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Comment by bvda | Hacker News Reader

I wonder why they chose to use (yet another) crypto currency for this.

It's also critical that it be a currency not used for any purpose other than advertising. The point of BAT is to price attention: users have the option of opting out of ads, if they do so it means less BAT available for purchase, which raises the price of BAT, which increases the rewards for opting into ads, which means more people opt in, which leads to an equilibrium price. If they had used say Monero for this, they'd really be pricing drugs and then piggybacking on that with an ad system, which would destroy any market pricing mechanism that they get.

> which raises the price of BAT

Why would the price of BAT raise when uses opt out of ads?

Two mechanisms:

1.) Less inventory. Advertisers bid for spots on the platform, which means that if there're fewer users accepting advertisers, the remaining spots will require more BAT, which requires purchasing more BAT on the open market. Higher demand + constant supply = higher price.

2.) Fewer user rewards. Users receive BAT when browsing, which they can either tip to creators or sell on an exchange (I'm not sure the latter option is available right now). Unless the users or creators are themselves advertisers, there's no use for BAT though, other than selling it to an advertiser. So when fewer users are receiving BAT, there's less available for purchase on exchanges. Constant demand + reduced supply = higher price.

> Less inventory. Advertisers bid for spots on the platform, which means that if there're fewer users accepting advertisers, the remaining spots will require more BAT, which requires purchasing more BAT on the open market.

Doesn't this assume that advertisers would be willing to pay more for fewer eyeballs? That seems like a pretty big assumption.

If they aren't, then the price remains unchanged, advertisers drop out of the market for BAT, and fewer ads are served. Again, you reach equilibrium, except that people who do not feel the current price of BAT is worth their attention don't have to put up with ads, marginal advertisers who get little value out of the advertising don't run them, and Brave makes less money. This also creates incentives on Brave to ensure that their advertisements are targeted effectively (so advertisers are willing to pay more), that they're unobtrusive (so users are willing to put up with more), and that the market for BAT is efficient (so value isn't lost in transaction costs).

Markets and negative feedback mechanisms are extremely powerful things. Most of the things wrong with the modern corporate economy can be traced back to markets being replaced by hierarchical organizations with positive feedback mechanisms (eg. corporations having more money with which to buy up competitors, which leads to increased pricing power, which leads to more money to buy up more competitors; or increased lobbying spending leading to favorable regulations, which keeps competitors out, which raises prices, which leads to more money for lobbyists).

You need some sort of cryptocurrency for this as microtransactions don't really work in the legacy system. Also by using their own token they can boot strap the ecosystem cheaply as they can mint the tokens themselves with the value accruing later after network participants are onboarded and transacting.

microtransactions don't work on cryptocurrency...

There are now three topics you can't discuss in polite company. Politics, Religion, and Blockchain. Just smile and change the subject.

> Politics, Religion, and Blockchain

but you repeat yourself?

I'm constantly shocked by how any mention of blockchains is enough make masses of HNers look like absolute luddites. It's just another datastructure that happens to have an above-average level of hype surrounding it.

Blockchain is not just a data structure. It has an associated political philosophy (ancap) and get rich quick schemes (ICOs/currencies).

When NoSQL was big a decade ago nobody thought it would upend society or make everyone millionaires.

It’s also one of the dumbest consensus protocols in use. It’s a compromise to get what they wanted out of blockchain but nobody will admit it. Which makes me wonder about the rest of their claims. It’s intellectually dishonest and money is involved. No thank you.

Hi, I maintained code with a Merkle tree before Satoshi picked his pen name. I’m just not impressed by the consensus algorithm. It’s not that I’m a Luddite, it’s that I understand some things about it that others don’t and will be tricked by.

In short, I see you all as a little nefarious, with a heap of woo to rival some other boondoggles we’ve recently gotten over.

I disagree, there are many out there that are good at micro-transactions.

My personal favorite example is:

https://www.stellar.org/papers/stellar-consensus-protocol.pd...

Transactions take a few seconds, 10000 transactions per $.01 as well as no mining for coins so it is not a bad coin for climate change compared to say Bitcoin and the mining farms.

Just my $0.02

Perhaps what is meant by "don't work" relates more to the value/price/volatility vs actual transaction functionality.

What you describe above has to be weighed against loss of value for holding until accumulating enough to trade for $ no, as well as general fees associated with trading for $ generally?

Else what really is the point, if maintaining the value transferred isn't possible?

Stellar also supports the creation of stablecoins [1], which tend to have a consistent price relative to some other asset (Often USD).

The way stellar works is pretty smart, if I have some currency on the stellar network and you only accept some other currency, it automatically looks for people willing to exchange them to find you a good rate. So even if few people use your favorite stablecoin you can still accept payments in it.

[1]: https://cointelegraph.com/news/ibm-backs-new-us-dollar-pegge...

This only used to be true. The state of the art of Ethereum has very effective microtransactions. This will improve again by orders of magnitude within the next three years.

For example, see https://comingsoon.idex.io/ which is state of the art.

Not true.

The Lightning Network allows microtransactions on the bitcoin blockchain quickly and cheaply; since it went into production last year, over 10,000 nodes have joined and there's over $7 million in network liquidity: https://1ml.com

I spend a lot of time studying blockchain and Ethereum and wanted to clarify your remarks.

  You need some sort of cryptocurrency for this as
  microtransactions don't really work in the legacy
  system.

Yes, you're right: Ethereum has lower transaction costs, lower non-monetary transaction costs, and ERC20 tokens are interoperable with other Ethereum-based services.

  Also by using their own token they can boot strap
  the ecosystem cheaply as they can mint the tokens
  themselves with the value accruing later after
  network participants are onboarded and transacting.

This is a common sentiment that I believe is incorrect: if a project could use ETH or USDC instead of its own token, but still function correctly, then that token is malpractice. Such tokens are a blight on the blockchain industry.

Projects like Augur and MakerDAO must have their own token or they wouldn't work at all. Augur and MakerDAO have healthy token economics.

I'm not an expert on BAT token economics, but I believe Brave would have been much better off using ETH itself or a stablecoin. afaik Brave's microtransactions don't require BAT to work and that makes BAT a bad token.

> Projects like Augur and MakerDAO must have their own token or they wouldn't work at all

Why?

For MakerDAO, there is basically the "DAO shareholders" who profit from fees, but are the ones who will lose if the peg is not resolved. And for the other token, DAI, it needs a $1 peg and not pegged to etheruem.

Anonymity. You can use the system without ever having to type your mail address or credit card.

Identity is much more than a name, a mail address or a credit card. Blockchain transparency means anyone can trace all your transactions.

So that they can't control who gives money to whom? Unlike google/patreon who can take away your ad/tips revenue stream with flimsy excuses.

people will provide all kinds of reasons but let's be real... it's so they can get rich. they own an enormous amount of BAT just like any stakeholders in a newly created cryptocurrency.

I'd assume to limit how much transaction costs for microtransactions from many users. Credit cards are awful for small transactions, so you buy a bulk of BAT every month to reduce transactional overhead and then let creators cash out when they have some threshould of BAT. They could have done it way simpler than a cryptocurrency, though, by just using a floating point number in a database somewhere, but I'm assuming they assume a distributed ledger is more secure somehow.

>so you buy a bulk of BAT every month

Why is nobody considering the exchange rate volatility here? Endless comments about saving a few pennies, while massive depreciation from holding large quantities in volatile crypto blow away any benefit of not using dollars.

volatility is just a risk, a possibilty to loose money/value. Or even to gain. Transaction costs, on the other hand, are a certainty.

Measures of volatility greatly impact perceived value of whatever it is you are holding/investing in. Don't try to make the claim to me that high volatility will have no effect on both sides of this market demanding BAT. That's silly talk.

If you want to try to tell me risk and volatility don't enter into decisions on which assets the market values, then you expose yourself as being as naive as I presume many buying into this idea are.

As I mentioned further up in the thread (https://news.ycombinator.com/item?id=21532097), BAT is an ERC-20 token and can be easily converted to a stablecoin, which is pegged to $1 USD per token. So if you can avoid that if you want to.

I'm aware of so-called stable coins. The risk with them is you must trust they have the backing & will make good on your claim. Now, since Brave is a company dealing with customers and content creators who actually have to get paid by them, they already must be trusted...so I do think this would have a been a better way to go.

I understand that crypto can be converted "easily". But how does that square with storing BAT in your wallet for long periods of time to frictionlessly use it to pay content-creators? Is "eaily converting" (presumably quickly with very small "hodl" periods) consistent with how the token is supposed to be used: stored on a wallet, collected by content creators periodically?

The short answer: for many Brave and BAT users are just going to do the standard thing of using the BAT they earn to support content creators. These folks aren’t concerned with volatility.

Users who are interested in building a business in the BAT ecosystem requires a different use case.

Now, if the BAT ecosystem takes off and it becomes possible to build a business using BAT, there will be all kinds of services to help content creators deal with the gobs of BAT they may collect.

Uphold, who is Brave’s partner that provides wallet services already has a bunch of useful services if someone has a non-trivial amount of BAT: https://uphold.com/

Not another.. BAT is Ethereum ERC20 token: https://etherscan.io/token/0x0d8775f648430679a709e98d2b0cb62...

>(yet another)

That part's simple: why wouldn't you want to create money from thin air?

Its about economics, with creating their own currency they have full control over the system and also get all the transaction/service/etc fees.

Presumably, they want BAT to be publicly tradeable. Hard to do with a central currency.

What central currency isnt publicly tradable? Thats the whole point. US currency even says "for all debts, public and private" on it.

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