Many of us have heard about blockchain and bitcoin, right? But how many of us actually know what we are talking about? And the potential this technology has to change the way we do things?
Blockchain technology is being integrated into business processes to help bring another level of trust and transparency across industries globally. This advanced yet young technology is already transforming a multitude of sectors including finance, insurance, health care, shipping, supply chain, logistics, and energy sectors. But only recently have blockchain companies started to bring this disruptive technology to the sports industry.
So what is blockchain?
We spoke with Dr Chris Rowell, who has been researching, teaching and advising on emerging blockchain and distributed ledger fields since 2017, to get a better understanding of what it is and its potential impact on sport.
1. How do you think blockchain could help the sports industry?
Chris: Blockchain goes beyond cryptocurrencies and NFTs. Blockchain is a unique digital trust architecture that can help in the empowerment of athletes and enable faster, cheaper, and new kinds of agreements and transactions in the sporting space. New kinds of digital assets like cryptocurrencies and NFTs is one example of this. Player identity, data, and contracts are other examples. Putting these together, the opportunities for blockchain (in combination with other technologies) to create value for the sports industry are pretty profound - examples include reducing transaction costs, changing the scope for intermediation, creating new marketplaces for NFTs, giving players and teams more control over their data, and automating contract payments.
Imagine an athlete signing a digital contract that executes automatically when they fulfill the conditions, controlling the rights to their digital likeness and being paid automatically when this is used in an ad or game (with their permission), issuing a limited number of digital collectibles of their best plays (the digital equivalent of a signed jersey), or selling a number of tokens that represent “shares” in their playing career, allow fans to invest in their funding journey and reap returns (paid automatically into their digital wallets) when the player hits the big time.Dr. Chris Rowell
2. What are your predictions for the use of blockchain in sports over the next 5 years?
Chris: I think we will see some of the things mentioned above begin to take hold, and blockchain will become a more “normal” part of our lives, rather than just something people speculate on and tweet about. Central banks are jumping on board to use blockchain (or similar technologies) to create digital fiat currencies. Governments and companies are looking at blockchain to help them secure identity information and other personal credentials for citizens (allowing citizens far greater control and privacy over their personal information). At the same time, we will see the continued growth of new markets for NFTs and digital collectibles, and new business and funding models that we may not have thought up yet. It’s an interesting time in blockchain at the moment - like in the early days of the internet, we are still trying to figure out what business models could work in this new space, and what companies should look like (or if they need to be there at all). I think we’ll see some exciting new things in the next few years.
3. What excites you the most about Blockchain?
Chris: I’m most excited about the potential of blockchain to help us take back some of the power that a few, large organizations have consolidated in the online space over the last two decades. Blockchain has the potential to empower people, whether athletes or other individuals, with greater control and privacy over their personal information and the ability to create and trade digital assets. Of course, we may see certain companies and governments seek to step in and co-opt blockchain technology to gain even more control, and many are currently trying (e.g. Facebook with its Libra project). But I’m hopeful that we can use blockchain to move toward a fairer and more equitable digital world. The key for us is to be very conscious now of what is possible and advocate for use cases that promote transparency, accountability, and open standards that promote access and competition.
So what does PlayWize have to do with blockchain? And why should you care?
Just like these businesses, we believe Athletes are a brand. Whether you’re a pro, junior, retired or aspiring athlete, each player in the game has their own unique story to tell and this can be commercialised. By using blockchain technology, interested parties can invest in young athletes, who then get access to funding at all stages of their careers. Investors will also have access to a much wider range of previously inaccessible investment opportunities. It is an interesting strategy that will begin to play out over the coming years.
And if you don’t believe us, there are already companies working in this space like Jetcoin, Globatalent, and Sportyco which are all founded on smart contracts - a layer of technology ushered in by the advent of blockchain technology - that allows interested parties to invest in the future earnings of the athlete.
Some athletes have even started receiving payments in blockchain cryptocurrencies. Nikolay Rosenthal, one of the Rungsted Seier Capital (DK) star players have switched his traditional salary payouts exclusively to bitcoin, the world’s first cryptocurrency. This switch was a part of a deal when the team’s financial backer was taken over by Bitcoin Suisse, a bitcoin broker from Switzerland.
Blockchain’s smart contracts have built-in automation - so when conditions of the contract are met, the athlete’s payment will be automatically released and recorded on a blockchain which gives total trust and transparency to all stakeholders involved in the transaction.
Todd Byrne, a former pro-rugby athlete with the NRL, thinks this type of automation can alleviate many legal disputes in the sports industry. Especially when it comes to contract grey areas between athletes and third party endorsements. In this article with coindesk, Byrne explains that athletes sign third-party endorsement agreements for extra income. These sponsors are not affiliated with the team, and the resulting contracts have a tendency to go south when there are disagreements over whether or not the terms of the contract have been met.
Introducing self-executing, blockchain-enabled smart contracts to the sports industry will help to reduce these pain points, and introduce another level of trust and transparency into the industry.
At PlayWize we are passionate about the issues Todd Byrne illuminated, and intend to collaborate with the industry to engineer blockchain solutions that will transform the sports industry.