefit.


Team 9/10:

Brave’s founder, Brendan Eich, has a long history of success in the technology sphere being at the forefront of projects such as JavaScript and Mozilla Firefox. Their team is comprised of privacy-focused developers and strategists. They even employ a Tor specialist, who has worked on implementing Tor technology as a tab feature to add an extra layer of privacy for Brave users.


Community 8/10:

Brave has an ever-growing and loyal community of users. The browser surpassed 5.5 Million active users at the beginning of 2019 and has continued to explode in popularity. Community members are very active in spreading the adoption of Brave and the BAT token, helping spread the word to several websites and outlets that may be interested in the benefits that Brave provides. The community also enjoys active user bases on Twitter and Reddit, two of the main hubs for crypto related communities.


Adoption 10/10:

There are few cryptocurrency projects that have as much everyday use as the BAT ecosystem. The advertising market is enormous, as is the demand for a privacy-centered, efficient web browser. One cannot deny that exposure on platforms like YouTube, Wikipedia, and Reddit prove that BAT is miles ahead of many other cryptocurrencies, with an important niche to boot.


Potential 5/10:

The Brave browser certainly has incredible potential to continue to grow at a rapid pace from here on out, currently only making up a fraction of the entire market share of web browsers in use globally. It is very possible that in the coming years we see Brave do to Chrome what Chrome did to Firefox and Internet Explorer.

However, there are more prevalent concerns regarding the potential growth of the BAT token. The valuation structure of any asset is determined by the balance between buying pressure and selling pressure. If the buying pressure exceeds the selling pressure, the price goes up, and vice versa. To lay that out over Brave’s situation means that the buying pressure created by publishers buying BAT to list their advertisements must exceed the selling pressure created by those receiving the token (both average users and content creators) and this is something that has yet to be seen.

Many people are concerned that the constant selling pressure will outweigh the buying pressure, thus creating a depreciating asset, while others believe the weight and scale of the advertising industry will drastically increase the popularity of BAT should Brave ever become a preeminent browser on the same scale as Chrome. Ultimately only time will tell.

Others are concerned that in order for the BAT ecosystem to thrive, that it must rely on the inherent good nature of people. The Brave model requires that people be generous with the BAT they receive, and others think that the natural greed in people will cause them to hoard the BAT they receive and sell it for their own benefit instead of using it to tip content creators. While the model certainly allows for both outcomes, whichever one prevails will certainly set the tone for how the model continues to grow moving forward.

Another concern is centered around how this will impact content creators in the end. Since Brave naturally blocks all advertisements, this will significantly impact the main revenue streams for content creators should Brave ever become a widely used browser. It has yet to be seen if the tips they will receive in BAT will truly exceed the revenue they would have received in the first place from their ad revenue.

Brave and BAT have a lot of potential for upward mobility. However, a model such as the one Brave is employing has never been seen before, and exactly how these matters will unfold has yet to be seen. The model seems to be centered around many assumptions, but without examining the widespread implications of such a structure one will need to wait and see exactly what the outcome will be.


Liquidity 8/10:

BAT is tradeable on Coinbase (although not in New York), and has relatively high liquidity when compared with other cryptocurrencies with similar market caps. Daily BAT trade volume is on the lower end, considering it’s listed on high volume exchanges. The lack of volume may make it difficult for larger investors to buy or sell BAT tokens without moving the price substantially. However, the main Brave browser has not yet opened up the ability to withdraw earned BAT, so we can assume that once that feature is implemented that this will increase the volume as people withdraw and sell their accumulated tokens.

Summary

Ultimately, Brave is one of the most promising and well-delivered blockchain projects currently in the space. With a great team, a great product, and increasing growth figures, it’s certain that Brave will have a future in the list of top web browsers.

The BAT token does its job well and delivers on its intended purpose, and many of the potential drawbacks related to BAT stem from the fact it is an ERC-20 token, meaning that BAT can do everything right and still suffer should the future of Ethereum prove to not be as bright as some may speculate.

The Brave-BAT token model is also something very new and untested in the grander scheme of things. There are multiple philosophical, mathematical, and financial concerns as to how it will impact the sector of the advertising industry that it targets.

Final Rating

CoinGrades Rating: 76/100
Coin Grade: B+

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