NFTs in Sports
5 minute read · Issue Number 57 · February 26th, 2021
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Today’s article dives into an exciting element of blockchain technology; non-fungible tokens (NFTs).
What are they? What makes them extraordinary? Why we need them? And how will they take over the sports industry?
Let’s get to it.
Non-Fungible Tokens (NFTs)
A non-fungible token (NFT) is a type of cryptocurrency (or digital asset) representing something unique, and it can represent both tangible and intangible items.
Meaning, NFTs can -represent digitally- nearly anything in the virtual or the real world.
You may be asking, “seriously, Ronen, anything?”
We may not be there yet. But eventually, there will be NFTs that will represent anything unique.
Today, there are hundreds of non-fungible tokens representing items in multiple industries, sports included. Rare art? You’ve got it. Collectible sports cards? No problem. Digital sneakers? What else?
Fungible vs. Non-Fungible
Fungibility means that two things are identical in specification, where owners can mutually substitute individual units.
Money is an example of a fungible good.
Because if you lent $50 to your friend, you don’t mind him paying you back $50 with a different bill (or set of bills).
Non-fungible means the asset is unique – you can’t substitute it, and it’s the reason why no two NFTs are identical.
Why we need NFTs?
People held, owned, and collected items throughout history, but the old fashion way of managing things has many weaknesses and problems.
Let’s say you own a painting that you claim “was drawn” by Picasso. How do we know it is authentic? How can we know it is actually yours? Say you own a physical certificate referencing that painting. What happens if you lose that certificate?
Under blockchain technology, non-fungible tokens can verify digital scarcity, ownership and create asset interoperability across multiple platforms. The NFT contains distinguishing information that makes it both distinct from any other NFT and easily verifiable to prove the asset's authenticity and ownership.
In practice, NFTs make the creation and circulation of fake items pointless because the technology can trace each item back to the original issuer.
NFTs in Sports
Since 2017, NFTs have exponentially grown in popularity. Games, marketplaces, and virtual worlds have raised millions in investment in the space. Even Nike holds a patent for its blockchain-based NFT-sneakers called CryptoKicks.
Besides digital collectibles, in sports, some teams are developing ‘fan tokens’ to represent registered fans on the blockchain to allow them to get involved in their favorite team’s life.
With fan tokens, fans can participate in community votes for some aspects of team management. For a team, this can be a source of revenue and a tool that boosts fan engagement.
Blockchain and crypto are growing industries, and major sports leagues have millions of fans and followers in the digital space. NFTs are the product of their intersection, and the future of digital engagement in sports is coming sooner rather than later.
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