Grayscale's Deeper Dive into Basic Attention Token

Last Update 12/10/2021

In November 2021, we hosted a conversation with three members of the Brave Software team: CEO and Founder Brendan Eich, Chief Business Officer Brian Brown, and Vice-President Jan Pietrowski. Internet users who browse the web using Brave's eponymous web browser can choose to replace the ads they see with ads from Brave's ad network. They are then given rewards in the form of Basic Attention Token, or BAT.

Rayhaneh Sharif-Askary: Hi, everyone. Welcome. This is Ray Sharif-Askary from Grayscale. I work in investor relations and I am fortunate enough to be joined here by Brave's CEO and founder Brendan Eich, as well as Brian Brown, Brave's Chief Business Officer, as well as Jan Pietrowski from the Brave Team. We're going to give folks a few minutes to join, so in two minutes or so we'll go ahead and kick it off.

Brian Brown: Are there ground rules here, Ray, in the sense that this is confidential and people are expected to keep things within the group or not? Just curious.

Rayhaneh Sharif-Askary: So this is made available only to our investor base, our existing investors, private placement investors, and we can certainly ask that people not share anything you would not like shared.

Brian Brown: That's cool. It'll give us a chance to say more.

Rayhaneh Sharif-Askary: Give it around one more minute or so.

Okay, so I think we're ready to kick it off. Again, I want to start off by thanking Brendan, Brian, and Jan for being on with us today. A few housekeeping things. First of all, this is a reminder that this webinar is for our existing private placement investors. It's confidential and closed to the public and only our investors can attend and so there is no press or media allowed. At the end of the webinar, we will try to take some questions, so feel free to send in questions using the Q&A function anytime throughout the webinar.

And the purpose of this is, really, we've launched, recently, a trust for Basic Attention Token. Brave is something that Grayscale and DCG are very excited about, and the purpose of this is to just make it more tangible for our investors and show you how it works, talk about what we're excited about and make it more of a reality.

So with that, I would like to kick things off with a poll question. So here we go. How many of us are frustrated? How many of us are frustrated by the amount of advertising that they have to endure when trying to do basic things, using their internet browser? We'll give folks another 10 seconds or so. I've never actually seen poll results like this. Everyone is frustrated, apparently. Everyone is having a really difficult time and doesn't want to see all that stuff. Fair results. So this is really interesting.

Brian Brown: It's a great result.

Rayhaneh Sharif-Askary: Yes, set's the stage really well. Okay, so let's kick things off. Brendan, we're really lucky to have you on here today. There's some really significant achievements that you have long before you created Brave including JavaScript, Firefox. Can you talk a little bit about your background and how it led to the creation of Brave?

Brendan Eich: Yeah, if you want the full three hours, look for Lex Fridman's interview with me. So I was doing browser work since Netscape where I was hired to do what became JavaScript and had to be done in 10 days or it probably wouldn't have happened. And so I've been around browsers a long time and I saw that JavaScript, and Cookies before JavaScript, and just basic web affordances like images could be used for tracking. And this created an evolutionary system that led to not only ad tech, but very bad things. People have different views on how bad it is, but all sorts of fear of election interference and social platforms being abused for really awful things. And I felt a lot of this was unintended and we could do better. So one of the things to make life better is blocking JavaScript. I'm Dr. Frankenstein, I've got to kill my monster.

And Brave does that by default. Now that's easier said than done because you know you want to let things like Gmail, which uses JavaScript heavily, work well, but you want to block all the invasive tracking scripts. And there are extensions that have done this that developed over the years since Firefox created browser extensions as a category, and Chrome is the king of extensions now, but Google's trying to turn out the light slowly, I think, on that. But we collaborate with some of the best of those tracking production extensions, and then we research and develop ways to integrate those into Brave directly so there's no extension needed, and we can put these in the most efficient way in front of users and make the web experience seamless and much faster. When you block all these ad tech scripts and other bad scripts, you end up saving a lot of time because you don't load things from the network and that saves you data plan and battery life. So it's a real win for the user.

Rayhaneh Sharif-Askary: And on that note, we've talked about the surveillance economy. DCG Barry has been... Barry Silbert has been focused on this theme of privacy for a while, whether it's Zcash, or Horizon, or now Basic Attention Token. What's your view and why is it critical now? What's changing now?

Brendan Eich: So there isn't a single unitary good you can buy called privacy. And sometimes people think if they buy a VPN, they're all set, but it's not true. But there's a rising consciousness of what privacy means, first of all, from people having bad experiences just from annoying ads or retargeting. After you bought the shoes, you still get ads for them for 30 days. Or more harmful effects like ad fraud and malware distribution through ad exchanges. So there's a rising awareness of privacy in a sense that it's a problem for people when they hear about breaches or experience problems directly. And they also see Google and other big tech players start to become not their friend that they seemed to be 15 years ago.

I remember Google search when we did the Firefox search deal and it was pretty darn good. It's not as good as a search engine, but Google's now tied it all together with other businesses in a way that treats the user on a good day like sheep to be shorn, and on a bad day like something else. So people are aware of this and they don't know what to do. You can't go buy privacy for $5 a month, though that may become possible over time and we're working on it. But even if you wanted to do that, you shouldn't have to. So we're building in privacy by default and making things faster and better on your battery life and this pops with users. Every time you do something with users that saves them time and battery, they love it.

Rayhaneh Sharif-Askary: So moving on to the browser itself, how do you describe it? And maybe you'll show us. Describe it in layman's terms and then perhaps you can walk us through the various players in the ecosystem and how they all work together.

Brendan Eich: Sure. Do you want me to show a little bit of it?

Rayhaneh Sharif-Askary: I'd love that.

Brendan Eich: Okay, so let me get set here to screen share. I'll say this: Brave is a browser, but people think that's a old category. We view it more like a super app because we've observed that browsers are taking away from apps the larger the screen size. This is something other analytics outfits and observers have noticed too. We've come to see that if you have a trusted app that the user can rely on to defend their data, you can build almost anything into it. You saw WeChat do this in China on a messaging app backbone or body plan. We're doing it on the browser, but we view Brave as something that's almost a new category unto itself, which is a super app that represents the user's interests first. And this means specific things economically, which gets into our cryptocurrency work. Can everyone see what I'm sharing?

Brian Brown: Yes.

Brendan Eich: Good. Okay, so this is the onboarding screen for Brave if you're a new user. And I'll just quickly go through it if I can. It talks about importing. It's very important. Browsers have all learned to do this, but Brave does a very good job now to let people frictionlessly migrate or add a new browser without having to start from zero. So you can import all your settings. You can switch from Chrome, or just set up a working replica of Chrome in Brave. And then if you're not sure, you can try Chrome and Brave Together and pretty soon I think you'll get rid of Chrome and life will be better. We have to teach you about a few things if you're willing, but you can skip all this. We have pretty good click through on this tour, by the way. 50% make it through all the way.

This talks about Brave Shields, which is this greyed out Lion Shield icon up top that you can see at the right of the address bar. We have a search engine picker here and you may have noticed in early March we announced Brave Search is coming, and I'll show that in a minute. We have Brave Rewards, which is our way of integrating the Basic Attention Token into Brave. The token needs endpoint software just like any blockchain needs a light client or a full node. With Brave, there's more to it because we're measuring attention in a way that has to be secure against fraud. But Brave Rewards is the way that users participate and they opt in. And I'm already opted in on this profile, so I'll show that separately. And then when you're done, you get a new tab page, which is a beautiful image. We started with a great collection of images which took a lot of curation effort, and we realized you could sell these, maybe one in four, won't abuse the user.

The user gets a revenue share if they opt into Brave Rewards. Here's a BitPay ad, for instance. And if you reload, you get others. When I mentioned Super App, I wasn't kidding. We have something here I'll show, just point to in lower right corner. You can do private Zoom like one-on-one calling for free using Brave. This uses web standards. WebRTC, which was a 10-year effort, is in the browsers and that's how Google Talk and all those other things work. So we're working on something we're calling Brave Talk that gives free one-on-one calls and will have a premium leg that allows you to do multi-party calls. There's something else to point to at the bottom of this page, which is still branded Brave Today, I think we're going to call it Brave News. And that is the news reader that is coming up from below.

And this is interesting because it doesn't use any user data or personal data on our servers. It's all done as we do ad placement by matching against a local catalog of feeds using keywords as metadata. And you get to customize that, but it picks a good set of feeds for you from interests that you've expressed just by browsing. Very lightweight, not even machine learning, just looking at sites you've visited and keywords in their URLs and their titles. And so we have a news reader built in that brings back the best of what people missed from Google Reader. We're adding RSS customizable feeds for users. We're going to have a premium leg that lets you plug in other custom publishers as feeds than the ones that we automatically select out of Alexa based on a very simple scoring metric. And what else is there to show here?

The new tab page has your recent pages, and if you want to customize that, you can. Oh, and most important, on the upper left, I shouldn't have skipped it, what we call Brave Stats, which is fairly gamified on Twitter. We should probably have another round of calling for who has the most stats, but this shows hours saved due to Brave Shields blocking all those scripts I mentioned. So 6.2 hours for me on this profile so far. This profile is several months old at least. We have a bandwidth savings estimate, 8.8 gigabytes of bandwidth saved. And total number of scripts blocked, which is pretty high. This is based on the script's URLs, so it's not going to count duplicates but it's going max out. That's a huge number of scripts. Let me get onto Brave Wallet. I'm in the middle of setting this up, actually, but we have a wallet that allows you to use a key like Ledger or Trezor to do peer-to-peer crypto directly in the browser.

And for people who are willing to do that, we're more than happy to support it directly through what we call the crypto wallets feature. We're working on a new design which Brian will show some slides on about how to unify all our wallet cards into one umbrella wallet, which has the Basic Attention Token as the easiest onboarding path. No KYC, no hardware wallet for security. The self custody model I'm showing here, which has a hardware wallet, and the custodial models which we have with various custodians such as Gemini, and Uphold, and Bit Flyer in Japan. More to come. And here is a demo of Shields. If you just had any doubts about my Brave Stats, you can see CNN is just festooned with tracking scripts. And these are not operating your interests and they're really slowing down the page load performance and cluttering the page with ads. And you're much better off blocking them.

If you ever want to customize them, you can get into this a little bit through the Shields panel. If you take Shields down, you get kind of the Chrome experience, which is slower and painful and we'll have ads at some point. I'm not going to wait for them. Yeah, one's coming in at the top. I'm going to kill it. Okay, here is a YouTuber who's verified with us. We have a way of tipping and supporting creators directly with the Basic Attention Token. That's part of the Brave Rewards platform, the brave BAT ecosystem that we will be scaling up. And the more we scale it up, the more valuable it becomes. So here's MrBeast. If I want to send him a tip, I get a panel here. I'm going to have to hide my Zoom thumbnails, and I can customize tip amount, I can send a tip. I'm going to send him 10 BAT.

Let's see. Let's see if that works. Yep. Okay. I actually don't watch MrBeast videos, but I'm too old for that. But he is by far the biggest YouTuber who signed up with us. We have a lot of people who have signed up with us. I think maybe if I go to... You can see at a volunteer site that reads our analytics endpoint, you can see all the people who have signed up with us. It's quite a large number, over a million overall lifetime creators. We support not only websites, but YouTube channel owners, and Redditor... Reddit and posters, and Twitter users who tweet. So when you get into the details of the rewards, there's a control panel. And I just wanted to call your attention to one thing here. We have a private ad system in the browser. As I mentioned earlier. It uses local data, personal data on your device only.

It doesn't take it to our servers, it matches against the catalog of offers. We direct sell and we can add more demand over time as we get clean demand sources that don't use tracking. You can see we've got a good selection. Some people notice it's crypto and soft goods, tech heavy, but there are some big brands coming in here too. There's Amazon, for instance. So the ad business is coming up well and that's the seven-day history where I can actually give thumbs up and thumbs down on these ads. I don't want to do it right now because I love all these ads, but I saw a question also about the Basic Attention Token holders. I just wanted to have Ether scan up to be ready. It's widely held, over 400,000 holders. Pretty diverse set. Some of these biggest holders are liquidity polls for exchanges, not our wallets. And yeah, that's my demo. Brian, do you want to do the slide deck?

Brian Brown: Sure, you want to...

Rayhaneh Sharif-Askary: I can jump in, if it's okay, with a quick question before you do that.

Brian Brown: Sure.

Rayhaneh Sharif-Askary: So for instance, from the YouTube perspective, could I theoretically, if I had an exercise channel and I got verified with you, then people could pay me if they liked the videos that I put up and they found them productive. People could pay me in Basic Attention Token.

Brendan Eich: Yes, that happens all the time. And to go back to... I'll stop sharing in a minute. To go back to the Brave BAT info, if you look at the YouTubers, we have... By far, the largest cohort is YouTubers, this big red part of the circle you can see there. So those people are signed up and they're getting not only tips, but recurring monthly contributions and what we call automatic contributions, which are all privately computed in your browser and sent anonymously. So yeah, the platform is up and running and we've onboarded quite a lot of people up to including MrBeast, haven't got PewDiePie yet.

Rayhaneh Sharif-Askary: So the circle represents... If we could go back to the circle for a second. The circle represents everybody that's creating content and getting paid.

Brendan Eich: Yes, this is basically a pie chart, with a white circle in the middle, of all our creators, showing which platforms they're using. So when you see a website, that's the black, those are verified websites like and and others who've signed up. And we can drill down into that if you want, but you can see YouTube really has exploded because I think the creators, since 2015, have been struggling with monetization for many reasons. They're just always, I think, under threat of losing what they thought they could make off of YouTube, so they're open to new platforms. A lot of them use Patreon as well.

Rayhaneh Sharif-Askary: How do you see, if you had to guess, and I'm sure you have estimates, but how do you see the circle changing over time?

Brendan Eich: I think websites will grow. You may have seen just recently, my pal Tony Haile sold Scroll to Twitter. Scroll is a portable paywall, or I think a subscription service that's portable across publishers. Publishers are beleaguered and they're not happy with how Google and Facebook have ground them down, and yet they still want to drive recurring credit card paying email identified subscribers. And we want to help them, but it's hard to get them to see the dynamics here. If we get more people who bypass their paywalls after taking some free articles, or use a new private window or a tour private window in Brave to get more free articles, they could get some people who... I've heard from many users who want this, just say, "Let me use my BAT to get three more free articles." And after doing that a few times, we could convert them to a paying subscriber if they're definitely overpaying in BAT.

So we're trying to get more websites and I expect this black will grow over time, especially as the industry moves with things like Twitter buying Scroll, toward better, let's say, web standards for publisher economics. We think crypto is pretty important there too. Now, obviously when you go to publishers like The Post which onboarded with us almost three years ago, you cannot get them to say, "Oh, I'll take Bitcoin or BAT." Legal IT and the CFO won't allow it, but we have these custodial partners uphold it then in Gemini now that will do exchange automatically for paying in fiat and that's been critical for our growth.

Brian Brown: So I'll flash you a couple of slides really fast, but from a high level, from what Brendan is saying, it sounds like a lot of stuff. But if you boil it all down, we're essentially a private browser, plus private search, plus an integrated wallet that then has N number of crypto and FinTech solutions inside of it. As Brendan alluded to, it's kind of an American WeChat. We provide all these services, and then it integrates very nicely into that whole crypto slash FinTech solution. So Brave finds itself at this confluence of two major movements, which is the internet use that's been going on for quite a while, hitting at 4 billion right now. More and more people asking for private solutions, which is where Brave is. New article out in CNET saying 40% of people on mobile are ad blocking. And we're pro ad, we just don't want all the trackers that are inside of ads.

And then that merging with the kind of financial internet as it comes up, Blockchain, FinTech and Crypto. And Brave is there, really juxtaposed between those two macro trends to take advantage of it. So you can almost picture Microsoft, Apple, Google, in one quadrant, and then PayPal, Binance, Coinbase down on another. But who's going to bring them together? Who's going to give crypto utility? Who's going to take crypto to the masses? And that is really Brave. And Brave did its token sale back in 2017 and it took off 36 million dollars in 24 seconds. We kind of kicked off the craze if you go back and look at the curve. But in terms of people who've actually executed with the cash that they received, Brave is really at the forefront of that, way out ahead of people that even raised billions of dollars, haven't done anything in so many words.

And we've hit 30 million monthly active users. 57% are in the US or EU. 11 million daily active users. We've had 2.2 times year-over-year growth across a number of years. We're 90% organic in our growth at this point. We're not paying for growth. And that's EU and US focused growth. 15,000 downloads per hour. 6 million monthly transacting reward users that Brendan profiled there, so a very large amount. A million verified creators with that great growth rate there as you can see. And those are the creators he was just talking about, YouTube, et cetera. Awesome reviews. And here's a critical factor, which is 66% of people we surveyed traded crypto in the last month. And if you look at the Coinbase S One, they put out in the public press that they're 50 million plus users. That's not really accurate. That's just emails. If you go into their MTUs, their MTUs are about 6 million.

We've got 30 million users, and 66% of those surveys are saying they're MTUs. So the value is there because it's 13%, or sorry, $13,000 per user there, about $875 for the average internet user. And if you look at the first eight years of growth in the internet, we came to about a hundred million users. The first eight years of growth in crypto, we're at a hundred million users. But in order to continue that growth, we have to go out and democratize, take it to the masses. Brave is the mechanism by which we take crypto to the masses, we bring them in with a better solution for what they're doing on the internet anyway, which is browsing and searching, and then we funnel them into N number of crypto and FinTech solutions, buying, exchanging NFTs, P2P payments, sending something to grandma in Argentina directly if she has the Brave Browser, auto converting the Bitcoin to Fiat or Stablecoin or something else.

I won't go through these things because Brendan's already covered them, but these are the two main pillars, browser and search. And then you've got the rewards and tipping that he mentioned. And what's coming next is a Wallet 2.0, and in that wallet, Brave is really going to be expanding out into exploring a DeFi and CeFi solution. TBD on the details of that, but we are releasing a DEX aggregator in short order. It's a matter of weeks. And if you've seen what MetaMask has been able to do with a few thousand users, Brave could convert a very, very small number of the 30 million users into that and have a tremendous outcome because MetaMask was already doing 120 million in revenue in about five months. And that onboarding that Brendan went through is here just visualized. People come in, they get into the earning the rewards, which is that frequent flyer miles that will take things to the masses.

Then they say, "Oh, what's this token? I can use it for things. I can even exchange it for actual real crypto and take it and do more like E-commerce." And the family of products that Brave is taking out, the browsing, the search, the news, we actually have a Zoom competitor that's more private and more secure, VPNs available, chat coming soon. All of that is fully integrated with a wallet that's going to allow for trading, lending, shopping, paying, NFTs, et cetera. So we're giving crypto utility where right now it's just kind of a store of value and an instrument of speculation. So Brave is really the on-ramp to taking crypto out to the masses.

Rayhaneh Sharif-Askary: That's really interesting on the DeFi angle. How will the future state of the Brave Wallet be different than what MetaMask is doing now other than potentially having a larger base of users?

Brendan Eich: So we'll tie it into our DEX aggregator and we'll give discounts based on BAT holding and usage. We want to promote growth. We want to promote the efficiencies we think we can realize with the combination of the browser and blockchain. And so we're going to use all our tools to full advantage including BAT.

Brian Brown: And we're going to be expanding the utility of BAT. The vision for BAT has almost become a -type BNB. For example, you could have users get discounts in our DEX aggregator using BAT paying fees, and they'd be able to earn a share of the trading fee revenue when they lock their BAT in a smart contract we plan to launch. As with the user base of 30 million will be able to I think go beyond that 15 million in revenue a month that MetaMask is doing. And we plan to use the utility BAT further inside of search and other just standard internet services as well.

Brendan Eich: One more thing about the wallet. If you've used crypto with custodians and self custody, it's kind of taking your life in your hands with copy-paste, or “copypasta” as the kids say. We can make much safer and low friction sort of UI affordances to get things moved between the cards and the wallet. We can make it much slicker and faster. So this will be a full feature wallet over time. We're inspired by work we've seen on things like Exodus, and we're not going to step back from this opportunity, I think.

Rayhaneh Sharif-Askary: So one won't have to copy paste wallet addresses to send or receive tokens?

Brendan Eich: Right.

Rayhaneh Sharif-Askary: That's amazing. That is something that frequently gives me a... Nearly gives me a heart attack.

Brendan Eich: It's a problem.

Rayhaneh Sharif-Askary: As I wait to see if I did it correctly. That's really great. Taking a step back, can we talk about Basic Attention Token, how it's different from Brave, how they work together, and does owning BAT give you an ownership stake in Brave? How does that ecosystem work? What's the difference?

Brendan Eich:

Right. We did a token sale end of May 2017 that was designed for our white paper to be utility token attention in a market where we were going to use Coase theorem to price in externalities that are currently imposed on users, really. Also, publishers. Even advertisers suffer. And these are things like the cost of ads annoying users, so they get ad blocking and they just opt out of the system. These are things like the publisher getting 30 cents from a dollar put in because the ad tech vendors take so much out and also operate against the publisher's interest. And the advertisers suffer from ad fraud and also from just that inefficiency. So when we designed the Basic Attention Token, we wanted to solve this problem, but as I mentioned earlier, it requires both blockchain and endpoints. So BAT is a utility token. It's on Ethereum. As you know, Ethereum has gotten costly and people are working on L2 and basic operation, gas prices down, fortunately.

But ERC 20 smart contracts take a number of operations. So we're doing things like exploring next generation blockchains. We're already reflecting BAT onto Binance Smart Chain, and we're working through a research program called Themis to move as much of our endpoint software as possible onto future blockchains like Ava, Solana... Who else is participating? I think some of the L2 people are participating very well as well. So we're trying to keep innovating, and researching, and collaborating to take the best of what we've done on Ethereum into other spaces. And you've seen this... It's very interesting how crypto's evolved because you've seen Binance capitalize on this. I think a lot of... Besides copying things like PancakeSwap from Uniswap, they just benefited from Ethereum got costly, so people would do fast Defi on Binance Smart Chain and then if they wanted to settle they'd still go back, but they would amortize their fees.

This has not been lost in us. And we're grateful for Ethereum, we're sticking with it, but you can sort of do the same kind of protocol evolution that we've seen on the internet as a whole. You never sort of abandon the old world, you simply reflect it into a new and faster blockchain. You lock up some BAT on Ethereum and it pops out on a new chain. So we're in this for the long haul and we're playing to win with BAT. And the endpoint software also needs to be standardized. I mentioned that's key because it's measuring your attention. No blockchain can measure your attention. That requires something on your system that you trust that has been secured against ad fraud and other threats. So that's something we're also committed to developing and in the fullness of time, we think there'll be web standards for it that make it possible to have BAT utility on other apps than Brave.

You're seeing Google on the back foot proposing all sorts of bird named crazy overcomplicated designs like Flock, and Fledge, and Turtle to react to the end of the cookie, and Apple's moves against the cookie, and regulators pressuring Google. I think what's going to happen is that stuff may ship in Chrome, but it may not work well. It may only be good for Google and not for any publishers. And over time, if we keep going, we'll have a set of new web standards that embraces not only crypto for payments, but crypto for attention economics. And that's where we're in the pole position.

Rayhaneh Sharif-Askary: If I were kind of someone that had a very basic understanding of cryptocurrency and the various tokens and types of tokens, how would you compare Basic Attention Token to Bitcoin or Ethereum? How would you put it in context for the novice?

Brendan Eich: Sure. So the easy way to say it is Bitcoin is digital gold, or people like to say sound money, digital money. Ethereum is about smart contracts. I think Chris Dixon was absolutely right. And you still see that developer energy that swarmed to Ethereum, and that's why you're seeing things like Binance Chain. And the C chain on Ava is bicocompatible with Ethereum. So the sort of investment developers make in smart contract programability is conserved, and that's almost like biological evolution. So now you know what BAT is. I think BAT can be the fundamental utility token for all the attention economics that browsers and many apps that have browser like web views in them. Let's face it, they're all kind of bad browsers like Facebook's app, which I uninstalled. These can all use BAT for the attention economics. You don't necessarily want to use digital gold.

We found the hard way, and the open Bazaar guys also told me independently, people like to hold Bitcoin, not spend it. So it's very hard to get people using it for something that's frequent or automated through micro contributions or tips. Ethereum, also, is I think a great main coin for that smart contract platform, but it's not the thing you necessarily want to spend all the time, whereas BAT is more like something you can just get started earning almost like a loyalty point. You can get a revenue share, 70% from the gross of our Brave ads. And you can then tip it back. You can take it out. So we're trying to make something that really does provide the fundamental unit of account for attention.

Rayhaneh Sharif-Askary: Can we go back to... So there was an announcement, you kind of touched on the search engine. Can you talk more about the search engine and your vision for the search engine?

Brendan Eich: Yeah, I apologize. I meant to demo that a little bit. If I can, I'm just going to try that again.

Rayhaneh Sharif-Askary: Sure.

Brendan Eich: So in my Brave browser... I have Dev Tools open for some reason. Forgive me, I'm a former engineer. We have a search engine and I can just type for... I don't know. What should I type? Something about... Let's find that podcast. I'm using Brave Search as my default engine and there's the results. There's some clever things I already opted into I won't be able to show you the opt-in path for, but one of the problems with doing a search engine is how do you compete with Google on the hard queries? Well, we are our Browser, so we have superpowers.

If you use Brave search in any browser, it'll give you very good results. We think better than Bing, better than DuckDuckGo, for sure. But for hard or unique queries, Google is still king of the hill and probably will be for the foreseeable. So browsers can do multiple queries to multiple engines. That's within your rights as a user. There's no way to block them. It's not something we're doing from our servers. So I've opted into a fallback that allows me to put rare queries through Google, and they will be identified as such. Maybe there's something I can do that's really a unique query here. I don't know. Let's try something. This might be something that Brave Search gets, but if it's hard enough it'll go to Google.

Jan Pietrowski: Try gibberish.

Brendan Eich: Yeah.

Jan Pietrowski: If you do bunch of gibberish keys.

Brendan Eich: Yeah, there's a definitely unique query. Oh, not unique enough. Let's just do like Jan said. So this is going to trigger the Google fallback in the browser and you'll see this little note here, I hope you can see that, that says we've checked with Brave and Google search results. The point is we don't have to worry about people switching back to Google because the rare or unique queries don't work well in Brave Search. If they opt into this, they get the best of both worlds.

It's better than Bing, and that means we can get a fast start getting people converted to Brave Search by default. We're looking at options for private ads, and if users don't like ads in search, we're going to give them a way to pay. It doesn't cost a lot to buy out your ad inventory on search and we think a number of our users will do that because while privacy is not a single thing you can buy to get privacy everywhere, people are now saying, "Hey, I want to pay for it. I know I'm better off paying for it than being the product and being subject to ads and centralized ad systems that put me in a conflict with the business owner."

So naturally of course, Google found some YouTube videos that have my nonsense keywords. Anyway, search is a big opportunity for us because not only is it obviously a powerhouse for Google, it's their biggest revenue leg, people want private search. So we can do things that are innovative here. We've talked about, in our announcement, also allowing what are community curated rule sets, like ad block filtering rules that can be uploaded into the search engine to customize your view of the objective index that we're developing. And we have our own index. Our search technology does not require us to crawl the whole web in real time like Google does. That requires you to become Google essentially.

We have a different way of doing it that is private and incremental, but is doing a very good job. And if people want, they can use our Goggles exploration, we hope to develop fully, to have their own sort of community-curated rankings and we think this will avoid some of the censorship pressure, but we intend to make the objective index really good and it will reflect what's out there as favored by all the users contributing with searches, and queries, and clicked results to Brave Search. So that that's a quick Brave Search demo. I hope that helps.

Brian Brown: And that search actually integrated, inside the browser, integrated with seamlessly with the wallet so that if you imagine some kind of E-commerce or something like that where you can actually do a one-click E-commerce, where I see a Nikon camera, I hit click, I want that, pay in fiat, or a combination of fiat and crypto, or crypto, and then it just arrives at your house because the browser knows where you are only on your device and then it ships to your house. So it's all kind of seamlessly integrated and it then shows you where that utility for the crypto actually comes from and how Brave can bring all those parties together.

And it's important to realize that Brave is the only independent private alternative to Google Chrome and Search. DuckDuckGo is basically just a skin on Bing. So we're really the only alternative for that. And as privacy continues to grow, you're going to see more and more people flocking to us. The Firefox users are in a constant state of decline if you look at the graph. They're not probably going to be maintaining that code base over time. Everyone switching to Chromium. So those 200 million people are going to shift somewhere. They're not going to shift to Chrome. They're more... I think we can go out and collect them well with our marketing activities even though 90% of our growth is organic.

Brendan Eich: Brian made a great point. Product search is very hot. You shouldn't end up all in Amazon where I think a lot of the merchants are suffering, sort of similar to the problem that the publisher is suffering with Google. So we can infer shopping intent very easily from queries like the one I'm showing. And we can actually synthesize verticals as privately as possible, including using on-device data like we do with ads and our news reader. So there's really a large commercial upside to search. It's not just about serving the user. That's our first priority. But again, when the user is happy then we're winning. We give the user a share of the revenue and if we can get our own private ad sales system up, which needs automation, self-serve, we will share search ad revenue with the user using BAT. So Basic Attention Token goes into search too.

Rayhaneh Sharif-Askary: We've touched a little bit on the user base and the growth. I want to get a little bit more into that, but first I do want to do one more poll. Let's see. Sorry, I'm trying to find my second poll question. Here we go. So how many users does Brave have today? Give it about seven more seconds. So I need to stop writing the poll questions because they're way too easy. What's the right answer? I don't think any of these are right, I've just learned.

Brendan Eich: It's over 30 million monthly active users, 10.6 million daily active, we announced for April. And it's up from there because we're growing every month.

Rayhaneh Sharif-Askary: Can you put that in... That's a lot. Can you put that in context to something like Coinbase for instance?

Brendan Eich: Yeah, Brian mentioned Coinbase has a lot of email registrations, but those don't equate to active users over a month or the high activity whales. So Brian, what's the latest on Coinbase?

Brian Brown: It was 50 plus million, maybe 54, 56 million emails they collected and they say that's, in a popular press, that's their users. But in truth, it's actually 6 million plus monthly transacting users and that's what they were valued on at about a $13,000 per user basis to get to their market cap.

Brendan Eich: I can run through a few questions I see, if that helps?

Rayhaneh Sharif-Askary: Definitely.

Brendan Eich: Yeah. So somebody asked how we secure the crypto wallet. What I demoed with my onboarding halfway done is basically like MetaMask. We use either a passphrase, which we don't recommend, or a Ledger wallet or Trezor hardware wallet, so self custodial using using a hardware private key. And somebody else asked what's the barrier to entry? Wouldn't this be easy to copy? I've been doing open source since Mozilla open source Netscapes code, and at the same time there was something that became what Apple uses called WebKit in Safari and what Google forked as Chromium Blink. The problem isn't the availability of the code, it's really the talent and things like our ad block filter lists, which is updated through a service so we can do rapid fixes and adaptations within a day or two around the world. It's things like our blind token issuance for the Brave anonymity protocol, which we're moving on.

I mentioned the research protocol, Themis. That code can't be copied because it has to be hosted, it has to be run through a trusted browser that people adopt. And so if you put it all together, people have tried to clone Brave. We've seen some wannabees who never got off the ground. We've seen at least one effort that led to a fork of us that did not get maintained, so it became full of security holes right away. Browsers are tough. Any rich app is a vector for attacks through remote content and these can take over your machine and steal all your Bitcoin. So keeping up with security patches is not an option. It has to be done and it's costly and it's another way that if somebody tried to copy us, they would be behind us. They would be lacking the business relationships we've developed. They'd be lacking the blockchain connections we have, and they'd been lacking the skill of our talented staff. And you can't clone those easily.

You might be able to use the source. So browsers have long since, and web standards have long since come to depend on open source, but that doesn't reduce the opportunities for competition. And since we're building sort of this super app, we're going where I think almost nobody goes. All the big tech platforms who basically got their own browser like Google did with Chrome, or built something that's Zuck's browser, which is the Facebook app, realize that they were better off doing things in their central servers. And they don't work on innovation. Chrome is not an innovative browser. So what we're doing is innovating where they don't want to go for business reasons and it's a real long path to attack, which we've been enjoying.

I see another question about BAT and other browsers. And this is something that has come up and I've mentioned the idea of doing a, it's a bad phrase from Adtech, an SDK or some way of embedding the endpoint software component of the BAT ecosystem into other browsers. That could be done, but it would be a mistake to prematurely do it. And meanwhile, we're bubbling up pieces into standards. Like Apple is an ally in W3C, we're working on things like private ad confirmation through blind signature cryptography, or through very simple schemes like Apple's proposal that they've implemented. So I expect it'll be a bit of both. You'll have piecemeal standardization, you'll have an SDK that we can, on fair terms, make available to other browsers. And you might get some other attempts to integrate BAT independently of our code and more power to them. We're not worried about that.

So your question about NFTs. With the current crypto wallet, you can buy NFTs just like you would using MetaMask. And with our unified Wallet, the Wallet 2.0 work, we're going to make it even slicker. As I mentioned, we don't want to have copy pasta bugs. We don't want to have people buying a valuable NFT and sending it to the wrong address.

Rayhaneh Sharif-Askary: How about thoughts on building a Brave email service?

Brendan Eich: Yeah, a lot of people want us to then go the distance, especially when we announced Search. There was much rejoicing, but then people said, "What about Gmail? I can't trust Google." We might do it. It's not on the boards right now. We've looked at it enough to realize there are severe trade-offs for privacy. If you use ProtonMail as I do, you realize it's a little clunky because of the encryption. Search is basically broken. There is no server-based search indexing. But there are solutions, technical solutions, that can be worked on here. So we're considering it in the longer term.

Rayhaneh Sharif-Askary: The tokenomics of BAT, what is the issuance rate? How does that work?

Brendan Eich: That so that that's something we don't tout, but it's a fixed cap sale from 2017, so there's only 1.5 billion BAT ever. And because it's ERC 20, 18 decimal places a fraction, you can divide it down as fine as you need. So as our white paper argues, especially the 7.3, the appendix, there's an econometric argument there with quantitative formula analysis basically showing that if the system keeps growing then prices should stabilize and all else equal BAT becomes more dear.

Rayhaneh Sharif-Askary: How do you plan on incenting liquidity in the DEX aggregator?

Brendan Eich: So there doesn't seem to be a big problem with MetaMask getting most of the liquidity from Uniswap, and that's the short term plan. We think in the long run, we'll have enough scale to have good liquidity. We won't need a lot of extra work there. But yeah, just looking at what MetaMask smartly did with their aggregator, it's been inspiring to us.

Rayhaneh Sharif-Askary: This is one of my questions, actually. What are the biggest challenges you see coming up?

Brendan Eich: So for me, there's a definite challenge recruiting crypto talent, and it shouldn't surprise anybody on the call. Everybody who's anybody can probably raise funds or even do their own project and do some way of getting funds out of it to go to the next level and try to hit it big. There is always a shakeout plan. Since we were... In 2017, we saw a lot of people fall by the wayside. And we're looking for talent, so if anybody has people they want to recommend to us, we're open to it. That's one of the big challenges. I think the other problem is at our scale, the old focus on one thing only rule, which we followed in the early days, doesn't apply, can't apply. Something that's big with 30 million users, has a lot of UX service area, has crypto, but also regular browser users. You want to do several things.

You want to spin some plates really well, at least have a three ring circus. That's a management challenge, and that's a product marketing challenge. So we're working, we're beefing up this year our marketing story, hiring a CMO because we have to go across the chasm. Even at our scale, and this happened with Firefox, when you get around 30 million users, you've got the lead users who love Brave and know how to pitch it for you better than you do, but you also have their friends and family, or just other people who come to it who are not sure what the difference between a browser and a search engine is. And they're not sure what privacy really means and who to trust. So marketing becomes important.

Rayhaneh Sharif-Askary: How will you compete with Google AdWords and Facebook in terms of targeting, retargeting, and measurement?

Brendan Eich: Yeah, so I laugh at that because obviously, they're powerhouses. I would say Google search is the big leg because what they get through their ad exchange for other parts of their system, properties they own like YouTube or the Google Play Store isn't as valuable. The publisher side, which they can't walk away from, it just isn't as valuable. Double Click, which they bought in 2008, it's kind of turned on them. I think that's one of the big thorns in their side on the antitrust front. So our goal is to do what we've done and keep doing it. We had a boutique audience, we did a direct ad sales team, and they're still working in growing revenue. As we bring up Search, we will work on automated self-serve ad sales because that's the only way to go for Search because of the dimensionality of the keyword space.

You need a lot of ad buyers. And so you have to worry about ad quality. You have to do all the things we're doing with direct sales. It has to be more automated over time, but we don't need to become Google. We can also, as the world evolves toward privacy, plug in private demand sources that aren't us, that we don't directly sell the ad space for. And that's something, I think, you'll see more of. We've already started to work with BuySellAds and a few others that are clean. There are some forward-looking ad players. The Adtech people are scrappy. And as privacy comes to the fore through regulators and law and through user choice, which is blocking, I think they'll adapt. So you don't have to be Google to compete with them. We don't want to be Google. I knew Sergey Brin when we did the Firefox deal and he was very idealistic.

He realized search was almost a common good, but he was about to go public, so there was no way he could stop that from being tied into all these other businesses. But the tying is an antitrust problem and it created all these perverse conflicts where Google is basically like Amazon hurting its own clients, its own ad buyers, its own publisher partners on the double click side. And we don't want that conflict. We want a decentralized web, which means Brave becomes a super app and gets a lot of users and there's plenty of money to go around. But we're not trying to hoard all the data. We're not trying to drive everybody to a single website where they're sort of fleeced.

Brian Brown: And just as a reminder, we have the ad revenue coming in, we have search revenue that is about to get the switch flipped on it, and then we have the crypto and the Wallet and the basis points that we'll be collecting on. And both crypto and search look like really tremendous revenue strengths for us across the rest of this year.

Rayhaneh Sharif-Askary: There are a couple on the Grayscale Trust and different ways to own BATs. So I can take that. Some folks are comfortable owning digital assets outright, buying them on exchanges. We've created a suite of products including Grayscale Basic Attention Token Trust, which enables investors to own these assets and have exposure in the form of a security. So like owning a stock, there's CUSIP, there's financials, there's tax statements. Certainly if there's any interest in that, please reach out to me. Some more questions. Is Search available today?

Brendan Eich: Oh, sorry, I was just typing the answer, so I'm going to send that.

Rayhaneh Sharif-Askary: Oh, sorry about that.

Brendan Eich: That's okay. It's okay. I can read it out. There's a wait list for testers. The first testing cohort has got access and we're heading toward making it available to everybody as an alternate engine. So when you go into your settings or if you recall that onboarding tour I showed you, there's a place where you can choose your search engine. It'll be in there. And that'll probably be in June. And that will allow us to get testing from people who are more friendly because there's still lots of things to polish from Search.

It's, again, a big service area to work on. Movie search, the IMDB automation, the Bollywood IMDB, all that stuff is coming. Local search is important. We have some good progress there and there's more to do. So as we bring it up, we'll do it first as an alternate engine for friendlies who choose it, and then we'll head toward default. Where for new users, you'll get brave search by default. You can switch to Google if you like. For existing users who stuck with our default, which in most countries has been Google, outside of private windows, we will propose Brave Search.

Rayhaneh Sharif-Askary: So as we wrap up, a longer term view question. So there's a question about would you sell. So I'll rephrase it. What is the plan 10, 15 years out? What's the long-term vision for Brave and BAT?

Brendan Eich: Yeah, I think when I started using computers a long time ago, let's say, especially when you got into PCs over time, you had this powerful thing where you were the person who installed the software. It made you have to deal with system administration tours, but you were in charge. But now we've gone to this world where you're kind of tied for good or ill. I have iPhones, I'm tied to Apple. You're definitely tied if you go into things like Google and Facebook. And it's, I think, turned against the users. My vision is that Brave is a mountain among a rising range of mountains that represent privacy first and user first.

And we are an exemplar. We have the biggest user base. We have the biggest crypto user base of users who are brought through our funnel. From not knowing about crypto or just hearing about it, or having maybe a little interest, all the way through to becoming HODlers or even traders. And if we do this right, I think we could outscale everybody else in the business. Now that sounds crazy ambitious, but I don't see why it can't be done. Frankly, it's already put pressures on us as a business to either give away our users to a big centralized exchange partner, possibly to our long-term detriment, or get acquired by them. And we're independent still.

Brian Brown: We're the top of the funnel for those super valuable users, as Brendan was mentioning. So they're at about $13,000 each and no one's gone out and collected as many as we have. You'll see exchanges out doing advertising in different places. That's a very hard way of trying to collect the crypto MTU. And we've got them here. And so we've been approach saying, "Hey, can you be top of funnel for us?" It's like, "Well, we can be top of funnel for ourselves and put them all into that wallet with N number of crypto solutions."

Brendan Eich: DeFi, CeFi, centralized exchange, DEX. It's all going to be there.

Rayhaneh Sharif-Askary: Well, I think we're approaching upon time, so I want to thank you Brendan, Brian, for taking the time to do this. I'm really grateful and I think our investors are really grateful too. This is tremendously helpful. And thank you everybody for joining us today. To the extent you have questions, we're happy to answer them. You can send an email to [email protected], and I hope everyone has a great rest of their day.

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