Not all cryptocurrencies make the grade and, indeed, more than half are destined to fail. But there’s no argument that the blockchain principle is here to stay. Now it’s being used by Blocside, a London-based initiative to use the technology to produce positive change in the international football community.
By Dion Bisara and Faisal Maliki Baskoro
While Bitcoin reached peak popularity last year, many investors hurried to get involved in hundreds of initial coin offerings (ICO), a loosely regulated process in which startups try to raise funds for their projects by selling their own cryptocurrencies instead of stock.
More than half of the cryptocurrencies launched last year failed, reflecting inherent risk in the sector. Bitcoin.com reported in February that 59% of 902 ICOs last year failed or were very likely to fail due to lack of activity.
While the failure rate seems high, cryptocurrency observers have stated that it is a natural process for the overall cryptocurrency industry to mature by weeding out scams from legitimate projects that solve real problems. For any cryptocurrency to survive, it must have a solid use and the team behind the project has to be reliable.
“Not all of industry needs blockchain. But for those that do need it, it eliminates intermediaries and improves overall efficiency” said Alex Lightman, a futurist and the CEO of Gibraltar-based TokenCommunities, a firm that specializes in advising and managing early-stage investment in cryptocurrency startups.
One such industry is the $40 billion global football market, with 3.5 billion fans that cement its status as the most popular sport on the planet. Global powerhouses like Manchester United and Real Madrid can have a fan base far beyond their country’s borders, attracting followers from New York, Seoul or even a teenager from Jakarta who also happens to support local team Persija.
With an ecosystem tied to diverse numbers of countries and currencies, the football industry is bound to experience inefficiencies. Clubs have to pay hefty transaction fees to intermediaries to sell sponsorship rights, broadcasting rights, merchandise, tickets, or even to sell their players to other clubs.
The inefficiencies also impact club fans around the world and create barriers for them to engage with their club in depth, says Daniel Taylor, CEO and co-founder of Blocside Sports, a London-based startup.
The industry is also, unfortunately, rife with corruption. FIFA, the world highest governing body for football, is ramping up its efforts to ensure financial fair play, pushing for transparency in club ownership structures and financial transactions.
Taylor believes that the problems can be eliminated if clubs adopt blockchain technology and use a common token to facilitate their transactions with fans, sponsor, broadcasters, agents across many countries and various currencies.
A token is a particular kind of cryptocurrency that represents a specific asset or utility that is fungible and tradeable, ranging from gold or property to power. Unlike Bitcoin or Ethereum, which have their own blockchain protocols, a token usually resides on top of another blockchain.
BlocSide is currently selling MVP, a digital token specially designed for the football industry. According to the first-phase Blocside plan, MVP tokens can be used to buy football merchandise, tickets and food at the stadium, or subscribe to a club’s streaming service through Blocside Platform in several countries.
Blocside has just established a partnership with South African side Cape Town City FC to implement the company’s concept. It has between $5 million and $20 million in its war chest and by June will have acquired two small clubs, one in the Australian League and one from Eastern Europe.
“We want to give football fans the ability to transact seamlessly in what we envision as the future of sports commerce. Blockchain technology provides a seamless mechanism to interact with global fans, an interaction that has yet to be entirely fulfilled,” said Taylor at The Peak’s ‘Crypto Revolution’ seminar at Grand Indonesia Kempinski Hotel in April.
Should the platform take off, Blocside will license the proprietary API to other professional football clubs in order to accelerate token adoption, aiming to become the “virtual currency” within the global football marketplace.
“Blockchain can guarantee transfers and contracts are paid on time and all parties get their rights, and remove corruption in FIFA because this technology ensures transparency of all transactions,” Taylor said.
Blocside’s MVP token is currently the only cryptocurrency in the football industry. Lightman, who is also an adviser to Blocside, said that this presents an ideal opportunity to football fans who want to test the water in investing in cryptocurrency. “For the first-timer, buy something that you can talk about with your friends and you can explain,” he said.
Blocside has successfully raised $30 million, above its minimum target of $15 million. “We are aiming for a target of $51 million in the remaining four days of ICO,” Taylor said at the time.
The token could be purchased through the Blocside mobile site or app, at a price of $0.17 cents per token with a minimum purchase of 300 tokens, by April 30. Holders of MPV tokens cannot barter their tokens with fiat money to clubs or Blocside, but they can sell them through cryptocurrency exchanges.
Taylor is optimistic about the company’s future, seeing adoption of its technology as potentially unifying clubs and fans around the world. “Football is a $40 billion industry today, of which about $17 billion is consumer spending. We are optimistic that we can capture a market of $1.5 billion-$2 billion,” said Taylor.