ichthyoid

When we look at the world of the Internet today, the vast majority of it is powered by ad-based revenue. From Youtube to Facebook to Twitter to Spotify (and of course, others besides), almost every popular service used has some sort of basis in generating income from online advertising. And while subscription services like Patreon or Disney+ or even Coil are proposing to give an alternative to this kind of system, there are others who would rather make it better than replace it completely.

As my followers know, I've been following quite a few blockchain projects and talking about them in various posts. One of these has been Brave and the Basic Attention Token (BAT), a project created to combine blockchain technology with an Internet browser experience for a more secure, and privacy-oriented way to, well, browse the Internet. If you want to see some previous posts I've made on Brave in the past, you can take a look here and here.

In two recent blog posts (Part 1 | Part 2), the team behind Brave introduced an academic research project called THEMIS. The goal of THEMIS is to try to continue the effort to provide users with privacy-oriented ad-based experience by decentralizing the middle-man that is often the fundamental negative of the ad-based system we have today. And so, in this post today, I want to explain and explore THEMIS, and see whether it can indeed create the change it is purported to.

But first, let's talk about why ad-based revenue is broken today.

Online Advertising: A Broken System

Today, the vast plethora of Internet services are 'free' to use. This has led to one of the greatest revolutions in communications, as we now have near instant communication with the entire world through our computers, tablets, and other mobile devices. One can argue the merits of this insanely fast change in society, but it's difficult to make a general case to go backwards, barring an apocalyptic event that wipes out the vast data centers around the world.

Notice the quotations around the word free above. I put those there because, while most Internet services (especially social media services) don't put any financial burden on its users, what they do instead is obtain user data. This collected data is then used to incentivize advertisers onto their platform, so that targeted ads could be created that would entice those users to buy products. And so, user information and data have become the new commodities on which online income and revenue are based.

Note: there are other advertisement-based revenue schemes, such as influencer-sponsorships et. al. However, I won't be addressing those in today's post.

There are massive problems with this, with the most obvious being that user privacy and security are easily circumvented. When hackers and scammers gain access to these centralized platforms that store user data, they obtain access to private information, such as residency, job, income, etc. Such information can be used, not just for things like impersonation or fraud, but to gain access to almost everything else about that user, such as financial and other online accounts.

There is another big problem as well. Because advertisers are the ones that give these free platforms money (in order to use the data from those platforms to target ads), the platforms are also beholden to whatever the advertisers want. We saw this recently when many big advertisers participated in a boycott on Facebook. The company was thus pressured to remove so-called hate speech and fake news from its platform. I'm not going to argue whether those things were in fact hate speech or fake news, but rather, I'll point out that whether they were is irrelevant (practically speaking). The reality is that these companies defined certain posts and comments as such, and with the monetary clout they had over the platform, were able to push for the removal of such content from the platform.

Thus, among others, we have these problems of censorship and exploitation in ad-based online business models.

How Brave and THEMIS Work

The team behind Brave goes about solving these issues through their chromium-based browser, as well as the use of the Basic Attention Token (BAT), an ERC-20 cryptocurrency. The goal of BAT is to reward users for their attention on online advertisements, as well as creators that are affiliated with the Brave Creators program, while also preserving their privacy and data.

To do this, they've set up a system where users who use the Brave Browser can opt to receive ads on both mobile and desktop class devices. An advertiser uses a Brave Campaign Manager to purchase ads, which are then distributed to users who have opted in in the form of notifications. If a user clicks on these ads, they are taken to the ads' website, and rewarded with a small amount of BAT (as determined by advertisers). In this system, private user data never leaves the browser, and Brave servers never receive any information on user browsing habits or interests. Furthermore, advertisers can specify how much users are rewarded, but this information is also never shared with other advertisers.

This, of course, means that the Campaign Manager has to be a trustable entity, which is where THEMIS comes in. While not yet implemented, THEMIS takes the job of a Campaign Manager by being a blockchain system that facilitates funding and payments through smart contracts. Furthermore, while Brave is the only facilitator between advertisers and THEMIS currently, the THEMIS protocol will allow multiple other facilitators to interact with the system as well. Furthermore, because THEMIS is a proof-of-authority blockchain system, its functions and contracts can be viewed by anyone, making it open and essentially trust-less.

Interestingly, THEMIS is not based on Ethereum, but rather its own independent blockchain. This is due to the current state of the Ethereum blockchain being unscalable for mass adoption. As the team's intention is not only for multiple advertisers to be able to choose from a number of facilitator options, but also to be able to serve millions of customers, each requesting rewards and payment on their own time, it's important for such a blockchain to be able to scale towards that purpose. While still being tested, the team reports that THEMIS can handle up to 51 million users per month, and can further scale when implementing multiple, parallel sidechains within the system.

Does It Solve the Problems?

Of course, by simply being a browser, rather than any specific platform or publisher (like Facebook or Twitter), Brave's main product is already open to allowing its users to basically navigate whatever part of the Internet they wish, and see whatever content they wish. They have even incorporated a VPN and some functions of the TOR browser in an effort to give even more anonymity for all its users. Additionally, user information and data never leaves the Brave browser, thus protecting their passwords and even crypto stored in it.

More importantly, and more pertinent to THEMIS and the whole BAT crypto ecosystem, Brave is further decentralizing its ad system in order to allow for a better advertising system that won't easily fall prey to any single entity or group of entities. There is a small caveat to this, which I will discuss later.

The key point of decentralization isn't just that the authority or control of a platform rests in multiple entities or individuals. That's just inherent in the definition. Instead, decentralization is valuable, because it incentivizes behavior that benefits users of all sides, which in this case, includes even advertisers.

For example, if Brave was the only content facilitator, then it would be the sole decider in what companies could advertise on its platform. By decentralizing this aspect, content facilitators will now be competing for advertisers, which means it will be easier for advertisers to get their content to users. This means that other browsers, such as Firefox, Puma, or even big tech ones like Safari and Chrome, can have this technology implemented if their companies so desire.

On the other hand, since users rewarded for their attention, advertisers are compelled to behave in a beneficial way towards browser users. This incentive structure can be analogized as advertisers handing out discounts or coupons to users, since every BAT given to users can potentially be used towards the purchase of those advertisers' products. However, users can also use their BAT towards the purchase of products not specific to any one company. In this way, it's no longer the simple clicks on the advertisement notification that are a good metric of how users interact, but the actual buying of advertiser products that will tell companies whether their campaign was effective. Any mistake (i.e. negative reaction) will not only disincentivize potential customers, but also may drive them to purchase competing products with the very money that the advertisers just gave them.

All this in a transparent, blockchain system in which anyone will be able to see how THEMIS is working (or not working), while preserving user privacy and data.

As mentioned, there is one small caveat to this system. Because Brave relies on BAT tokens, one could theorize that the use of this single volatile asset has the potential to severely disrupt the entire system. Just as how Facebook was pressured into censorship through a boycott of advertisers, Brave could be as well. If advertisers leave the platform en mass, it could severely devalue the BAT token itself, which could then dissuade people from using the rewards system, which could then cause more advertisers to pull out, creating a destructive cycle.

However, the fact that a browser is very much like a TV rather than network channels may be enough to prevent something like this from happening. People can't really be prevented from using their browser however they want, and with Brave's privacy system in place, no advertiser can ever see what users are looking at anyways. Furthermore, the fact that Brave is designing a system which isn't dependent on their own survival, but instead can be facilitated by any number of additional companies or browsers, helps to alleviate this kind of pressure as more and more companies adopt it. Thus, time will tell if this decentralizing system will achieve its full potential.

So THAT'S my review of Brave's Brave ecosystem, including their new THEMIS protocols (which, again, haven't yet been implemented). My goal with this was to be as un-technical as possible, so that anyone can understand what this whole thing is about. Hope it was helpful! I'll see you next time!