Has BAT gotten your attention?
Sorry not that kind of bat.
This video explores what the Brave browser is, its growth prospects and what this means for its token, BAT.
Basic attention token or BAT, is an Ethereum based ERC-20 token
which is used as the payment mechanism to encourage people to use the Brave browser.
The Brave browser is a free web browser that was co-created by Brendan Eich who created JavaScript
and who was also the former CEO of Mozilla, the maker of the Firefox web browser.
The Brave browser is built using the same open source code used in Google’s Chrome or chromium.
Brave markets itself as a faster, more private Chrome, made possible by its ad-blocking features.
Have you ever noticed that the same ads pop up even when you visit different webpages?
This is because most websites have trackers which follow you wherever you visit for the purpose of targeting advertising to you.
Brave’s shields come as a default in its web browser, improving privacy by blocking ads and their trackers,
and throwing away unnecessary cookies, thereby also improving speed.
In addition to being a web browser, Brave has ambitions to revolutionise the digital advertising landscape.
It calls out the fact that internet giants are getting rich off publishers without properly compensating them
and aims to address this through its Brave rewards program.
Users who participate in the Brave rewards program earn its native token, BAT, simply by viewing advertisements.
They can then contribute the BAT they earn to websites and content creators through tips.
In this way, Brave browser says that it cuts out the middle man,
allowing content creators to earn extra income commensurate to their efforts and allowing browsers to remain private.
The lofty aims of the Brave browser and its Brave rewards program make it an exciting project.
However from a business perspective it seems that Brave has its finger in a lot of pies and it’s not clear which one it's trying to dominate.
Firstly Brave markets itself as a privacy browser. However when push comes to shove,
Brave acknowledges that it will never be as private as the Tor browser, which keeps its users location private as well
Therefore what is Brave’s competitive advantage compared to other browsers aside from speed?
Further many browsers already have adblocker extensions
as well as a range of other extensions and features compared to Brave which makes them far more attractive.
Secondly Brave blocks ads on websites, however its suggested alternative of the Brave rewards program relies on advertising to remain viable.
Whilst those ads are less intrusive than Google Adwords, it still relies on people viewing ads hence it really isn't solving this problem.
And from an advertiser’s perspective, whilst Brave currently states that it has high engagement for ads,
it is unclear whether this leads to higher conversion or whether users are simply viewing ads to earn BAT.
Also Brave has essentially gotten on the wrong side of advertisers from the get go by blocking their ads in the first place.
Thirdly, does Brave really make things better for content creators?
In an optional tipping environment, it remains to be seen whether users will appropriately compensate content creators
or just keep the BAT for themselves, especially if the value of BAT goes up.
Brave also charges a 5% tipping fee to cover costs, in a similar way to the website Patreon which thousands of content creators already use to allow users to donate to them.
It's unclear whether Brave will ever replace Patreon or whether it will simply be just one of many sources of income,
given the process of signing up for a cryptocurrency wallet and exchanging funds into currency via Uphold or Gemini is much more complex than simply just accessing funds in Patreon.
Given these challenges, it remains unclear whether the Brave browser will attract the widespread adoption it set out to achieve.
This isn’t promising for the price of BAT.
Further even if the demand for BAT did go up, if the Brave rewards program worked as intended
and content creators who receive BAT wanted to cash out of their BAT by selling them, wouldn’t this then just have the opposite effect of driving the price of BAT down?
The logical rationale for BAT to dramatically increase in price just isn’t there.
However as anyone investing in crypto knows, the cryptocurrency market isn’t always based on logic
with the price of many cryptocurrencies bearing no relationship to their intended use.
A positive for BAT includes the fact it is an ERC-20 token, which is a smart contract that makes use of the Ethereum blockchain.
The benefit of being an ERC-20 token is that it is grounded in the well-established and trusted rules of the Ethereum blockchain
which provides investors with some certainty about its security.
Recent dissatisfaction with the way tech giants have dealt with the US election results has also prompted more people to seek out alternatives
to the web browsers owned by tech giants Google and Apple
The boom of defi or decentralised finance may also boost BAT’s price.
In fact in the second quarter of 2020 BAT momentarily became the most used coin in defi,
because it generated the best return on cryptocurrency lending platform Compound.
The cryptocurrency market as a whole is also rising due to political instability and the devaluation of currencies.
Therefore my prediction is that BAT may benefit from the rising crypto tide
but is unlikely to be a standout given the structural growth challenges with the Brave rewards program.
I hope you found this video useful.
Let me know in the comments below if you’d like to learn more about other cryptocurrencies or any other finance matters.
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