What Excites Me Most About Cryptocurrency
I can’t wait to see the world five years from now. Following the budding of blockchain technology in this past year has been a rollercoaster, to say the least. There are a great many revolutionary ideas being discussed in the cryptosphere — most doomed to fail, but some destined to blossom. Today we’ll cover some of the projects at various stages in their development that have me on the edge of my seat. And of course, click through the links for more information if you aren’t yet familiar with some of the slang.
The first project you may have already heard of: Ethereum. It’s right behind Bitcoin as the second-largest cryptocurrency by market valuation. This is no currency in the traditional sense — it’s a marketplace for decentralized applications (or DApps) that is run by the native currency in the ecosystem, Ether. Imagine the Google Playstore, but open-source, censorship-resistant, and the network connects users to your software for a fee. So instead of running a server, you pay into the network at cost.
Every DApp’s code is completely viewable, so fraudulent or malicious DApps are made ineffective.
Ethereum has a blockchain that stores these DApps, each of which contains snippets of code to be run with Ether. But Ethereum is also a protocol layer upon which alternative currencies can be built. These Ethereum alternative currencies are called “tokens”, and are interchangeable with Ethereum. Tokens can be assigned properties that make them ideal for specific use cases.
One brilliantly innovative token is Golem (GNT).
While the token is live, it will take time to develop the software to fully meet its ambitious goal of creating an interconnected worldwide supercomputer. The Golem network allows users to buy and sell computing power in exchange for Golem tokens. So if you have a computer sitting at home, you can contribute its computing power to the network in exchange for compensation. And if you require a computationally intensive task — like playing a demanding video game from your phone, or animation and video rendering from an average computer — you no longer need access to expensive computer equipment. Instead, you can rent the equipment wirelessly.
And finally, the token that excites me most of all: the Basic Attention Token (BAT).
The token simplifies and improves the relationship between the three main participants in the advertising market — users, publishers, and advertisers.
Users are the me and you: customers to whom advertisements are targeted. The case for increased user privacy is cut and dry. But on top of that, the BAT network rewards users with tokens in exchange for the payment of their attention. It also reduces malvertisementsand mitigates the highly-demanding data requirements that modern ads require.
Advertisers are the companies paying for the ads. In the current “ad-tech” system, advertisers need to pay a number of intermediaries who stand between the ad and the user:
- Demand side platforms
- Analytics agencies
- Trading desks
- Network exchanges — desktop and mobile
- Measurement and verification services
- Data suppliers
Not the most direct way to promote your product to consumers. Facebook and Google rake in tons of revenue by providing some of these services — supplying data and analytics, showing the ads on their platforms, and verifying that ad engagement isn’t fraudulent. Facebook and Google claim 73% of online digital ad revenue.
The BAT network removes these intermediaries through the use of tokens that are fraud-resistant and easily traceable, while cryptographically concealing the end user’s identity. So user attention is transparently managed, preventing the use of click farms and bots. The value-add for advertisers is a cheaper way to reach consumers that also reduces ad fraud.
The final party in the advertising network are publishers — these are the content creators and marketing agencies hired by the advertiser. Publishers deal with their fair share of intermediaries as well, with whom they share their revenue. By removing intermediaries, publishers see their revenues grow and an increase in the quality of their user data.
So how does BAT remove these middlemen from the ad-tech ecosystem, reduce ad fraud, and protect user privacy?
The token integrates with the Brave browser, an open-source browser that anonymously measures user attention to accurately reward publishers. It uses Basic Attention Metrics (BAM) to assign an Attention Value to an advertisement. A machine-learning algorithm will calculate this value based on time viewed and the proportion of pixels in view of the active tab of your browser.
The currency flows through the ecosystem as pictured above. Advertisers pay into the network, and some of their BAT goes to users, while some go to publishers. Users view ads they find relevant or interesting. Publishers create content with BAT, and are further rewarded when users engage with the highest-quality ads.
BAT, the token itself, can be used to cash in, to unlock premium content from content creators, or to access higher quality video on an entertainment channel. This could be a desirable alternative to the monthly subscription model. Users can contribute BAT on a per-use basis instead of paying monthly USD.
And to improve the ad-quality in the Brave browser, ads are tied to active windows only (so no pop-ups), will be rate-limited (reducing spam), and have open source code.
The most important benefit of the BAT network is the protection of user data. In the status quo, centralized networks such as Facebook and Google control advertising data. Every interaction between advertiser, publisher, and user must go through the central entity.
So all user data — our likes, interests, and demographics — are tracked and stored in one place. A decentralized or distributed network has no central entity — nodes interact directly with one another. Since consumer data is anonymized, and not controlled by a single company, user privacy is better protected in a distributed network.
While there are strong signs of progress, we are still a long way from decentralized marketplaces, CPU compensation, and adequate privacy. Even the major Cryptocurrency platforms are experiencing technical hurdles. But that doesn’t mean this technology won’t pervade the annals of industry. It’s best to get ahead of this disruptive trend now before your company is swept up in the tide. If you have any burning questions about Cryptocurrency or Blockchain technology, feel free to message me on LinkedIn, tweet me @ir3mo, or email me at firstname.lastname@example.org. Your question might just blossom into a full-fledged article.
Thanks for reading.