Exclusively written for 2tokens.org by Judy Reed 

In just a few years, blockchain tech has taken off in sports. The industry has gone from having relatively little to do with the growth of blockchain-based assets, to being a major proponent and practitioner in institutionalizing them. As existing applications round out into maturity, it’s worth considering what the significant trends in sports-related digital assets have been thus far. These trends serve as an entry point into additional applications of tokenization that could be set to disrupt and grow in the industry.

The state of play

Unsurprisingly, a major trend in the use of cryptographic ledgers in sports has been the integration of cryptocurrencies. There were several key factors that led to this application.

One was the acceptance of cryptocurrencies as a form of payment for tickets and merchandise. Notably, tickets for the Dallas Mavericks basketball team have had the option available for several years, as they were the second team in the NBA to accept Bitcoin payments. Around the same period, organizations like UEFA and Ticketmaster also started implementing blockchain technology like rotating QR codes as an anti-fraud option for receiving tickets.

Another factor leading to the growing integration of blockchain in sports was crypto exchanges sponsoring leagues and teams, as well as cryptocurrencies being used to pay athletes. Starting around 2020, for example, stars in the US National Football League (NFL) began taking large portions of their salaries in Bitcoin.

One such prominent NFL player is Tom Brady, who in 2021 went as far as launching the NFT platform Autograph. NFTs in particular have taken a number of sports by storm in the last year. As intellectual property owners, clubs have released collections of them, often on their own platforms.

However, the legal matrices in which NFTs exist vary between jurisdictions, such as the EU or UK, more so than other kinds of tokens. These matrices are often dependent on particular regulations enacted in the realms of copyright, data protection, consumer protection, gambling, and finance.

In addition to these often-discussed digital assets, several teams now offer Socios fan tokens, including football powerhouses like Paris Saint-Germain and AC Milan, almost all the teams in the US National Basketball Association (NBA), and extending to eSports teams like Team Heretics and competitions like the UEFA Champions League. In each case, tokens can be traded in a fungible way like currencies, but have used inside the official app such as gaining voting rights in non-critical team decisions, or access to special merchandise and ‘fan experiences'.

Tokenization Prognostications

Whichever token types become mainstays of sports culture and which ones fade away still remain to be seen. Recent and ongoing diversification points towards an even wider typology of blockchain use in the future.

It can be easy to forget that web and internet infrastructure are only decades old and still evolving. Emergent technologies like quantum computing and machine learning are likely to transform the face of cryptography and computational solutions in ways that we have yet to conjure up. It would be difficult for regulatory environments to stay ahead of these developments, as the dust is still to settle on the last decade of developments.

Towards the end of 2021, a great deal of discussion was had about the application and corresponding impact of decentralization and tokenization, particularly when it came to the metaverse. Large multinationals in particular have moved to integrate NFT collections into the virtual realm.

For example, the NBA tends to be at the forefront of the curve in terms of sports and technology. It's thus no surprise that they've begun experimenting with their own curated environment in the Horizon Worlds metaverse. With that, it’s not hard to see where existing connections with NFTs and other tokens could lead the industry.

The movements towards digital assets have shaken up the industry and introduced new actors such as third-party exchanges and trading platforms. With time and continuous application, tokenization in sports will no longer be a simple abstract of loyalty or appreciation. The future could see tokenization become a major financial player in the long-term fortunes of clubs, fans, and competitions.