What is Brave?
The digital advertising space is fraught with challenges. The advent of corporations like Google and Facebook, and the proliferation of bots, malware, and online fraud, has turned the digital advertising industry into an opaque and unsustainable marketplace where consumers, publishers, and advertisers all suffer. Consumers can’t opt-out of seeing ads they don’t want, auto-loading video ads drains device batteries and uses data, popular websites have as many as several dozen trackers slowing down page-loading times, and data costs are increasing.
To counteract the introduction of ad blockers, advertisers found loopholes that compromise online privacy. Users’ online activities are tracked by technology companies that analyze their behaviours and sell the data on to advertisers for a profit.
The Basic Attention Token (BAT) is a currency exclusive to the Brave ecosystem as its native utility token. Its value is derived from, and therefore commodifies, user attention. If a user opts-in, the BAT extension starts to track their time spent viewing and engaging with ads. Users are rewarded for their time in BAT which they can use to ‘tip’ content producers, hold onto in their browser wallet, or exchange.
What is BAT?
The Basic Attention Token is an ERC-20 token which means that it’s built on the Ethereum blockchain using a standardised smart contract template (smart contracts are bits of code that execute once a certain condition is satisfied). BAT launched on May 31, 2017 and is a unit of currency within Brave’s ecosystem. Its utility outside of the Brave browser is limited, but it shares certain features with other ERC-20 assets and can be speculated upon just like any other cryptocurrency.
The total supply of BAT is capped to 1.5 billion tokens, which were pre-mined prior to its token sale in 2017. One billion tokens were sold during the Initial Coin Offering (ICO), with a further 500 million kept in reserve while the platform grew and developed. BAT does not represent or convey any ownership, however, it only serves to fuel the rewards cycle between consumers, advertisers, and publishers in the Brave ecosystem. Brave as a browser has done well recently: its daily active user count rose from 3.8 million to 8.6 million in 2020. In addition, the number of verified content creators using the Brave platform has risen to well over a million.
BAT is also receiving institutional support. On March 17, 2021, Grayscale announced on Twitter that BAT was one of five tokens added to Grayscale’s inventory of digital asset trusts.
How does BAT differ from BTC?
BAT is an ERC-20 token built on top of the Ethereum blockchain whereas Bitcoin runs on its own, entirely separate blockchain. That means that earning BAT looks completely different from earning Bitcoin. On the Bitcoin blockchain, you can earn Bitcoin through Bitcoin mining, which involves setting up a very powerful computer to run special software that solves complicated math puzzles. You can similarly mine Ethereum but not BAT.
BAT’s value as a utility token is indirectly linked to the popularity of the Brave browser and its reward system. But as any openly traded asset, like Bitcoin, its value fluctuates along with market demands.
Bitcoin’s market cap is a lot bigger than BAT. As of May 2021, Bitcoin’s market cap of $1.2 trillion dramatically outpaces BAT’s $2.3 billion. Bitcoin is by far the most dominant coin on the market and its volatility can have a downstream impact on every crypto asset’s value and adoption.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset. First and foremost:
No Canadian securities regulatory authority has expressed an opinion about Basic Attention Token, including an opinion that BAT is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of BAT prior to making it available on Wealthsimple Crypto and has concluded that BAT is not and is unlikely to be deemed a security or derivative. However, there is a risk that this conclusion could change in the future and the impact of this on an asset’s value is outlined in our Product Disclosure.
We evaluated BAT based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of BAT, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created BAT and Brave;
- The supply, demand, maturity, utility and liquidity of BAT;
- Material technical risks associated with BAT, including any code defects, security breaches and other threats concerning BAT and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them; and
- Legal and regulatory risks associated with BAT, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of BAT.
Like all other crypto assets, there are some general risks to investing in BAT. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Each of these risks are described in more detail in our in-app Product Disclosure. In addition to these general risks, we note that BAT’s development is intrinsically linked to the Brave team, which is centralized. This is a structure distinct from many other crypto assets and protocols, and presents a form of concentration risk. Further, the BAT community is not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of BAT have no recourse to the BAT team or Wealthsimple if BAT declines in value for any reason.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading BAT. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
WDA is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Digital Assets Inc dated June 18, 2021. Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply to a misrepresentation in this Statement.
Last updated: July 26, 2021