Today, we are announcing a new blockchain-based digital advertising platform using an innovative, Ethereum-based token of utility called the Basic Attention Token (BAT).

The existing digital advertising marketplace injures key stakeholders. The introduction of BAT allows publishers, advertisers, and users to connect in a more efficient, transparent and decentralized marketplace that reduces fraud, privacy violations, and malvertisements while increasing publisher revenue.

BATs are based on user attention, which is really just focused mental engagement, and can be used to obtain advertising and other attention-based services on the BAT platform. BATs will be made available for crowdsale in the near future.

A broken system with eroded revenue, trust, and privacy

The advertising ecosystem started out as a marketplace where publishers, advertisers, and users were the main actors, but it is now overrun by “middleman” ad exchanges, complicated behavioral and cross-device user tracking, and opaque cross-party sharing through data management platforms.

This has translated into advertisers facing poor reporting and targeting, and publishers losing billions in revenue — while fraud has skyrocketed. Users have lost their privacy, face increasing malware risks, pay high charges to download trackers and ads, and suffer slow speeds. This has driven the adoption of ad blocking software, which is now on over 600 million mobile devices and desktops.

A few key numbers tell the story of today’s broken digital advertising landscape:

Over the last 12 years, publishers have lost approximately 66% of their revenue.

In 2016, ad fraud created by Internet bots cost advertisers $7.2 billion, up from $6.3 billion in 2015.

Up to 50% of the average user’s mobile data is used for ads and trackers, costing up to $23 a month.

Users face slow page loads and as much as 21% less battery life.

Google and Facebook, which together claim 73% of digital ad revenue and 99% of all growth, are exacerbating the crisis.

Presently, publishers are paid by monetizing attention via a complex network of intermediary players through ad networks and other such tools. With the onslaught of parasitic actors, publishers are getting very little revenue.

A new system is needed to properly value user attention. It must reward and protect the user, while giving better conversion to advertisers and higher yield to publishers.

Fairness, anonymity, and impact using proven blockchain technology

In the new blockchain-based digital advertising platform, users will opt in to receive advertising. If they do, their attention will be privately monitored on-device in the Brave browser, without tracking. Publishers will be rewarded accordingly with BATs — tokens of utility in a secure, private, and anonymous advertising system based in the browser and the mobile app webview. Users will also get a share of BATs for participating.

By keeping the data on the device, encrypting the data, and shielding the identities of our users as a core principle, BAT forms a bond with users that proves that not only does their data hold value, it holds substantial value that has been ignored and exploited by the middlemen year after year in the current industry model.

In sum, the BAT system provides the following benefits to:

Users: strong privacy and security when viewing advertisements, improved relevance and performance, and a share of tokens.

Publishers: improved revenue, better reporting, and less fraud.

Advertisers: less expensive customer attention, less fraud, and better attribution.

Anonymous machine learning for relevance; open source for transparency

In early stages, the BAT will be specifically tied to Brave browsers and Brave servers, along with verified publishers. Ad fraud will be reduced by publication of all source code for auditing, and by cryptographically secure transactions. Publisher payment will be through the BAT system.

The BAT exchange will be rolled out in phases over the coming months:

Pre-1.0 BAT: Brave already has an anonymized ledger system for making donations and payments to publishers based on user attention. The secure vault using the ANONIZE algorithm to ensure customer privacy is an important piece of the BAT ecosystem which is already in place and deployed in Brave. Brave is already measuring user attention at the browser and distributing donations to the publishers using this system.

1.0 BAT: BAT wallet integrated with the Brave browser. Verification and transactions to be handled by Brave’s internal Zero Knowledge Proof (ZKP) ledger system to protect individual user anonymity from advertisers, publishers and third parties. Ad inventory will be valued, and transactions will be calculated from reported Basic Attention Metric (BAM) data.

Beyond 1.0 BAT: Make the transfer and verification process entirely distributed on Ethereum using a state channel scheme with zero knowledge proof protocol for ensuring user privacy. Add alternate BAM metrics based on advertiser feedback. This will allow for full user privacy as well as a decentralized audit trail for advertisers, users and publishers to ensure they received correct payments for the advertising delivered through the BAT network.

The Basic Attention Token is uniquely positioned to reform the ad-tech ecosystem because it is the ability to privately monitor and anonymously confirm user intent at the browser level which allows for the development of rich metrics for user attention. Attention is measured as viewed for content and ads only in the browser’s active tab in real time. The Attention Value for the ad will be calculated based on incremental duration and pixels in view in proportion to relevant content, prior to any direct engagement with the ad. We will define further anonymous cost-per-action models as the system develops.

For placement, Ads will be matched with user interests using local machine learning algorithms to judge the content to which the user is paying attention, in the context of tabs, viewability, and many other variables not available to remote trackers. This matching will be done privately, on the device only, without any signal out. This means fewer, but more relevant and valuable ads. Several scoring algorithms have been tried with the Brave donation ledger system, which automatically donates an amount proportional to the attention given to a website.

As Brave moves to a fully decentralized micropayment system, we expect other developers to use our free and open source infrastructure to develop their own use cases for BAT. We want BAT and the tools associated with it to become widely adopted web standards for future development of web content, solving the important problem of monetizing publisher content while protecting user privacy. Publishers, advertisers and users who view web content deserve a private, secure and well engineered future.

(Users and investors seeking more information can download the BAT whitepaper from bat-clone-final.mystagingwebsite.com, and can sign up to receive notifications for the upcoming BAT sale.)