NANO & Basic Attention Token (BAT): Emerging Coins?
While the rise of cryptocurrency over recent years has been centered around Bitcoin, Ethereum, and a select group of coins, there remain over a thousand of cryptocurrencies in the market today. Each token boasts a unique set of technical features and utility to its users and investors. This paper will explore two coins that fall below the top 25 coins by Coin Market Cap: Basic Attention Token (BAT) and Nano. While both tokens are relatively comparable by market cap, they exist to address fundamentally different issues and thus vary significantly from a utility perspective. This paper will focus on exploring the utility that each token brings to the market, discussing key strengths and weaknesses, and evaluating each as investment opportunities. While the cryptocurrency market as a whole has seen a decline throughout 2018, both BAT and Nano may represent strong investment opportunities within the cryptocurrency space given their strong development teams, technical fundamentals, and utility to users.
Basic Attention Token (BAT) is a token that seeks to serve genuine utility to people and businesses within the world of digital advertising, which affects nearly everyone in today’s digital age. The founders of BAT identified a few key issues that plague key stakeholders within the digital advertising industry, including consumers and publishers. While few players are benefiting from the organizational dynamics and economics of the industry, many lose out in a variety of ways. Namely, users often bear high costs and significant inconveniences when engaging with digital advertising. The developers of BAT label these issues as a form of “electronic pollution” (“Basic Attention Token White Paper”, 2018). This comes in the form of malvertisements, long load times, data costs, battery life and privacy loss. Malvertising is the use of online advertising to spread malware to users. Load times are also a major inconvenience. In a study of download times and costs across 50 top publishing sites, it was found in the extreme case that www.boston.com took 30.8 seconds to load advertising content and just 8.2 seconds for editorial content. Mobile advertising contributes significant costs toward consumers’ data bills and take a heavy toll on battery life. Finally, it is no surprise that privacy is a growing issue within the digital advertising space. Taken together, these factors have led users to adopt ad-blocking software, which in turn reduces publisher revenues and generates greater challenges in targeting the remaining ad-viewing audience. See Appendix A for a breakdown of current ecosystem challenges as well as the features of the BAT solution (“Basic Attention Token White Paper”, 2018).
Prior to launching BAT, the development team’s first phase focused on generating a new open-source, privacy-focused browser called Brave, which can block “invasive ads and trackers, and contains a ledger system that anonymously measures user attention to accurately reward publishers (“Basic Attention Token White Paper”, 2018). Brave is “more than a browser” as it “it defends your data on your devices and synchronizes your personal and private browsing prole across devices using client-side encryption.” Your data provides you with “private and anonymous options to get compensated for your attention” (“Basic Attention Token White Paper”, 2018).
After Brave launched, the team launched the token, which is based on Ethereum technology. The token is derived from user attention or mental engagement. The goal, therefore, is that users become an active part of the advertising and publishing economy as they receive access to some of the advertising spend in BAT. Users can donate tokens to content providers and publishers. Furthermore, content can be purchased for friends using BAT if, for example, someone is interested in sharing a premium article that they enjoyed. These features demonstrate the usefulness of BAT in promoting a more equitable and granular exchange of value within the digital world.
As of the evening of November 28, 2018, Basic Attention Token (BAT) had a market cap of $194.5 million and was priced at about $0.1647 (Coin Market Cap). This placed the coin in the 28th spot in the industry. The recent break into the top 30 tokens followed BAT’s appearance as a tradeable token on Coinbase, which is an extremely strong sign for the project. At the time of this writing, BAT witnessed a 18.5% spike in value over the preceding 24-hour period. Trading volume exceeded $11 million during this same period. The circulating supply is set at 1,180,848,540 BAT (see CoinMarketCap for up-to-date financial data).
While BAT has followed the overall bear market within cryptocurrencies with a drop in market cap since the beginning of 2018 (it peaked at over $0.86 in January), the token has strong attributes that may drive continued adoption and value to investors. The token’s success in launching the Brave browser, its focused project goal that “will not become obsolete anytime soon,” and its recent listing on Coinbase collectively demonstrate the strengths of the project and indicate potential for continued progress (IBankCrypto, 2018). The speed of development and adoption remains a question, so continued observance of the project must be taken by potential users and investors seeking to capture value in this space.
Nano is a “trustless, feeless, low-latency” cryptocurrency that was first launched in December of 2014 as RaiBlocks (XRB). The coin was developed to address a different set of issues that have been presented to stakeholders within the cryptocurrency industry due to the structure of its leader, Bitcoin. Nano seeks to address three core issues in the Bitcoin protocol to create a more efficient and valuable coin for peer-to-peer transactions. As discussed in the Nano white paper, these include the following:
1. Poor scalability: Each block in the blockchain can store a limited amount of data, which means the system can only process so many transactions per second, making spots in a block a commodity. Currently the median transaction fee is $10.38.
2. High latency: The average confirmation time is 164 minutes.
3. Power inefficient: The Bitcoin network consumes an estimated 27.28TWh per year, using on average 260KWh per transaction. (LeMahieu)
The focus of Nano is enabling fast, free, trustless transactions from peer to peer. There are a few unique features of Nano that drive its utility to users in delivering the cryptocurrency’s value proposition. Rather than using a single blockchain on the network to track all transactions, each account has its own blockchain, generating what is known as a block-lattice structure. Each transaction generates two blocks, with one going to the sender’s blockchain and one to the receiver’s blockchain. Thus, transactions occur and are updated “immediately and asynchronously,” meaning that your transactions can be processed without the need of waiting for other transactions to be processed (“Why is Nano Fast? “, 2018). See Appendix B for a graphic that compares the protocol of Nano with Bitcoin. Nano uses a delegated proof-of-stake protocol along with proof-of-work as an anti-spam measure (CryptoCandor, 2018). A balance-weighted vote on conflicting transactions enables Nano to achieve consensus quickly and while maintaining strong decentralization. These characteristics have led some to describe Nano as “what Bitcoin should have been” (Falk, 2018).
Nano has a market cap of $142.7 million as of November 28th, 2018, crediting it as the 38th largest coin by market cap, slightly behind BAT, though the gap has risen quickly due to BAT’s recent entrance onto Coinbase (Coin Market Cap). At this date, Nano was priced at $1.07, with a circulating supply of 133,248,289 NANO (which is set as there is no mining of Nano). 24-hour trading volume at the time of this data was set at roughly $3.1 million, with a change of 9.5% over the same period (as many coins had a strong day on November 28, 2018). While Nano currently sits 10 spots behind BAT, it held the 28th highest ranking of tokens by market cap at the end of August, following a strong rally in the final two weeks of the month (Sinclair).
An attractive characteristic of the Nano project is its simplicity and commitment to its core purpose. In fact, “do one thing, and do it well” has been referenced as an “unofficial slogan” of the project (Helpburn, 2018). It is certainly an industry leader when it comes to speed. Nano has the distinction of the fastest coin, boasting a deposit time on Binance of only 3 seconds, and edging out the next best Stellar Lumens by 2 seconds. To put this impressive fact in context, only the 5 fastest coins that are traded on Binance have deposit times of less than one minute (Helpburn, 2018).
Nano also has a strong development team that has shown commitment to the project and consistent engagement with the its community (Cryptorated, 2018). The Nano Github is “notoriously active, especially relative to the team size,” and the team is “very communicative with the community, with active Discord and Telegram channels” (Cryptorated, 2018). These serve as positive signs for the project. Nano has hit numerous objective checkpoints in its roadmap and seems poised to continue progress. There are multiple desktop and web/mobile wallet options for users (CryptoCandor, 2018). Furthermore, the rebranding of the project from RaiBlocks may serve as a signal of long-term commitment to the project. While these facts cannot alone generate investment value for the token, they serve to maintain transparency and confidence among stakeholders of the project.
In recent news, Nano has been selected as an official “Gold Label Project” by Binance Info. This is a significant step and marker of credibility as Binance Info “holds projects to an unmatched level of accountability, requiring frequent updates and allowing all users to participate in the contribution and editing of project information” (Nano, 2018). Despite these strong indicators, there remain some concerns regarding Nano. While some predictions aggressively boasted that Nano may hit $25 by December of 2018, markets have certainly humbled that hope. Nano hit a peak at over $34 in January but has suffered throughout the following months after a hack in February 2018 on the Bitgrail exchange. Nearly $200 million of investors money was lost during the event, leading to a steep price decline and leaving many uneasy about Nano (Supoto, 2018).
Another question that remains is whether Nano can keep working with mass use (Cryptorated, 2018). That is, does it truly offer unlimited scalability? Though the team has run into several technical difficulties along the way, if Nano is able to “scale according to the claims, then the entire cryptocurrency world will forever be different,” according to analyst reports (Cryptorated, 2018). The success of Nano will also depend on how other cryptocurrencies, namely Bitcoin, adapt as the market develops.
Overall, the Nano project has demonstrated that it boasts a strong development team, coupled with a unique set of features that address core issues demonstrated by Bitcoin. While Nano has experienced a bumpy road along its development and investors should therefore be cautious, there remain strengths of the project that warrant continued observance as it seeks to become a leading cryptocurrency. The commitment and simplicity of the token in serving as a currency alone may have the potential to change the way people are able to transact peer-to-peer in a rapid, feeless, and trustless way.
Appendices
Appendix A
Appendix B
Works Cited
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CryptoCandor. (2018, January 31). Nano | $NANO | In Block Lattice We Trust! Retrieved from https://www.youtube.com/watch?v=thlp1RYwgI0&feature=youtu.be
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LeMahieu, C. (n.d.). Nano: A Feeless Distributed Cryptocurrency Network. Retrieved from https://nano.org/en
Nano. (2018, November 27). Why is Nano Fast? — The Basics — Nano — Medium. Retrieved from https://medium.com/nanocurrency/why-is-nano-fast-the-basics-a2ef32cc3f80
Nano. (2018, November 29). Nano Selected as an Official Gold Label Project by Binance Info. Retrieved from https://medium.com/nanocurrency/nano-selected-as-an-official-gold-label-project-by-binance-info-3bbb406c0215
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Sinclair, S. (2018, September 03). Nano Was August’s Top-Performing Big Crypto Despite Yearly Low. Retrieved from https://www.coindesk.com/nano-returns-from-record-low-to-become-months-top-performing-big-crypto
Supoto, Y. (2018, May 02). $195M Hack: Nano (NANO) Only “Good on paper”, Bitgrail Founder Alleges. Retrieved from https://ethereumworldnews.com/195m-hack-nano-nano-only-good-on-paper-bitgrail-founder-alleges/