Alex Dreyfus, CEO of Socios, shares his views on the many ways that blockchain and the token economy can help the football industry.
For the majority of consumers and sports fans, mention the term blockchain and most of us will think of those dancing appliances from the World Cup advert for Hdac, that truth be told left most people scratching their heads about what the ad was even for, including many of us within the industry. Beyond Bitcoin and cryptocurrency fluctuations, blockchain technology and tokenisation (currently a term reserved for the crypto space), can be applied to virtually any industry where there is a transference of assets.
The creation of digital tokens can be used to represent a stake in any conceivable asset. The benefits of doing this include lower transaction costs, improved liquidity as well as shared ownership models. Tokenisation has already been embraced by myriad industries, from agriculture to photography, mainly because of the innovative and transparent nature of the technology, but can blockchain work for the football industry?
This year has seen the football world begin earnest experimentation with blockchain, with clubs and footballing bodies showing real willing to both understand and embrace blockchain technology, through changes to ticketing systems, partnership and sponsorship agreements and even buying clubs and players.
UEFA recently confirmed it has deployed a blockchain-based ticketing system as part of a phased rollout, and marking a fresh milestone for blockchain integration into mainstream football, UK-based trading platform eToro recently announced that it had secured an advertising deal with seven Premier League football clubs paid for using Bitcoin.
FansUnite Entertainment, a blockchain protocol focussed on the sports data industry, has partnered with Premier League club Leicester City to provide sports data using cryptocurrency and the token economy. In January, Arsenal FC became the first team in the Premier League to secure a blockchain partner in the form of CashBet Coin - a gambling cryptocurrency designed for the iGaming market, and little known Turkish club Harunustaspor claimed it was the world’s first football team to purchase a player using Bitcoin. Just last month, Italian club Rimini FC 1912 sold 25% of their shares to Heritage Sports Holdings (HSH) in exchange for Quantocoin.
It’s clear that European football has been increasingly adoptive of cryptocurrencies and it’s only natural for organisations like football clubs to explore how new technologies and ideas can shape the future of the sport; but just what are the benefits and can blockchain really can be a game-changer?
While Gibraltar United, who play in the Gibraltar Football League’s Premier Division, are currently the only club who give their players the option to be paid in cryptocurrency, the day that clubs accept cryptocurrencies from fans cannot be too far away. Cryptocurrencies may even one day replace fiat currencies in the multi-billion euro transfer industry. In August, tickets for UEFA’s Super Cup match between Real Madrid and Atletico Madrid were successfully distributed to mobile phones via blockchain technology, in a move to make its sales process for matches simpler and safer.
Blockchain also brings a level of unprecedented transparency to the beautiful game that can benefit clubs, fans, players and other stakeholders, with the potential to reduce or even eliminate illegal ticket touting practices as well as the sale of counterfeit sports merchandise being mooted as a real possibility.
The use of digital currencies is certainly in line with UEFA’s 2017 anti-match-fixing initiatives to combat corruption, fraud and money laundering, and blockchain can no doubt help (and ensure accuracy) with their directive to European clubs to release information on how much teams are spending on players wages and fees to agents.
There is also, of course, a unique opportunity for blockchain and the token economy to fight corruption in a sport which has been rocked by a number of high-profile scandals over the years, for example, the accusation that Qatar bought votes as they won the right to host the World Cup in 2022. Had the vote been performed on the blockchain, the votes would have been transparent and the outcome sacrosanct.
In theory, the blockchain platform we, at Socios.com, are currently developing, could be used for such a vote in the future, but that is a pipe dream. For the moment, we are focusing on empowering fans by ensuring their voice is heard by the clubs they love, through voting rights on certain club decisions, via a mobile voting platform and through ownership of branded fan tokens.
Socios.com will work alongside many of the world’s top football clubs to develop their blockchain strategies, and monetize their existing fan bases through a unique and innovative Fan Token Offering (FTO). Our club partners will use the platform to further their fan engagement strategies, building global rather than regional fan bases.
While ownership of the tokens provides fans with access to exclusive content and experiences, the club benefits from tokenisation as a revolutionary new model of investment and capital generation; a model that provides a decentralised but soon-to-be regulated system for the propagation of funds.
We have applied the method of tokenisation to the football industry, and in our case, tokenisation represents an ecosystem whereby ownership of a token provides access to exclusive services, and token-holders are part of a network of owners with shared passions and beliefs.
What is clear, is that blockchain and the token economy provides solutions to many issues facing the football industry today. By forging a blockchain path within football, we can collectively educate and inform the millions of football fans around the world that this innovative technology will bring them closer to their favourite clubs whilst at the same time making blockchain relevant to consumers and a mainstream service, just like WIFI and the internet is today.
Alex Dreyfus, Socios CEO