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Pay by Bitcoin – high barrier to entry

Update (2017-11-04): Brave has switched from Bitcoin to its Basic Attention Token (BAT) system. BAT, like Bitcoin, is a blockchain-based token system – better known as a crypto-currency. Most of this article remains unchanged as this is just a change of currency, the technologies and problems remain the same.

I signed up for Brave Payments the first week it was made available. It was kind of hard to get started as Brave only accepts payments in Bitcoin. For customers in the United States, this isn’t a big worry as Brave has partnered with Coinbase to provide a smooth user experience where customers can sign up to a monthly subscription of Bitcoins that are automatically deposited into their Bitcoin wallet and charged from their credit cars inside Brave. This convenience, that almost hides the fact that Brave is using Bitcoins behind the scene, isn’t available to customers outside the USA.

The first beta version of Brave Payments hadn’t paid any attention to non-US customers, and people were left to figure out how to deposit Bitcoins into their “Brave Wallet” without any instructions about how they were going to go about doing this. After I raised the issue, lobbied for Brave Software to recommend a Bitcoin exchange to their customers instead of having them figure out the whole Bitcoin market for themselves.

Brave is now recommending Cubits to customers outside the USA; the one still not as easy as for their US-based customers. I mentioned in my reviews of the two Bitcoin exchanges Cex.io and Cubits.com, that it’s cumbersome and time-consuming to get your hands on Bitcoins.

You’ve to provide government-issued identity papers and jump through all sorts of barriers before you get to pay high fees to purchase the digital currency. I can’t imagine many potential customers of Brave will be willing to go through all of these steps just to make voluntary payments to websites they can otherwise access for free. The legality of Bitcoins is unclear in large parts of the world.

Unless you’re living in the USA and pay via the default Coinbase integration, it’s not even a renewing subscription. I don’t know much about running a business, but I do know that not having subscriptions renew automatically is very bad for retention rates. Having their potential customers jump through time-consuming and expensive currency conversion processes every month will probably bleed paying customers from Brave more than the actual subscription price.

A shared problem for Brave customers all over the world is the volatility of Bitcoins. Funds are stored inside the customers’ digital wallet. The value of these virtual funds is displayed in U.S. dollars instead of in their native Bitcoin value.

This has the unfortunate side effect of increasing the decreasing the worth shown back to the user. For example, my 40 USD worth of Bitcoins have been displayed in Brave to be worth as little as 34,70 USD and as high as 34,70 USD – all within the time frame of less than a month! This makes me feel uncertain about the safety of the funds I’ve placed in Brave and it makes me question how the system works.

Brave charge their subscription fee on a monthly basis, but when funds started decreasing over a few days – I started wondering whether the charged me a little by little or all at once. It’s not a good user experience when the account balance is adjusted up and down all the time.

Publishers aren’t on board

Bitcoins will be alien and it will be confusing to many potential customers. Publishers will have a much harder time with it, however:

Only websites with control over their DNS and the technical know-how to implement the changes are eligible. Plus they need the willingness and expertise required to accept payments in Bitcoin, and convert those funds back into traditional currencies. The technical requirements laid out above means a huge number of websites won’t have the ability to collect their hard-earned visitor contributions made through Brave.

There’s currently no page on the Brave website for publishers to sign up to receive their payments from Brave Software. Under the current model, Brave Software will contact publishers once they’ve more than 10 USD worth in Bitcoins pending payment. I’ve contacted Brave Software and have been told I’ll be among the first publishers they’ll sign up once they start accepting publisher sign up. In other words, Brave is already collecting funds from their users but don’t have the system to pay publishers in place yet.

Big publishers aren’t happy about Brave. The Newspaper Association of America (NAA) sent Brave Software a cease and desist letter already before Brave had released its first beta, according to The Drum. They weren’t angered by Brave’s cumbersome payment model and inconvenient choice in payout currency, but rather the fact that Brave is collecting money on their behalf from customers without making agreements and signing deals with them first.

Haven’t we been here before?

Brave’s business model isn’t new nor particularly innovative. As far as I know, they’re the first attempt at integrating a website ledger natively into a web browser. However, they’re not the first to collect money on behalf of publishers only to be met with opposition when they turn around and want to give that money to the publishers they’ve been earmarked for.

Readability, an online service that stripped away ads and distraction to create “a clean reading experience”, operated for less than a year in 2011/2012. Readability, like Brave Software, collected volunteer payments from their customers and intended to hand those out to publishers based on how many distraction-free articles their users had read per website.

To Readability’s surprise, very few publishers were interested in collecting the money Readability’s customers had intended to send their way. As much a 90 % of the subscription fees from Readability customers went unclaimed by websites despite Readability’s best efforts to make websites accept their earmarked funds.

Despite amassing thousands of paying customers in less than a year without an advertising budget, Readability got stuck with a growing pile of funds earmarked for publishers that the publishers simply didn’t want.

The Readability service was simple to use and easy to understand. It would automatically quality assure the content that people would pay for as it required their users to click on a button in their web browsers to save an article to their reading lists. The distraction-free reading experience championed by Readability lives on as the “reading modes” you can find in the Firefox, Safari, and Microsoft Edge web browsers.

Brave have anticipated the problems faced by Readability by redistributing unclaimed funds among their paying customer’s other visited websites. There’s no transparency as to which websites on the customers’ ledger will receive any funds, but this way there’s at least a guarantee that each contribution will reach a publisher. Even if it wasn’t the customers’ first or even second choice of publisher.