Blockchain technology and cryptocurrency The Future of Sports

Blockchain technology and cryptocurrency The Future of Sports
The sports sector has recognized the potential that cryptocurrencies and blockchain technologies can bring to further monetize fan engagement, draw sponsors, and engage a global market in ways that were unthinkable decades ago. Digital natives and ardent sports fans alike consume sports and related content after a game has ended. To adapt to the new digital era and satisfy fan expectations, sports teams, clubs, and governing bodies are innovating.

The sports sector has responded to the restrictions placed on it by the COVID-19 epidemic and developed new tactics to ensure that clubs and fans stay connected in a socially dispersed environment. The sector has realized that blockchain technology has the potential to completely transform revenue streams and the fan experience through expanded crypto-sponsorships, fan tokens, non-fungible tokens ("NFTs"), or even the entry of blockchain service providers into the market.



Sponsorships and Partnerships

As the prevalence of cryptocurrencies in the media and in everyday life is growing, sponsorships have increased viewers' and investors' awareness of them. The following list offers some noteworthy instances of sports teams increasing their advertising budgets to collaborate with fresh and emerging crypto-currency exchange platforms in an effort to boost their brand recognition:

  1. One of the first cryptocurrency marketing campaigns was the sponsorship agreement that US bitcoin payment processor BitPay and ESPN Events struck in December 2014. In an effort to raise awareness of Bitcoin, BitPay also provided sponsorship for the St. Petersburg Bowl, an annual postseason college football game in the US.
  2. With CashBet Coin's partnership with Arsenal Football Club as the team's exclusive and official blockchain partner, cryptocurrency sponsorships took off by 2018. The agreement was made to publicize the release of the CashBet coin, a cryptocurrency created especially for use on CashBet's online gaming sites.
  3. In 2018, Litecoin was named the official cryptocurrency of UFC 232, supporting Jon Jones and Alexander Gustafsson's contest for the light heavyweight championship. Litecoin UFC received more than 40 million Twitter impressions from an audience of more than 16 million users globally as a result of the event, which caused a surge in demand for the coin.
  4. A number of Premier League teams were paired with eToro to promote their cryptocurrency trading service, which was wholly funded by Bitcoin. With clubs including Tottenham Hotspur FC, Brighton & Hove Albion FC, Cardiff City FC, Crystal Palace FC, Leicester City FC, Newcastle United FC, and Southampton FC as clients, the platform was one of Europe's largest football sponsors by September 2020. Cryptocurrency, according to eToro, can be used to validate goods, lessen ticket touting, and facilitate the transfer of players.
  5. In March 2021, Aston Martin Cognizant Formula One made history by becoming the first Formula One team to collaborate with a cryptocurrency company. With Aston Martin F1 cars competing in events around the world, Crypto.com, a site with over ten million active users, will undoubtedly get more marketing exposure.


Blockchain technology and its application to sport

As payment options, Bitcoin and other cryptocurrencies are also being integrated and welcomed. Fans have been able to buy tickets and products using cryptocurrencies, while clubs have used them to pay for player salaries and transfer costs. By adopting more secure and transparent ticket exchange marketplaces, sports clubs and organizations have also benefited from blockchain technology. Consider this:

  1. Early in 2018, the Turkish football club Harunustaspor made history by becoming the first team in football history to make a player acquisition using Bitcoin. Omar Faruk Kiroglu, a 22-year-old player, was compensated by Harunustaspor with 0.0524 bitcoins (worth £385) and 2,500 (worth £470).
  2. Fans had the option to buy FIFA World Cup 2018 tickets using Bitcoin, Litecoin, and Ethereum through international payment service providers like Wirex and Epayments. Additionally, the Apartments Malina hotel chain in Kaliningrad declared that guests may now reserve and pay for lodging with Bitcoin.
  3. After concluding a business agreement with cryptocurrency platform Quantocoin in July 2018, Gibraltar United Football Club started paying some of its players' salaries in bitcoin. The first football team to be bought by a cryptocurrency company was Rimini FC 1912, an Italian Serie C team that is 25% owned by Quantocoin. Initial Coin Offerings (ICOs) were permitted by the initiative's new rules, which were put in place at the time by the government of Gibraltar.
  4. In order to offer a new blockchain mobile ticket platform, TIXnGO teamed up with Lancashire Cricket last year. For all domestic and international matches at Emirates Old Trafford in 2020, secure mobile tickets will be activated through a partnership with ticketing system supplier SecuTix. The goal was to develop a single encrypted ticket for cellphones that is traceable, eliminates the possibility of fake tickets, and makes it easier for end users to transfer or resell tickets.


Crypto-assets and Fan Tokens

Fan engagement tokens represent one of the most fascinating developments to come from the nexus of sports and technology. A "completely fungible digital" utility token called a "fan engagement token" allows supporters to access and have influence over some decisions that are made by their preferred sports club. The tokens grant the holder the ability to cast a vote on club issues, such as choosing charity campaigns or changing training facility names. Similar to a membership card, it offers supporters extra benefits, including VIP admission and treatment to a range of events.

Unlike previous arrangements, such as "United Managers," which the French Football Federation ("FFF") banned in 2019 and sought to allow fans to vote on a team's strategy during matches, this one does not allow fans to vote on the team's tactics. FIFA's (and other domestic associations') third-party ownership ("TPO") regulations would be violated by any arrangement that provides supporters or other third parties direct influence over clubs' operations, policies, or performances.

Fan engagement tokens for sports and e-sports are available through Chiliz ($CHZ), a cryptocurrency, and the Socios platform. Socios allows supporters to vote on choices like who the football team plays during "friendlies." Decisions regarding institutional or corporate governance, which once again may have an impact on TPOs, are not subject to vote on the Socios platform.

The first two significant football teams to collaborate with Socios.com were Paris Saint-Germain and Juventus. The world's top exchanges, Binance, Paribu, and Upbit, list the fan tokens $PSG and $JUV. Up to this point, Chiliz has partnered with many more illustrious sports teams, including FC Barcelona, Atlético de Madrid, AS Roma, and Istanbul Başakşehir, as well as e-sports groups like Heretics, NAVI, Alliance, and OG. Chiliz has partnerships with the UFC and MMA as well.


Through a Fan Token Offering (FTO), fan tokens are produced and distributed to fans (similar to the concept of an ICO). Fan tokens, unlike an initial public offering (IPO), don't represent ownership in the equity of shares in any sporting team, but the business is nevertheless very successful. For instance, FC Barcelona ($BAR) gained US$1.3 million after going for sale on the Chilean Exchange in less than two hours. A total of 106 nations sold $BAR fan tokens.



Sports and cryptocurrency memorabilia

The NFT is a further "crypto" offshoot that is gaining popularity in sports. NFTs are a diverse group of distinctive tangible and intangible goods, including collector sports cards, digital sneakers, and virtual real estate, that are kept in digital wallets. An NFT cannot be used in another NFT. Each NFT stands for a distinct digital object. A multimillion-dollar industry, trading cards and collectibles allow sports fans to capture memorable moments in photos and other forms of media. Additionally, NFTs have distinguishing information that is distinct and simple to verify on the blockchain network. As a result, each NFT gains value because it cannot be duplicated. Examples comprise:

  1. A selection of digital goods with an NBA license are available through the NBA's Top Shot. It is a blockchain-based trading card platform that has brought in gross sales of more than US$230 million. Users of the service can purchase and sell brief clips featuring game highlights of the best basketball players. Each user is the owner of a special highlight reel that is special due to its unique serial number (i.e., there are 20,000 copies of a highlight reel, and Joe Bloggs owns number 14,210 of that highlight reel).
  2. Sorare, an Ethereum blockchain-based fantasy football game, has a collaboration with FC Bayern Munich. Sport Shorts previously covered Sorare in 2019 when it collaborated with the Belgian First Division. On the platform, players can buy and sell digitally limited-edition football cards, while collectors can trade player cards, assemble teams, and earn rewards based on actual performance.


Conclusion

Sporting organizations should be aware of the dangers this new technology poses, despite the surge in interest in digital currency. Despite their remarkable rise, cryptocurrency assets' value remains unstable, and the legal and regulatory environment is still unresolved. Due to the lack of stability in this area, sports firms will need to develop contingency-hedging agreements in order to protect themselves financially in the event that valuations change. However, the emergence of crypto-assets opens up new possibilities and increases excitement in the sporting world.
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