Most recent update: [March 10, 2022]
No securities regulatory authority has expressed an opinion about the Crypto Contracts or BAT, made available on the VirgoCX Platform, including an opinion that BAT is not itself a security and/or derivative.
What Is Basic Attention Token (BAT) and How Does It Work?
The Basic Attention Token (BAT) is a token that is revolutionizing the digital advertising and rewards industry. The token is designed to disintermediate web-based advertising to literally reward users for their attention, while providing digital advertisers with a greater ROI on ad spend.
The BAT token is the native currency of the Brave browser ecosystem. The entire mechanism and token distribution of the BAT token is natively delivered through the Brave Web Browser, which is three times faster than Google Chrome browser, uses 35% less battery, and is an open-source, privacy-focused browser. Brave browser is designed to block invasive cookies, malware, and ad trackers, while using blockchain technology to anonymize and securely track specific user attention, where access is granted, which ultimately results in rewards for publishers.
The Basic Attention Token (BAT) is the reward mechanism in the decentralized advertising ecosystem model and has value between advertisers, users, and publishers.
1. Users can earn BAT through Brave Rewards activation in the Brave Browser which will provide users with frequent flier-like tokens for viewing ads and can even set the number of ads the user sees per hour. The user is in control of their privacy as they can turn on/off ad viewing features in the browser
2. Brave browser users can also use earned tokens to distribute to publishers, as tips, for amazing content and websites via token donations, which is also a seamless function within the browser. This allows publishers and creators to participate in the ad revenue.
3. On the other side, advertisers pay for ad campaigns using BAT tokens which can be purchased on many centralized and decentralized crypto exchanges.
Basic Attention Token (BAT) is an ERC-20 token and thus runs on the Ethereum Blockchain. It can be stored in any ERC-20 compatible cold or hot wallet.
The total supply is 1.5 billion BAT with the circulating supply around 1.489 billion.
Who Are the Creators and Founding Team Members?
The other co-founder is Brian Bondy. He is the lead developer and CTO for Brave Software and was previously the software developer lead at Khan Academy. Prior to that, he was a senior software engineer at Mozilla Corporation and also a co-founder of VisionWorks Solutions Inc.
History of the Basic Attention Token (BAT)
The company was founded in 2015 by Brendan Eich and Brian Bondy, who launched the token in 2017 to remedy the issues they saw in the digital advertising space. The issues were around privacy violations of users and misuse of user data, the declining revenue problem for traditional online publishers, and the difficulties that advertisers were experiencing trying to measure and assess the effectiveness of their ad spend and return on ad spend (ROAS).
They later launched the Brave Browser and Brave Rewards was built into the token itself. Once the capital was raised, the next major challenge was to gain user and publisher adoption.
Since the integration of the Brave browser, there are now 30 million monthly active users, 10 million daily active users, 1 million verified creators accepting BAT, over 12 million wallet creations, and thousands of ad campaigns with global leading brands, 1 million verified publishers, and more than 400 advertisers. There are also over 4.3 million monthly transacting BAT users. The utility of the token is growing into the blockchain gaming industry, which could lead to greater adoption of the BAT token moving forward.
What Makes Basic Attention Token Unique and What Gives It Value?
The primary use case was to function as a token to revolutionize the advertising industry, but the properties and use cases have grown over time. BAT is an advertising-focused token that creates value for the end user, the publisher/content creator, and the advertising company.
The uniqueness of the token is driven by the integration of BAT into the Brave Browser. Its value is derived from its utility as a unit of exchange in efficient marketplaces, as it can be used to pay for ad spend in an ecosystem with millions of users.
Advertisers must commit to $2,500 in ad spend on the platform, all paid in BAT, as of November 2020. The more people that opt to use the Brave browser, the greater the network effect, attracting more advertisers into the BAT ecosystem. The BAT token supply is capped at 1.5 billion tokens, of which, 99% are currently in circulation.
What Wallet Can I Use with Basic Attention Token?
As BAT is an ERC-20 token, you can use any ERC-20 compatible cold or hot wallet. The Uphold Wallet is the Brave browser integrated wallet where your browser earnings are transferred to. In order to withdraw BAT from the Uphold wallet, KYC information is required. BAT is compatible with both Trezor and Ledger hardware wallet.
What Are the Risks or Drawbacks of Basic Attention Token?
The Basic Attention Token (BAT) has a few key risks that we need to consider. Currently, the BAT payment system and the Brave Browser are very centralized as both are run by Brave Software Inc. This centralization could lead to decisions being made about the token that the community may not necessarily agree with. Also, since a majority of the BAT tokens were sold in a presalE, there could be a high concentration of tokens held by a few large holders or investors. Another potential concern is the limited nature of the token’s utility as it is mainly used inside a closed ecosystem. Google Chrome is still the dominant browser today and Brave browser adoption would need to grow exponentially to create more utility for the token within the Brave ecosystem.
Prior to listing BAT on the VirgoCX Platform, VirgoCX performed due diligence on BAT and determined that BAT is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis including reviewing publicly available information on the following:
- The creation, governance, and location of BAT and/or its primary development team;
- The supply, demand, maturity and liquidity of BAT; and
- Legal and regulatory risks associated with BAT.
Statutory Rights under Securities Legislation
VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30, 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada, do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.