How to Survive the Crypto Winter: Why did the Basic Attention Token (BAT) succeed while others failed?

In early January 2018, the crypto market was on fire. It was a time of frenzied excitement as token values skyrocketed and the combined market cap for cryptocurrencies soared to $813 billion. Then, irrational exuberance switched to pessimism: the bubble burst and the fallout was swift and brutal. By December, the market had crashed to $101 billion, an overall decline of 88% from the peak.

Needless to say, many cryptocurrencies and blockchain projects did not live to tell the tale. However, some projects managed to weather the storm, remain trading and even begin to record modest gains in token value. So what sort of firms survived the crypto winter and what can this teach us about playing the long game in the blockchain sector?

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One token which fits into the survivor category is the Basic Attention Token (BAT). User privacy has gained increasing prominence in recent years as the full extent of online tracking comes to light. The BAT was established to serve as the building block of a new internet browser called Brave, which aims to protect the privacy of users while creating a new model for digital advertising.

First traded in July 2017, like most other tokens of the era, the value of BAT mushroomed in January 2018 to over $864 million before collapsing again during the crash. Since February, however, it has recovered impressively and is now valued at $419 million.The idea behind BAT is to make the digital advertising market more efficient by connecting advertisers, publishers and consumers directly, while cutting out the middlemen.

Headed by Mozilla co-founder Brendan Eich, the BAT network uses a browser called Brave to natively monitor which website content users are paying attention to. The token will then serve as the basis of a transparent market for users’ attention. Publishers receive BAT when users view ads linked to their content, while users receive BAT for viewing ads. Finally, advertisers need to purchase BAT in order to target their ads to relevant users.

Thus, the BAT network aims to make internet advertising more transparent, while distributing ad revenue more fairly. This is a powerful idea — although they say that “content is king”, in reality, content providers such as newspapers only receive between 40–60% of advertising revenue. When you see an advertisement online, there are often three middlemen between advertiser and publisher each taking a cut, including a supply-side platform, a demand-side platform and an ad exchange. This means less ad revenue for the people actually producing the content. Indeed, it is somewhat ironic that a tech sector which constantly talks about disruption and efficiency has produced such an inefficient market.

By tracking user behaviour natively and anonymously rather than through scripts on the page, the Brave browser provides greater privacy for the user. More importantly, it gives publishers the opportunity to cut out middlemen and potentially increase revenue.

So why has BAT recovered while other tokens faded into obscurity? The first lesson here is that for a token to be successful, it needs to have a compelling concept at its core. BAT takes a genuine problem — the inefficiency of the online advertising market — and aims to use innovative tokenomics to solve it. This is an idea that is interesting regardless of the dynamics of the crypto market and is still as relevant now as prior to the crypto slowdown.

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Secondly, the BAT token has a clear purpose and value within the proposed ecosystem. The proponents of many other ICOs of similar vintage were vague about the underlying value of their token and were effectively using tokens as an unregulated method of generating capital. The investment in such tokens was largely speculative and the only true value they had was due to hype and irrational exuberance among crypto investors. Ultimately, most of these projects collapsed during the crypto winter. In contrast, by serving as a measurement unit of user attention, the BAT token plays a central role in the tokenomic ecosystem of the project.

Thirdly, BAT is backed by a team with a proven track record in the field. Brendan Eich created Javascript and co-founded Mozilla and Firefox — that is the sort of CV that breeds confidence in the investor community. Other members of the core team are veterans of firms like Microsoft, Evernote and Yahoo. While obviously not every project will be led by someone with the stature of Eich, this shows how important it is to have proven talent in the core team, not just on the advisory board.

Finally, BAT demonstrates the importance of transparency when dealing with developers, token holders and the wider blockchain industry. The communications team behind the project provides frequent opportunities for community engagement on its website, including regular “ask-me-anything” online interviews (AMAs) with key team members in which nothing is off the table. This shows that in order to build and retain the support of token buyers, it pays to encourage robust debate rather than shying away from it.

At THE RELEVANCE HOUSE, we help blockchain firms with great ideas to manage their STO or ICO. We believe in building brands that can survive and prosper in the long term. This involves crafting a compelling message which clearly explains the function and relevance of your token. Because only relevance has impact. Find out more about us.

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Photo credits:

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