What is Basic Attention Token & How Does it Work? - BAT for Beginners

Why Was Basic Attention Token Invented?

The internet has changed how advertisers can reach out to potential consumers with intrusive methods. Websites are full of banners and ads. The ads are more targeted due to user data that may or may not be collected with consent. 

At the same time, large volume websites such as Facebook and Google have taken advantage of this, and advertisers pay a hefty amount to these entities to get their ads out. While the Brave browser combats privacy penetrating ads, it does allow users to opt in to watch relevant ads. BAT is used to reward the viewers and this eliminates the pushing of intrusive ads.

Content creators are also faced with issues such as hosting platforms taking large commissions out of their revenues. Brave users can view content and tip content creators, with the BAT going directly to the creator, thus eliminating intermediaries at this level too.

How Does Basic Attention Token Work and What Technology is Behind It?

As a cryptocurrency, BAT works using peer to peer blockchain technology. With advertisers able to show their ads directly to users, and the users able to tip content creators directly, BAT helps to take middlemen out of the equation.

Built on the Ethereum blockchain, BAT uses the main ecosystem to run and the token itself is ERC20 compliant. Blockchain was developed to allow direct communication and transfer between two or more parties and using the same principle, BAT can be paid out to viewers and other content creators regardless of the online platform they choose to host their content on.

As a decentralised token, BAT offers a lot of advantages over other forms of payment systems. Traditional reward tokens are controlled by a central authority: the coin or token developers. They have complete control over what the tokens can be used for and how much, including any pricing strategy. 

BAT has no such limitations, and advertisers can set the rewards for viewing while people tipping content creators are free to do so as much as they want. As a cryptocurrency, BAT is not just contained within an ecosystem of rewards and tipping. Owners can use it outside Brave for payments, as a store of value, and even in DeFi.

Is Basic Attention Token Real Money?

While the verdict that cryptocurrencies are money or not largely depends on the jurisdiction and the political environment, BAT does fulfil the basic requirements. According to Investopedia, money should have characteristics such that it can be a unit of account, a store of value, and be accepted as a medium of exchange. 

Basic Attention Token does fulfil these properties. However, BAT lacks acceptability and recognisability in comparison to fiat currencies and does not have any central authority to govern it.

As an altcoin, it derives a lot of properties from Bitcoin and other major cryptocurrencies. It is a deflationary token in that only 1.5 billion BAT are in existence, with 1.489 billion of those already in circulation. Secondly, the team behind BAT and the Brave browser are also working on a complete DeFi ecosystem that will include a new version of its wallet, a completely decentralised exchange with staking and farming on multiple chains, and eventually a fully decentralised web.

In the meantime, people can send and receive the token for services rendered just like money is used as a payment option. In the end, BAT’s definition of money is more of a personal choice. If two or more parties agree to use it for payment, there is nothing that sets it apart from fiats like the US Dollar or any other.

Fees and Expenses of Basic Attention Token

The Basic Attention Token currently runs as an ERC20 token and therefore utilises the Ethereum network. As such it is subject to the network’s transaction fee, known as gas. The Ethereum blockchain has its own ETH token and hosts thousands of ERC20 tokens. 

With a current capacity of roughly 10 to 15 transactions per second (TPS), the load today has outgrown the network. Since transaction fees are an incentive for miners to record the transactions, network loads can cause an increase in the fee, as people are willing to pay more to push transactions through. Currently, an average transaction costs around $2 at the time of writing

If you are into DeFi and/or want to use a DEX (Decentralised Exchange), the swap costs can be much higher. Centralised exchanges will have their own set of fees. Though many will allow you to deposit free of charge, you will still need to pay the transaction fee to the Ethereum network. 

Trading will cost you an extra, the total trading fee depending on the specific platform you use and if you are a maker or a taker. Similarly, you will need to pay a withdrawal fee if you decide to take out your BAT to a private wallet.

For an ordinary Brave user, acquiring BAT for free while watching ads on the browser seems like a good idea, however, the tokens generated can be too few and you might need to buy BAT to own a meaningful quantity. Several platforms will allow you to use your fiat to buy BAT, but be warned, your bank or card provider may levy extra charges, and you will need to check this with the relevant service provider.

What Are the Benefits of Basic Attention Token?

Leveraging blockchain technology, Basic Attention Token provides a reward and incentive mechanism in the digital advertisement sphere. While traditional digital advertising is intrusive and forced upon viewers, the Brave browser makes it optional with BAT being awarded for watching the ads.

Social media platforms also eat into the revenues of content creators. The use of BAT means that people watching the content can pray tributes in the shape of BAT tips which reach the creators directly, ensuring credit is given where credit is due.

As a cryptocurrency, BAT stands out from other cryptos as it is creating a new and efficient marketplace for advertisers and creators. This is evident from the fact that there are more than 1 million content creators registered to receive BAT as tips and mainstream publishers like The Guardian, the Los Angeles Times, and the Washington Post have joined the network. This implied support for Basic Attention Token lends the project credibility, and could bolster the price of BAT in the future.

Apart from the use benefits, BAT can also be used as a medium of exchange, allowing people to use it to buy and sell (wherever BAT is acceptable as a payment option).

Can Basic Attention Token Be Used Anonymously?

The developers behind BAT are all about ensuring the privacy of people and as a cryptocurrency, transactions done on the network are anonymous. Though the ledger is transparent and records all token movements, only wallet addresses are noted down along with the amount of BAT sent, making it difficult to link people in real life with the wallet.

Fiat to BAT on and off-ramp services are a different matter. Using your fiat to buy BAT will result in a money trail (your bank will know where you send the money) and similarly, if you sell it using a platform, your bank will know where the money came from.

How Safe is Basic Attention Token?

Based on blockchain, all data and transactions conducted are immutable, meaning that the values cannot be changed unless the wallet owner decides to transfer BAT somewhere. Ethereum is the second-largest blockchain ecosystem and its growth means that it is close to impossible today to hijack the network, cementing the safety of BAT tokens.

What Teams Are Working On Basic Attention Token Development?

Though BAT is an open-source token based on the Ethereum ecosystem, it is headed by the BAT Team, which is responsible for all the development of the token and the upcoming features such as DeFi capabilities.

The team is headed by Brendan Eich, famous for being the man behind the creation of JavaScript and Mozilla’s Firefox browser. Eich is accompanied by the Co-Founder and CTO, Brain Bondy. Bondy also worked at Mozilla as a Senior Software Engineer and was the software lead at Khan Academy. The financial aspects are overseen by Bill Engles (CFO). His career is filled with leading financial positions in various firms that include electronic businesses, commerce, restaurants, and entertainment firms.

The team is guided by various notable advisors. Zooko Wilcox is a computer security expert who has worked in the past in developing DigiCash (the first modern attempt at a cryptocurrency before Bitcoin) and is a founding member of the privacy-oriented ZCash cryptocurrency. 

Greg Badros also advises the BAT Team. He has worked for Google on different products such as Gmail and Adsense in the past, and has also been an advisor to various other mainstream firms like Pinterest. Ankur Nandwani, the Product Manager at cryptocurrency exchange Coinbase, also advises the BAT Team.

Which Financial Institutions are Invested in Basic Attention Token?

Describing itself as an ad exchange, BAT has practically changed how digital advertising can work to benefit both advertisers and their audience. As such, it has caught the eyes of a few of the biggest names in the crypto VC sector:

• Genesis One Capital

Hong Kong-based Genesis One is committed to funding crypto and blockchain products that can disrupt the market.

• All Blue Capital

Operating from five different countries, All Blue Capital has invested in some of the largest companies at different stages—early startup and late—including Facebook, Twitter, and SpaceX. BAT is just one of many crypto projects it backs, believing in the change the token can bring to the public.

• Fundamental Labs

A pure blockchain and open finance technology backer, Fundamental Labs has been funding major projects since 2016. The portfolio includes Coinbase, Polkadot, Filecoin and EOS to name a few.

Basic Attention Token Mining

Like many ERC-20 tokens, BAT was pre-mined at its launch. Currently, the only way to acquire is through the Proof of Attention concept created by the BAT Team. This can be done by downloading the Brave browser and joining the Brave Rewards program. As people use the browser, it calculates the amount of time spent on partner websites and the advertisements watched on these.

Through this, users can earn a small amount of BAT which is distributed once a month. Alternatively, if people are content creators, they can register with BAT and other users can tip them for their content.

Basic Attention Token Wallet

Being ERC-20 tokens, Basic Attention Tokens can be stored in any wallet that supports the standard. A few of the most popular choices are:

• Brave Wallet

The official wallet of BAT comes as a Brave browser extension. Currently, this is the only way anyone can earn free tokens through the Proof of Attention consensus.

• Trezor

Trezor supports BAT, and being a hardware wallet, it comes with the added security of being disconnected from the network physically and making it impossible for bad actors to access funds.

• Meta Mask

Another browser extension that can be used with other browsers, it is particularly popular with users because of its ability to run dApps directly.

• Trust Wallet

A mobile-based wallet, its security and functionality are some of the best, to the extent that Trust has been acquired by Binance.

Is Basic Attention Token Worth the Investment?

While BAT still has a long way to go when compared to other altcoins, it has created its own base and place in the industry. The most successful token of its kind, it has already collaborated with more than 400 advertisers and has major mainstream publishers on its platform, including Vimeo, The Guardian, the Los Angeles Times, and the Washington Times. This has given BAT an immense boost, and in 2021 alone, it has shown an impressive 320% increase year-to-date (1st January to 20th August 2021).

On the other hand, BAT is subject to the extreme volatility associated with cryptocurrencies. While long-term storage may eventually result in profits, you should be prepared for large dips. Alternatively, you can capture the price movements through regular trading.