Sports NFTs: What are They and Why are They So Popular?

October 18, 2022

Thanks to the development of the crypto industry and the great interest in sports, NFT sports are gaining more and more popularity around the world.

Lazio’s title sponsor is a crypto exchange, Inter is a blockchain application, Barcelona and PSG are already releasing fan tokens, and Gretzky, Messi, Nurmagomedov are NFT collections. PSG football club sold $218K worth of NFT tickets for matches in Japan, following buidlbee.com. How did it happen and why have all these incomprehensible words already become an important element of sports? Let’s figure it out together.

In November, the crypto exchange Crypto.com paid $700 million to rename the Staples Center, where the Lakers and Clippers play, to “Crypto.com Arena” for 20 years (35 million per year).

Why Do Crypto Exchanges Displace Traditional Sponsors in Sports?

There seem to be several reasons:

crypto exchanges are looking for new customers, and there is more interest in crypto in sports;
sporting events are a source of affection, while cryptocurrency exchanges are unreliable.

Collaboration among cryptocurrency exchanges, blockchain systems, and publishers is particularly active in Italy. For example, Serie A signed an agreement with Crypto.com and Lazio with Binance, and there are much more similar cases.

So what about NFT?

Tokens use blockchain technology, but not in the way they are similar to cryptocurrencies. Each NFT token is unique, it cannot just be downloaded or copied and cannot be replaced with the same one (like traditional money or cryptocurrencies).

With the help of NFT and a transaction recorded on the blockchain, you can claim any digital asset you have purchased. As a rule, NFT is bought on specialized platforms using cryptocurrencies. You can do without them, but the industry considers transactions with cryptocurrencies simple, reliable and decentralized.

Therefore , tokens are usually used in two roles:

NFT as a certificate for some material things. For example, for real estate.
NFT as a digital object: gif, picture or art. Here NFT is also a certificate, but its object exists only on the Internet.

In 2021, the global NFT market was estimated at $22 billion. Most of it consists of art and collectibles – for example, paintings, gifs or drawings. But in the form of digital assets, such items have additional advantages. Because NFT items are not only for collecting, but also for trading.

The sharp growth of NFT is associated with the boom in the value of cryptocurrencies, the gamification of the market, the emergence of decentralized platforms with a unique community (like OpenSea, DMarket and Raible) and the interest of opinion leaders – for example, Elon Musk and Jack Dorsey.

Usually, athletes’ NFT tokens are cards with the main moments in their careers (video, photo, gif, cartoon, or drawing), which are issued in limited quantities. Cards that are not quickly sold on the primary market are burned or left on the Internet.

Piracy in NFT

NFTs seem to be the next stage in the development of digital art because due to their uniqueness they allow you to create a little more than just art or gif. But they also create a space for piracy.

However, there are practically no such problems in large sports NFT projects. As a rule, the biggest market players like NBA Top Shot or Sorare use official licenses from leagues, and athletes who issue personal tokens do not need any additional rights (unless otherwise specified in the contract with the club).

Revolution of Sport NFT

The revolution in sports NFT was launched by the NBA Top Shot. Behind it are the founders of the blockchain, who have reached a turnover of a billion dollars on simple videos.

NBA Top Shot launched a little over a year ago and instantly became an ultra-important player in the sports NFT industry. Its turnover for 2021 is more than $ 800 million (4/5 of all NFT in sports). In March, NBA Top Shot attracted $ 350 million in investments, at the same time the company was estimated at $ 1.5 billion.

The project’s fundamentals are fairly straightforward and comparable to those of standard Panini cards, with the exception that instead of stickers or player images, Top Shot packs include video game events.

You won’t suddenly become wealthy by purchasing the most costly bundle. To be able to buy a package for $ 999, you need to gain a high level of collector. To do this, you first need to buy packs for $ 9, then for $ 19, and then catch the next drop of expensive items and have time to buy them.

The received moments can be put on display, participate in challenges and earn new packs. A commission from the subsequent selling of moments between participants on the internal trading platform is how the platform makes additional revenue.

There is also Sorare – the main NFT startup in football. Sorare has already attracted 680 million dollars of investments, among the investors are Andre Schurrle, Antoine Griezmann, Gerard Pique, and other football players. Griezmann even bought Arsen Zakharyan’s card in the game. Big names of investors, low entry threshold, and licenses of clubs from Spain, France, England, and Russia quickly brought Sorare high trust, but in fact, this platform is not used for collecting, but for earning cryptocurrency.

Now the topic of NFT sports is interesting mostly for ardent sports fans, however, we will observe how events in this area develop.