Are NFTs (non-fungible tokens) bad? Are cryptocurrencies bad? Well, how long is a piece of string? 

For those who know about cryptocurrency, NFTs are similar but instead of being currency, they are unique digital assets that represent ownership of items such as video clips, music and art. 

For those who do not know about cryptocurrency, we will take one step at a time! Cryptocurrency is essentially a tradeable digital currency which is monitored and organised by a peer-to-peer network called a blockchain. Think of it as a £1 coin without you being able to physically hold it and without any regulation. Therefore, if somebody steals your £1 coin you are not able to do anything, you have no protection, and this money is lost forever. 

Realistically, if you had a £1 coin stolen, you would not suffer many repercussions other than being perplexed as to why someone would go through that much effort for a solitary coin which will likely be worth 50p in a year’s time (We will leave inflation talk for another time). However, when it comes to cryptocurrency, the most valuable coin is Bitcoin which at the time of writing is valued at $41,061 per coin. It reached $61,374 in October 2021 and 10 years ago, was only valued at $196 per coin. You can see why cryptocurrency has grown in publicity over the past few years. 

Funnily enough, in 2010, a cryptocurrency developer called Laszlo Hanyecz spent 10,000 Bitcoins (the first recorded transaction) to pay for two pizzas at his local Papa John’s. Using today’s value, his two pizzas cost $411m (10,000 Bitcoins were worth $40 in 2010). Devastating.

Now, NFTs are similar to cryptocurrency as they are unique digital assets, however they cannot be used to purchase items, unlike the digital coins. NFTs give you ownership and the knowledge that you own the original copy of a digital asset. It is similar to owning the original Mona Lisa but you cannot physically hold it, and again, if it is stolen then you cannot do anything about it. Even more annoyingly, nothing is stopping other people from taking copies of your digital asset, they just do not have official ownership of the original image. Essentially, imagine you have a digital document for the secret recipe of Coca Cola but everybody has access to the document and is able to make copies – but it’s ok as you have the original document, right? RIGHT?? 

NFTs have become prevalent over the past 12 months and along with cryptocurrencies, they have started to worm their way into Football, Basketball, Hockey, American Football, as well as many others. When I say they have started to worm their way into Sport, of course I mean the Sports stars and Clubs of these sports have used their global reach to attract fans to invest into these digital assets. 

Firstly, Cryptocurrencies in Football. Socios.com is a name of one of the main platforms which has enabled cryptocurrency to become associated with Sport, especially Football. They currently have partnerships with many different clubs including the likes of Juventus, PSG and Arsenal. Socios.com is a platform which allows fans to buy tokens which provides voting rights for decisions the club determines. The most important vote to date was the one provided by Juventus which gave ‘fans’ the option to vote on what the goal song would be during one of their games – The decision was Song 2 by Blur. Not a bad choice in all fairness. 

However, let’s just remember that these are not necessary fans which are voting. The Socios.com cryptocurrency token is called Chiliz ($CHZ) and these are available to anybody who would like to invest. If Arsenal decide to sell more fan tokens, there is nothing stopping the likes of Tottenham, Chelsea and Man Utd fans from buying these tokens and making ridiculous decisions to hinder the club. Of course deciding on goal music isn’t going to impact the club, but if Socios.com grows over the next few years then who knows what decisions these investors will be able to make. 

More importantly, Chiliz was advertised as a fantastic investment opportunity to fans throughout the World. Earlier in 2021, Arsenal’s fan tokens sold out within a couple of hours – Two million (!) tokens were sold in just two hours. Despite this, even though the two million tokens “sold out”, there was a total of 40 million Arsenal tokens in supply. The remaining 38 million were unsold and were kept by Socios.com themselves. To speculate, but this may have been done to boost the value of their tokens so they can gradually release the other tokens to ensure the value remains high. 

Despite this, when fans are unable to make any meaningful votes and token demand reduces, the value of the coins drop exponentially. According to the BBC in January 2022, Man City fan tokens had dropped by over 50%. Socios.com are advertising fan tokens as tokens where you can make decisions in football clubs and with huge investment potential, yet are essentially worthless. 

Furthermore, NFTs are very similar to these Socios.com fan tokens. Clubs have started selling digital pictures of players and celebratory moments, however Sports stars have also been getting involved. John Terry bought an NFT of a Bored Ape** on Christmas Eve for £23,400 (all transactions are recorded) and after advertising the NFT to all his followers on Twitter, bids on the NFT reached upwards of £30,200, meaning Terry likely made a considerable profit on an item in the space of two weeks. Thankfully he Tweeted a few weeks later to tell his followers all profits would be going to Charity, although we don’t know whether this happened or not.

The main concern of this, is the NFTs are likely to be driven in value because of John Terry’s influence. The buyer of the NFT from John Terry may have been a huge fan and after being drawn in by his influence, they may have spent all their life savings to invest into this asset, thinking it is a perfect opportunity to make some money. Unfortunately that is rarely the case. These footballers can buy the original NFTs at low value before advertising and driving their influence to increase the value and attract large bids on the item. Once JT has sold the item, he no longer advertises and his influence disappears, thus the value of the item diminishes because nobody is interested in a worthless image of an Ape without the influence of their hero. 

John Terry isn’t the only player to have advertised these NFTs. Reece James, Paul Pogba and Michael Owen, as well as many others, have been seen advertising their NFTs. It is likely some of these footballers are not aware of the issues with NFTs, all they see is their chances to make quick money and profits, yet as influencers to many people including youngsters, they need to be aware of the consequences for the decisions they make. Additionally, if someone like Pogba loses money on an NFT costing £20k, it will not be a huge impact for someone with a salary of 10x that amount per week. 

We are still in the relatively early days of cryptocurrency and NFTs being associated with football, so it is currently difficult to determine whether there is a possibility for fans to benefit. But when the NFTs are already too expensive for the average fan, I do not hold much hope. 

Football has never been the most ethical sport, however when sports stars and football clubs are bankrupting the fans who idolise them, whether intentionally or not, something needs to be done to ensure this no longer happens. But the big question is what can be done for digital tokens and coins without any physical element or regulation? I will leave you to answer that as I don’t have a clue.

**Bored Ape Yacht Club (BAYC) is a collection of 1,000s of digital images of Apes, all unique. Eminem bought one for just under $500k in 2021.

Liam Crowe – Director, NIBE