It’s a Brave New World

https://brave.com/

The below report explores the innovative Brave Web Browser and the investment case for its native crypto token - Basic Attention Token (BAT).

More specifically, I wanted to write about the internet revolution that is Web3.0 and how it will change our lives over the next decade, using BAT as an example.

But first, a little background - Brave software was founded in 2015 by Brian Bondy and Brendan Eich. Brendan is known for creating Javascript (one of the core technologies of the World Wide Web) and as well as being the CEO of Mozilla (Firefox). Suffice to say he’s has the credentials for the task at hand.

So what makes Brave better? The Brave web browser, available on all mobile devices, has 3 distinct advantages over rivals like Google Chrome or Safari.

These are Speed, Privacy & Rewards.

Speed

https://brave.com/compare/chrome/performance/

When I say speed, I am referring to page load times. Brave web pages load up to 3x faster than Google Chrome according to data published by the company. The browser tracks the total time saved which can be viewed on the home page. So far, I’ve saved 47 minutes according to my dashboard, not bad for a part time user. Brave also uses less battery life (up to 40% less) which allows you to stay connected for longer. Furthermore, Brave makes use of the Google search engine, so you do not lose out on the world class search quality that Google provides.

Privacy

Brave Web Browser Home Page

Online Privacy remains an important aspect of our digital lives and Brave has made this core to their mission. We have all experienced what it’s like to have our search data tracked and used to re-target us with adverts. Think of a time you were searching for something online, bicycles for example, and then all of a sudden your Facebook and YouTube ad’s are filled with bicycle related products. This is an example of your data being used and sold to companies who wish to advertise and sell products to you.

Brave fixes this by blocking the trackers and pop-up ads that are used to track your search history, interests and buying habits. Neat right? They even keep score on their home page, and to date, have blocked 56,365 trackers and adverts trying to target me. As the global population become more aware of their data privacy, we can expect this feature to become increasingly popular.

Rewards

Everyone loves rewards. Brave created the BAT crypto token in order to monetize the Brave ecosystem and to shake up the $330 billion dollar online advertising industry. Brave users can opt-in to receive pop up notifications for adverts (frequency ranges between 1-5 ads per hour) and get rewarded in BAT tokens for viewing those ads, whilst always maintaining their privacy. I have been testing this feature and have earned 31 BAT (roughly $14) over the past few months — simply for viewing adverts at my own free will. In addition to this, Brave users may also “tip” content creators who use Brave, to show support. Both of these features encourage new users to make use of the browser as a potential revenue stream.

The one drawback I have experienced was the requirement to signup with Uphold in order to withdraw BAT rewards. This requires users to provide personal information, which may not be ideal for users who are drawn to the browser for its privacy benefits. For users who are happy to comply with this request, they are able to begin earning passive income from anywhere in the world.

So what is Web3.0?

Web3.0 is by no means a new concept and the notion has been around for decades. Only recently did the financial incentives arise, in the form of cryptocurrency, to promote further development and growth of this emerging industry. Web3.0 provides a new way for individuals to use the Internet without giving up their privacy and valuable data.

This lays the groundwork for the most important takeaway when thinking about Brave and the BAT - the democratization of the advertising industry.

For some context, Web1.0 was the first iteration of the internet where we were passive users of the internet and most of our online activities included searching and reading. Where majority of us were consumers of online data not creators.

Web2.0 introduced a more interactive experience with the introduction of social media companies like Facebook and YouTube. With Web2.0, majority of users were consuming and creating content. Web2.0 exploded faster than anyone could expect, but came with the major downside of a lack of user privacy. Social media, search engines and the associated data were being used to fuel the online advertising industry to such extremes that we witnessed the demise of print media in a space of 10 years. Web3.0 aims to level the playing field by giving power back to the users. In the case of Brave, it even pays them.

The above example shows how Web3.0 and Brave will shake up the advertising industry, but this is only the start. Other exciting Web3.0 crypto innovations have their eyes set on taking on industry giants like Amazon and YouTube.

These include Filecoin - which offers a decentralized data storage network, an alternative to Amazon AWS - or Helium, which provides a decentralized WIFI data network powered by individuals - an alternative to your existing centralized data provider. Both of these projects also include reward mechanisms for those who support the network, in the form of crypto tokens.

These networks are growing stronger each week, and can be tracked live, thanks to the blockchain.

BAT Tokenomics

Turning the focus back to Brave, its important to ask: Is BAT a good investment? The investment case is simple. Do we expect there to be more demand for BAT than supply, over the next 5 years?

Lets examine supply: BAT is an ERC-20 token that exists on the Ethereum blockchain. There is a total supply of 1.5 billion BAT tokens. These were created at launch and no additional BAT tokens will be created.

  • 1 billion tokens distributed to investors in the Basic Attention Token ICO.
  • 300 million tokens allocated to the User Growth Pool (UGP), which is a pool of tokens used to provide an incentive for users to join the BAT ecosystem (as explained above).
  • 200 million tokens allocated to the development pool.

The demand for BAT is driven by 2 key factors. Growth in user and growth in Advertiser demand.

User growth is easy to track as there are a number of helpful, publicly available metrics that can be followed on a daily basis. I compared the performance of a few important stats between May 2018 & Jan 2021. The findings were as follows:

  • Monthly Active Users grew 1,000% (2.4 million users vs 24.1 million)
  • Verified Publishers grew 6,250% (16,000 vs 1 million)

These are some serious user growth numbers.

Advertising demand continues to impress, with Brave recently announcing that ad campaigns are available in nearly 200 countries. According to a recent blog post, they have already supported over 2677 campaigns from over 465 advertisers. These include big name brands such as Verizon, The Home Depot, The New York Times, Amazon, Logitech, Lenovo, QuickBooks and many more. The average click-through-rate for a Brave Ads campaign is 9%, well above the industry average of just 2%, with many brands observing an even higher engagement.

As user growth and advertising demand increases on the Brave platform, we can expect the demand for the BAT token to increase along with it. This is because advertising campaigns are funded using the BAT token.

More engagement = more campaigns = greater BAT demand.

In addition to the above, we can also include the utility of the tokens as a benefit. Owning BAT opens up a world of opportunities thanks to a range of crypto and other applications available to users, as illustrated in the below graphic.

https://brave.com/state-of-the-bat/

In closing, I fully expect the price of BAT to increase steadily over the next 5 years. This is due to the fixed supply and growing demand dynamics that exist within the Brave ecosystem.

In addition to this, the emergence of Web3.0 as the next evolution of the internet era, will further contribute to the success of Brave, the BAT token and many other decentralized Web3.0 applications that are being developed each day.

Ex banker. Spent too many years in traditional finance. Bullish on Bitcoin, Ethereum & DEFI.