Blockchain in Sport means more than Cryptocurrency
2021-03 Application of Blockchain technology in sport means much more than the use of cryptocurrency. When the Sacramento Kings launched a blockchain-based auction platform in early 2020 “they relied on the Ethereum blockchain to verify and authenticate their match-worn gear” 1. With the US sports memorabilia market estimated at more than $5 billion (according to the publication Blockchainland), providing assurance to collectors and fans is seen an important feature to selling original merchandise.
Merchandise and blockchain technology
Blockchain technology in form of smart contracts or non-fungible token (NFT) can provide a consistently secure data source. Following the example of the Kings, multiple entities could contribute to the system where the outcome of any execution is recorded on a distributed ledger (i.e. smart contract) or entitlements represented by a digital asset (i.e. token). Based on the fact that once data records are written and not updated or deleted, buyers and sellers could be re-assured of the originality of the merchandise they are looking to sell or buy. Blockchain technology in form of a "distributed ledger with confirmed blocks that are organized in an append-only, sequential chain using cryptographic links" 2 would enable full transparency and traceability throughout the transaction chain and even provide the ability to trade merchandise with confidence in the future, e.g., when on-selling the item.
Ticketing and blockchain technology
In a similar way, it is understood that sports and event ticketing is looking at blockchain to authenticate entry passes. In particular, as more and more entities convert from a paper stub to electronic means, the authenticity of an event ticket is of enormous importance. Particularly, when tickets are resold at a large or quick profit (‘scalping’), blockchain technology is seen as way to curb fraudulent transactions 3.
Membership and blockchain technology
The use of cryptocurrency to offer a new form of loyalty membership program by sporting organizations and clubs seems to have the potential to create new ways of member engagement. Members can exchange FIAT monies into ‘club coins’ in order to redeem these for merchandise, special event tickets and memorabilia. Clubs issuing the ‘club coins’ can incentivize members to enrol or renew their membership in order to get access to specific discounts or offers otherwise not available to the general public. In addition, sponsoring organizations could raffle or donate ‘club coins’ as part of a membership drive or to award member loyalty etc. As such, club loyalty points in form of ‘club coins’ could also be redeemed at businesses affiliated with the sporting club and create a new form of loyalty program according to work conducted at the University of New South Wales (UNSW) in Australia 4. According to the trial, participants were offered multiple options on how to use their loyalty cryptocurrency: exchange into gift cards, transfer to regular bank account, held in a cryptocurrency wallet (e.g. Ethererum wallet) or transferred to other participants.
Additional information
If you are interested to understand how blockchain technology can be deployed in sports business applications, please contact chemneera.
References
1 https://theblockchainland.com/2020/01/16/sacramento-kings-launch-blockchain-auction-platform/
2 ISO 22739:2020 Blockchain and distributed ledger - Vocabulary
3 https://www.ticketingbusinessforum.com/tackling-ticketing-fraud-blockchain-potential/
4 https://www.cmo.com.au/article/632265/how-cryptocurrency-set-change-customer-loyalty-program-model/
