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Intro Notes, Plugs & Amendments 🔌🔧

I’m a little foggy headed today so please bear with any errors or lack of insight.

Every now and then I discuss something broader in the Web3 world and think about how it might impact sports.

In this particular edition, I discuss where we’ve come to with NFTs in particular. Why are they a thing? Why are they important? And most importantly: where are they going?

That last question, I don’t think I can answer with any real conviction, I don’t think anyone can — but I can predict where I think the next trend of innovation with that specific technology might well be.

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This Week’s Deep Dive: The Next Frontier of Sport NFTs

Why do we have NFTs?

By now you’ve heard of NFTs.

I mean, if you’re reading this newsletter and you haven’t — you’ve taken a wrong turn on the internet.

NFTs (Non-Fungible Tokens) have gripped millions of people worldwide and had countless journalists, marketing execs and boardroom members scratching their head with the thought

So let’s start with why NFTs, as a technology, need to be built using a blockchain.

NFTs are digital property, or give the owner digital property rights — in the eyes of many nation court of laws (see Singapore high court examples).

Take it from a technologist, not me. A couple of tweets from the thread above give you a decent enough idea as to why they need to use a blockchain. The reason why NFTs can’t be QR codes, or use a centralised database — is because centralised databases do not have the requisite properties allow for digital ownership.

This doesn’t mean they’re bad. They’re incredibly useful for a lot of the world’s trade, commerce and so much more.

When it comes to having digital property rights, decentralised databases are basically the best bit of technology we have. Whether they’re perfect or not, is another debate.

And NFTs, are a technology, or group of token standards, that are built on blockchains — that allow creators to create stuff that grant buyers of their content, digital property rights.

That’s pretty cool.

The Context

There was an article last month from Bloomberg that stated ‘NFTs are down in trading volumes by 97%’ 

As with many journalists writing about Crypto - they get their data wrong often. That’s not a critique on their intelligence or how good they are at their jobs, but NFT data in particular is very difficult to compile accurately beyond the surface layer of raw numbers (Secondary market volume, primary sales, etc.)

NFTstatistics - or @punk9059 - is head of research at PROOF.

They tweet something very pertinent, essentially saying that the data suggests is closer to 80-87% rather than the 97% quoted.

That decrease is still large, but it’s important to note that the article was misleading and quoted in so many different outlets. I mean, it didn’t even include volumes from some of the most popular marketplaces in the space. Which is strange.

Nonetheless, NFT volumes have dropped substantially.

I actually think a better metric to look at is Google search volumes, to get a more holistic view on things.

By inputting NFTs into Google trends, we can see that the interest in NFTs has pretty much plummeted since Jan 2021.

Retail searching for NFTs, has dropped a lot. Probably 85% or so from the highs of January.

In isolation however, these volumes are not negligible.

There’s clearly still a lot of interest in NFTs.

What’s Next?

To summarise so far:

• NFTs have exploded seemingly out of nowhere and like previous Crypto cycles, retail buyers got involved

• The trading volumes and search volumes (aka interest in them) has plummeted since the highs of Jan 2022, but in isolation are still substantial.

• NFTs allow creators to sell digital things that their buyers can own, and this is only possible by blockchains underpinning these tokens.

1) Where do they go next? And 2) where does the sports relevance come in?

Let’s start with that first question.

It’s highly unlikely that NFTs on the collectible side of things remain as solely static images, but there will still be an abundance of them.

Why? 

Because digital merchandise is probably going to be important in the future, but at the same time — because these things are digital, there’s so much more that can be done.

The malleability of NFTs means they can be so many different things, and new consumer facing use cases will persist over the next 3-5 years.

Five years ago, they weren’t a thing.

Three years ago, 99.99% of people didn’t know what NFTs even were.

So we’re still at the very early stages of this subsection of blockchain technology.

One project that was incredibly successful recently was QQL by Tyler Hobbs. 

Tyler is a generative artist famous for the Fidenza Collection 

It’s pretty tricky to get your hands on one of these NFT artworks for less than $100k. 

There’s also been 52,228 ETH in secondary volume to date. Which is a lot.

Safe to say, Tyler is not only one of the most successful NFT creators in the world — he’s one of the most successful artists globally — full stop.

His most recent project, QQL, is even cooler.

Especially when we draw comparisons and inspiration in a sporting sense.

This new collection sold out for a total of $17.6m.

What is it, exactly?

• 999 generative NFT pieces of art by Tyler Hobbs in collaboration with Dandelion

• Mint passes were auctioned on the Sept 28th, starting at 50 ETH and eventually settling at ~14 ETH.

• Collectors were able to select a unique edition to mint, that they generated themselves

• Minters receive 2% royalties: those who generated 1 of the 999 editions actually get secondary market royalties as well

This isn’t necessarily groundbreaking, but it’s probably one of the first mainstream examples of some sort of consumer side co-creation.

The above picture shows the generator that collectors use to co-create their QQL pieces. You can actually try it yourself here!

The process is fairly simple:

1. Collector purchases a mint pass

2. Collector generates editions & mints their favorite as an NFT 

Collectors becoming co-creators, is a really interesting shift… a co-creator who also receives royalties on that NFT in perpetuity.

This is a shift that I think we’ll continue to see; creators engaging their audience, consumers and collectors in a way that is deeper than a Discord community.

And from the conversations I’ve been having with a lot of smart NFT people; NFTs that have elements of co-creation and ‘evolution’ in their life cycle are something that will be a big trend in the next phase of Non-Fungible Tokens.

The advantage here to physical goods is multifaceted in a number of ways - but being able to evolve and morph your digital property, in the same way we do other digital things like game items or characters, could be the eureka moment for many creatives.

Many brands and sports properties are probably slightly behind Tyler who is definitely more along the spectrum closer to the ‘bleeding edge’.

This is largely due to having to play catch up on this new thing: Web3. 

But some of these bleeding edge innovations of customisation, evolving NFTs and co-creation are probably more interesting to sporting brands than simple collectibles that leverage sporting rights.

Again, this isn’t to say that simple digital collectibles that leverage those sporting rights will not be a thing in the future — I think they will — I just think that the things that will excite fans and *engage* fans in sports more are going to be the things that they are able to take part in tangibly creating.

The Australian Open Metaverse is a great example of this, in a sense. It allowed NFT artwork be submitted by fans worldwide, with some picked to be the NFTs the public purchased.

The metadata was also impacted by on-court actions, such as winning shots.

NFTs can basically be anything.

But the trend that emerges, that allows for the line between creators and consumers to soften, I think is going to be a new paradigm.

More sports crypto stories & things to put on your radar

• The Brazilian National Football team; the Selecao, are launching NFTs and fan tokens with Bitci

• Street Child World Cup are dropping GOAT NFTs in an effort raise money for charity

• Rawlings have dropped 450 NFTs in a limited run

• RTFTK’s latest chapter focuses on storytelling with project animus

• There was a bug in Dapper’s UFC Strike that saw an abnormal amount of rare moments pulled by one account.

Great reads, great tweeting and more general ‘stuff’ that could impact you

• There’s been some confusion around Decentraland, one of the largest decentralised virtual spaces, on the subject of active users up until now. I have to say, I think I’m still confused even after this tweet! 

• FTX and Visa partnering to create credit cards. Might not seem like a big deal, but I think it is as stablecoins become more abundant.

• Coinbase are launching a documentary on the history of crypto and their company

Thank you!

Thanks for reading the latest edition of the Sporting Crypto newsletter. I’m really happy to see so many people enjoying it and sharing it with their networks. If you enjoyed this, please tell your friends who might be interested - and share it on social :)

This newsletter is for informational purposes only and is not financial or business advice.These are my thoughts & opinions and do not represent the opinions of any other person, business or entity.