Welcome to our July edition of all things blockchain. This month, we overboard on NFTs, ponder on how safe our crypto is and get overly excited…
It’s been an incredible British sporting summer so far and I’m sure no one has been able to avoid getting caught up in the wide range of emotions sporting events bring on.
Some 2021 highlights for me have been the ecstasy of England reaching the final of the Euros but going through the agony of losing to Italy on penalties, the excitement of cricket being redesigned by The Hundred, and the delight of seeing Tom Daley and Jonny Brownlee finally reach the top step of the podium in Tokyo. It’s been a rollercoaster so far and we still have the Paralympics, the Ryder Cup and the conclusion of the closest fought F1 season in years to come.
Amongst all of this excitement you may not have noticed the actual sporting highlight of 2021 – the cryptoasset revolution that is changing the way we interact with sport forever.
You may have noticed that your favourite football team has recently announced a cryptoasset sponsorship arrangement, as most Premier League teams now have an official cryptoasset partner or similar.
You may also have noticed the strange looking writing on Andy Murray’s sleeve at Wimbledon. The latter was the name and logo of the blockchain retail sales and auction platform WeNew, a business Murray recently partnered with to auction a non-fungible token (NFT) representing the moment he won Wimbledon in 2013. The NFT (including some add-ons) sold for a reported $178 million.
NFTs have become extremely popular in the sports industry, massively taking off initially in the baseball and basketball collectables space. In February 2021, fans and collectors spent more than $230 million on NBA ‘Top Shots’, a collection of highlights and digital artwork the NBA and its associated players union licensed to Dapper Labs. A video of LeBron James slam dunking was bought for $208,000 on its own. During the summer, trading of NFTs has extended to other sports as cryptoassets become increasingly popular in the mainstream.
Producing content through NFTs and putting it out to market on a blockchain platform provides an ideal opportunity for the content producers to grow their products, brands and revenue streams.
Very broadly, NFTs are digital assets that typically sit on a blockchain ledger, or an IPFS decentralised storage system, and are ‘non-fungible’, i.e. each digital asset has a detailed record of creation and ownership transfer so can easily be identified as unique.
In the world of baseball and basketball cards, buying and selling digital versions of rare cards as NFTs allows buyers to identify how rare the card is without the risk of it being forged and/or having to be sent away a number of times (potentially getting stolen or damaged) to be valued. For Murray’s 2013 Wimbledon win, the NFT is a video clip that was sold with a collection of other items, including a screen to view the clip on.
Acquiring an NFT doesn’t transfer copyright of the item and it doesn’t prevent others from viewing and downloading it. It does, however, allow the owner to claim ownership of the asset (the card or the clip in the above examples).
In a social media world, the demand for content from fans appears to be insatiable and many are fighting for the opportunity to own something produced by their favourite athlete, club or sport’s national governing body (NGB) historically and contemporaneously. Producing content through NFTs and putting it out to market on a blockchain platform therefore provides an ideal opportunity for the content producers to grow their products, brands and revenue streams.
As the cryptoassets industry continues to develop at an alarming rate, it will be interesting to see how popular sporting NFTs become. Everyone will have seen the volatility of cryptoassets and they are still treated with a large amount of nervousness and scepticism, partly because of the lack of understanding of how the whole system works. With Murray’s recent sale, though, the signs are that the sporting public have already given them a gold medal.
We advise a wide range of clients in the cryptoassets industry and we have a wide network of legal and technology specialists in this area. Whether you’re an athlete, club, NGB or related business, we’d be happy to help guide you through the intricacies of how to get involved in this developing area.
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