Blockchain technology is becoming increasingly popular around the world. Its application can be seen in several ways such as tokenization, forms of payment, governance tool and intersection with artificial intelligence. This blog post unravels the tokenization process, bringing examples that already exist in the industry and opportunities that may be seen in the near future.
Tokenization is the process of transforming a real asset into a digital one, starting from the creation of a token, which can be defined as the registration of such an asset in digital format, with the blockchain guaranteeing security to the process. One of the benefits of this process is to provide liquidity for unique assets. Tokenization allows dividing items such as art pieces, real estate and patents into several fractions, democratizing investment in different sectors.
Examples of tokenized assets
The first one comes from the NBA. Brooklyn Nets playmaker Spencer Dinwiddie decided to tokenize his contract at the beginning of last year. The process suffered some resistance from the NBA itself, being approved after about six months. Spencer’s token buyers would receive monthly interest on the investment.
The second example is Brazilian. In December 2020 Vasco da Gama, in partnership with the Bitcoin Market, tokenized its credit rights related to the solidarity mechanism, an amount paid by FIFA to the training club in international transfers. A group of 12 athletes revealed by Vasco is represented in the token and any transfer of these athletes brings a return for those who invested in the token. With the sale of this asset, the club raised about R$ 3 million.
In addition to the two examples cited, there are several other possibilities of tokenization in the sports industry.
Attracting fan engagement in the attention economy era is one of the most difficult challenges for all entertainment companies. Also included here are sports entities, who now compete with esports and the various streaming applications available on the market. Many clubs use reward programs to try to attract fans’ attention by offering physical products or experiences, something that decreased during the covid-19 pandemic.
This is where the tokenization process comes in. Replacing point programs with tokens, to be later exchanged for cash, may be the necessary way out, further facilitating the work of collecting and analyzing data when using blockchain technology. In this sense, the company Liquidteam produces technologies that can help entities to relate tokenization with their Fan Centricity strategy.
When it was possible to receive fans at the stadiums, the ticket sales process brought some difficulties to the clubs. The cost of operating the entrances and the creation of secondary markets and currency exchange are some examples. By implementing the use of tokens in this process, these difficulties decrease in size.
Blockchain security is able to recognize all buyers of the original tokens, which would make fraud within this market somewhat difficult to occur. This would also facilitate the moment of recognizing possible responsible for fights or any act of racism inside a stadium or gymnasium.
In recent years, we have witnessed some teams seeking investments/financing for the construction or remodeling of their stadium or training center. The solutions found were diverse, from traditional partners to crowdfunding that involved the fans, as in Vasco da Gama’s case.
However, no institution has used tokenization to facilitate this process. Splitting physical properties into tokens is one of the basic principles of the process, which would enable fans and even investors to acquire portions of the equity by receiving financial rewards or experiences with the club as a form of payment.
There are several ways to apply the asset tokenization process within the sports market. Therefore, it is necessary to popularize this type of investment, within Brazilian society and, mainly, among sports fans in the country.
Through the popularization of this market, a series of opportunities arises for blockchain startups to present their solutions for the sports industry, especially at a time when the entry of new financial resources is so important for all modalities.