I’m not much of a “sportsball” fan (though I make an exception for Springbok rugby), so football news tends to fly way below my radar. My favourite tech podcast (the BBC’s Tech Tent), however, recently included a segment that broke through my honed cerebral sports deflectors and left me perplexed. According to the Beeb, football fans are now collectively dropping millions into club-endorsed non-fungible tokens (NFTs) and crypto coins, marketed as collectibles, for trade, or as a means to access fan perks.
“Across the five major European leagues,” reads one BBC article on the topic, “24 different clubs have launched or are considering fan tokens, including eight [English] Premier League sides.” Besides trading these coins as you would any other cryptocurrency, the so-called perks might be discounts in the digital shop of a football club or the chance to win tickets to a game.
The NFTs, or collectibles in question, tend to be digital animations or video clips — which the Tech Tent team likened to collecting team stickers. Apparently this is already big in basketball fandoms, and making inroads in other sports.
Now, I concede upfront that some legitimate artists seem to be using NFTs to fund their work, and certify authenticity — and power to them — but my preferred explanation for how enigmatic and tenuous NFTs feel to me comes from software engineer and tech commentator Stephen Diehl, who offered this on Twitter a few months ago: “There is one comparable market to NFTs: The Star Naming Market.”
Remember how that was a thing in the ’90s? Diehl explains: “You’d buy the ‘rights’ to name a star and they’d send you a piece of paper saying that you were now the owner of said star. Nothing was actually done in this transaction, you simply paid someone to update [an unofficial] register about a ball of plasma millions of light years away.”
Still, there is no denying it is ripe for exploitation and fraud, and the hype is not helping
Diehl has a long thread of tweets on this (from October 6 2021 if you’re looking for it) which does a wonderful job of pointing out multiple absurdities, but the kicker for me — one last Diehl quote — was this: “The entire grift is in convincing other people that it has meaning.”
And you know who is primed for a grift? Passionate fans and believers — which is exactly why we will drop more than R1,000 on a branded polyester jersey. At least you can actually wear a team jersey though, unlike the five Manchester City NFTs that a Mr Mike Bousis told the BBC he bought for $40,000 (R643,000 at the time of writing). A bit of googling suggests this might be the Michael Bousis who made millions in retail payment systems and is now a majority shareholder in Greek professional football club OFI Crete.
I have no quarrel with big men with big pockets who want to bid on crypto-based “assets” for bragging rights, or the brave investors who have successfully gambled on bitcoin. I also think decentralised finance (DeFi) is fascinating, and will be in the mix of financial products of the future…. Hell, maybe it is the future, as its proponents tell us. Additionally, I am on board with the potential uses of blockchain technology in general. Imagine how the application of digital signatures and distributed ledgers could transform cross-border trade and logistics, as just one key example.
Exploitive frauds
Still, there is no denying it is ripe for exploitation and fraud, and the hype is not helping. According to Statista, total sales of NFTs on the Nifty Gateway platform (a major NFT market) amounted to about $408.8m between May 2020 and November 2021. Huge sums are changing hands for the ledger-entry change that says you own this thing, but the inscrutability of it means that market manipulations such as wash trading are a real threat. NFTs are also ideal means to launder your money, if you are so inclined.
The promise of huge profits through crypto-trading has been effectively cemented into the social consciousness. And, in SA in particular, we’ve already had several examples of terrifyingly exploitive frauds perpetrated off the back of that narrative. I do believe that as these crypto vehicles become more widely accepted, regulated and, hopefully, stable, people will continue to make slow and steady gains from them — with occasional moments of high-flying glory — but we don’t seem to remember the slow and steady stories, just the exceptional ones.
There will always be people looking to exploit the exceptionalism story. Sometimes that is a straight con, the promise of a token that never arrives, the private marketplace doing imaginary trades but pocketing your cash. And sometimes that is going to be a NFT promoter who taps into a primed market with the real thing ... but a real thing with nothing to support the inflated value but hype and hope. The second might be mostly legal, but is it really any less of a con?
• Thompson Davy, a freelance journalist, is an impactAFRICA fellow and WanaData member.
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