“Non-Fungible Tokens” or NFTs, are a type of signature or digital certificate, via blockchain, that transforms any type of digital media into a non-fungible asset, which means it becomes exclusive. The NFT linked to a common digital asset, with billions of copies on the Internet, serves to create a scarcity around this item, since in the middle of these billion copies, only one has this certificate of “originality”.
To understand what NFTs are, it is necessary to understand the difference between a fungible and a non-fungible asset. “Fungible” assets are those which can be replaced or exchanged, but in the end will have the same value, for example, if you have 1g of gold you can exchange for 1g of gold, without losing any value. “Non-fungible” assets, on the other hand, are those that have subjective values, an asset that cannot be replaced, since they are exclusive. A great example of non-fungible assets are artworks, if you have a famous painting and exchange it for another, the result of the operation is no longer equivalent as in the case of currency exchange.
In summary, NFTs are digital assets of publicly verifiable and authenticated intellectual property on a blockchain, which transforms unique digital media into originals before ordinary copies.
Some examples of where NFTs can be implemented are: Digital Artwork, digital media such as GIFs, memes, JPEG, messages, videos, etc., gaming, collectibles, etc.
NFT Market Boom
The NFTs market has been around for a while, but it has only started to move considerable values and attract people’s attention in the last few months. The graph below shows the number of times the term NFT has been searched worldwide on Google in the past five years. It is possible to see that the line only spikes up in 2021.
The values moved also help to show the progress of this new digital asset. OpenSea, the NFT marketplace, sold US$ 1.5 million in 2020. In January 2021 the amount increased to US$ 8 million, reaching US$ 86.3 million in February. March came to break all records, with the most expensive work being sold for US$ 69 million.
This trend can be explained by the development of virtual activities, which gained space during the pandemic. People stay connected even longer and are giving more value to products and services consumed on the internet. Another fact that goes in the same direction is the appreciation of digital currencies, such as Bitcoin and Ethereum, which have the same NFT technology.
In sports, the highlight is the NBA Top Shot, which moved over $ 230 million in a weekend in NFT trading, with cards that can be static — a figure / art of a player / event / situation made by multiple artists — or special videos featuring the best moves of a particular player, for example.
As we have shown in the previous paragraphs, this market has acquired a relevant size, which still raises doubts for many people. Why pay so much for a digital asset?
The main point here is that NFTs have an extrinsic value, that is, determined by what is outside, by the market. Who decides whether an art or a clip will be of value is not who produced it, but who is interested in acquiring it. In addition, scarcity contributes to this, since whoever buys any asset will be able to prove, through blockchain technology, that he/she is the sole owner of the NFT.
Relating all of this to the sports industry, we can remember the market for football uniforms, especially old jerseys, which has been gaining more and more space and value. There are also several other options for collectors, from items that were part of the history of a club or athlete, to the sticker albums. The advantage of digital assets in comparison with these is that NFTs do not depreciate, maintaining their quality and value for much longer.
Future Potential
The future is very promising for NFTs, and it will be one of the promising features for using Blockchain, especially in the sports market. All the fanaticism involved in football, basketball, volleyball and other sports is a reason to purchase shirts, boots and other historical items that, because they are digital, will never be used. Only the fact that it is something unique, makes the fan value the product.
Esports are another area that can stand out when it comes to NFTs. In an electronic game, which was already born in the digital market, the possibility of the user having a skin, a weapon or an exclusive car can culminate in the creation of a single market within that universe, mobilizing high amounts.
At the same time that there are people excited about the new asset, there are those who believe that it is a bubble, created mainly by the search for possible sources of profit in an unbalanced world economy. All that is left for us is to monitor the development of this market, always attentive to the possibilities that an NFT can bring to the sports industry and the new ways of interacting with fans.
