Blockchain in sports: crypto bubble, NFT hype, and real innovation
The sports industry is actually a lucrative industry because it benefits from sponsorships, match profits, and massive merchandising initiatives. In the world of sports, fan engagement and sponsorship have reached incredible heights in the past, notwithstanding the fact that clubs continue to find innovative ways to engage more fans with the support of digital technology.
Blockchain, NFT, Bitcoin, Fan-Tokens – you can’t get away from the crypto hype in the sports business right now. There are lucrative business models and supposedly quick profits to be had. But this can quickly turn into playing with fire. Especially when fans come into play. Let’s take a closer look.
If you want to invest alternatively, you need technological understanding. There are different types of Blockchain, which offer (technological) advantages and disadvantages depending on the area of application.
Anti-counterfeiting is one of the significant plus points that Blockchain has over conventional systems. However, a significant portion of crypto assets are irrevocably lost or can no longer be accessed due to pseudonymity.
How NFTs bring fans and clubs together: blockchain in sport clubs
The hype around NFTs is currently breaking records, and not just in the sports business. At the end of April, the Ultimate Fighting Championship (UFC) filed two patent applications to start selling NFTs (Non-Fungible Tokens). The first is a trademark to launch a UFC-branded cryptocurrency, and the second is to create an app for the new token.
This is an expected development, as other popular sports in the U.S. have already begun to actively develop the topic of non-fungible tokens. For example, the first major app to combine big sports and NFT was NBA Top Shot. The creators of the platform from Dapper Labs were licensed by the NBA.
Many soccer clubs have also released their own NFTs. One of the most popular platforms using NFTs related to soccer is Sorare. It’s a game where you can create your own virtual soccer team using a base of 4,000 players. The players are “packaged” in sets of cards with episodes of various matches.
During the playing season, Sorare gives a fan a limited number of cards: 100 rare, 10 very rare, and 1 unique. Cards have two levels of value – collectible (sale, purchase, exchange) and in-game: the life of the “card” player must be monitored in reality – whether he is healthy, whether he entered the field and scored a goal.
However, the sphere of cryptocurrencies is not only connected to the world of sports through NFT. The story with soccer club tokens began back in 2018 when PSG announced plans to issue its own coin. Clubs use the infrastructure of third-party IT platforms to issue tokens. The most popular of these is Socios, and it is used by such title clubs as “Barcelona”, “Juventus”, “Roma”, “Atletico Madrid”.
However, in addition to Socios, there are other platforms for the implementation of blockchain and tokenization of soccer clubs. Bayern Munich has partnered with Stryking Entertainment and Real Madrid with blockchain startup Fantastec SWAP. Already more than 100 soccer teams around the world have their own cryptocurrency. Among the clubs whose FTOs are taking place at Socios these days are Poland’s Legia and Turkey’s Geztepe.
The future of blockchain in sports
Ownership of fan tokens allows fans to participate in the life of the team: for example, for Juventus the song playing after a goal was chosen, for AC Milan – a new motto, and for PSG – the inscription on the captain’s armband.
Ultimately, the question with crypto remains whether the independent but unregulated market represents a huge speculative bubble or whether investing in blockchain applications is actually worthwhile. There are risks such as tax treatment and enormous energy and CO2 consumption.