In a first for professional soccer, Spanish team DUX Internacional de Madrid has used crypto to buy a new player. Ex-Real Madrid player David Barral is a new acquisition for the club facilitated by the cryptocurrency trading company Criptan.
Although technically this is not the first recorded Bitcoin (BTC) transfer, amateur Turkish club Harunustaspor bought 22-year-old player Omer Faruk Kiroglu back in 2018 for 0.0524 Bitcoin and 2,500 Turkish Lira. This move was performed to gain attention for the club in international media for doing “something new” but not necessarily sparking blockchain adoption in soccer.
DUX’s acquisition is indicative of the adoption of blockchain technology and crypto tokens within the soccer community and its fans. This development came soon after European soccer giant AC Milan joined the blockchain bandwagon by announcing on Jan. 18 the impending launch of their native fan token, ACM, on the Chiliz blockchain, a fan engagement platform.
The CHZ blockchain includes 20 other sporting organizations and has reportedly been installed 450,000 times, with token sales exceeding 14 million in number, with the fan token of reigning Italian Serie A champions Juventus ($JUV) being one of the first to be listed on the platform. Alejandro Laplana, CEO and Founder of Shokworks — a company that develops digital platforms for various brands and sports teams — discussed AC Milan’s move with Cointelegraph:
“This is great because it can engage their 250 million (+) fans all across the globe and include them in exercises like voting and direct feedback in club policy. Moreover, this can further engage them with gamified loyalty and rewards programs via secure smart contracts that reward engagement with additional tokens. It can also help build liquidity by listing their tokens in exchanges.”
AC Milan’s entry into the blockchain domain is an interesting case when compared to other soccer clubs that have joined previously, as it is a club with a huge fanbase. The club’s achievements have been scarce over the last decade, and this move is bound to streamline fan engagement and enable it to acquire new fans, especially given its current push to win the Serie A league title.
In addition to AC Milan, other soccer clubs, such as Juventus, Paris Saint-Germain, Arsenal and Manchester City are becoming participants in the blockchain and crypto community. In fact, Spanish giant FC Barcelona generated $1.3 million in less than two hours after launching its token, BAR, selling 600,000 Barcelona crypto-based tokens for $2.20 each back in February 2020. The initial sale was oversubscribed by more than five times, and the price of the BAR rose by 200% in the first five minutes of trading on Chiliz. It currently holds a market capitalization of over $20 million.
Laplana further stated how FC Barcelona’s token is unique when compared to the token offerings from other soccer clubs: “It helped inform — via fan interaction — the design of the mural for the first team locker room. […] The token is designed to reward holders of the tokens (fans) for increased engagement with more tokens.”
Fan engagement during COVID-19
The coronavirus global pandemic brought sporting events to a standstill, canceling most of them and postponing the 2020 UEFA Football Championship and the Tokyo Olympics 2020 being postponed to 2021 for the first time in history. The soccer industry was hit with empty stadiums due to COVID-19 restrictions and with the general lack of engagement and monetization from the global fan base. Since fans are not in the stadiums, tokens provide them with voting rights in club-specific polls or give them access to VIP experiences or can be redeemed against exclusive club merchandise.
Another way to engage fans is through trading cards and fantasy soccer games based on a blockchain. For example, Sorare is a blockchain-based fantasy soccer game that leverages classic soccer trading cards and fantasy league games. It runs on the Ethereum blockchain and uses nonfungible tokens. An NFT is a special crypto token that represents something unique, and thus, it is not mutually interchangeable. FC Barcelona star center-back Gerard Pique is a seed investor for Sorare.
Use cases go beyond fan engagement
Amid the ongoing global pandemic, fan engagement is the most important aspect that the introduction of blockchain within soccer can bring about. However, there are several other use cases that can become vital.
Laplana explained that soccer clubs can use the technology to build up liquidity for specific programs such as stadium renovations, adding: “Another use case is clear and transparent elections in a sport that has unfortunately been tarnished by decades of rampant corruption and disputed election results at every level of the sport.”
The ongoing global pandemic has been devastating for sporting organizations, including soccer, as stadiums are currently going empty, affecting the revenue and fanbases of teams. Various major international clubs are now resorting to crypto and blockchain to find ways to bridge this gap.
These use cases could be employed for clubs that have a considerable fanbase and are currently facing challenges on and off the field. Stefan Ateljevic, founder of BitcoinPlay — a Bitcoin gamification platform — told Cointelegraph how cryptocurrencies could begin to play a larger role in the economics of the soccer world:
“In the next few years, I wouldn’t be surprised if clubs used crypto as legal tender between themselves — if it legally becomes an option. Clubs that have cryptocurrency reserves could simply use these assets to buy and trade players, as they would in any other fiat currency. This could extend to even salaries, as crypto becomes more integrated into the business world.”
With the advent of smart contracts, clubs could also use blockchains to code a player’s transfer record, thus enabling soccer organizations to trace a player’s history from the youth academies all the way to global sporting leagues. The same can be done with the player’s medical data history to enable club management to make informed decisions with ease about their picks from the talent pool. This can be done by using tools like PowerAgent, which is a smart contract ecosystem that enables sporting professionals to create and manage smart contracts by connecting all the involved parties of the athlete’s contract negotiation and agreement procedure.
Related: Celebs and crypto in 2020: Blockchain cities, Bitcoin newbies and Twitter trolling
Fans could also benefit from having an easier ticketing exchange mechanism, as the technology makes exchanges safer and more reliable, eliminating tickets being sold on the black market. Another impending use case could be the monetization of proprietary content on Over-The-Top media platforms and current popular general content providers — such as Netflix, Disney Hotstar, YouTube, Amazon, etc. — via smart contracts becoming critical to the growth of teams, clubs, leagues and players.
Regulation plays a key role
Blockchain technology and crypto can be utilized in various sports across the globe, offering opportunities to engage fans, stakeholders and players alike. Roham Gharegozlou, CEO of Dapper Labs — a blockchain-based gaming company — told Cointelegraph that blockchain technology has been used with other sports in the United States:
“Sports leagues, teams and athletes are starting to understand the importance of cryptocurrency and blockchain technology. Fans of the Sacrament Kings and Dallas Mavericks can purchase tickets and merchandise, using Bitcoin. […] $12 million+ has been invested by collectors on NBA Top Shot, and we’re still only in our Beta. Recent Top Shots have gone for as much as $35,000, and this trend shows no signs of slowing down.”
Even though Dapper Labs is involved with the National Basketball Association of the United States, popular sports in the U.S. such as basketball, football and baseball have a smaller presence in the crypto sports community compared to soccer.
Ateljevic further opined that the regulatory situation in the U.S. makes it more difficult for clubs to adopt the technology: “Crypto regulations are different in each country or zone, such as is the case in the EU. In other words, I think it would be a bit more complicated for the NBA or NFL to start using crypto in their customer engagement strategy.” Laplana stated ways in which this regulatory environment can change:
“It is up to club boards and their partners to take charge in building and rolling out fan tokens — in close contact with domestic regulatory authorities — that can add value to fan bases and the organization under a compliant framework.”
Benefits of Blockchain Technology to Businesses
The year 2008 saw the introduction of bitcoin (decentralized electronic cash system). Since then, many more cryptocurrencies have been introduced to the market and turned doubters into believers. Those who had misgivings have slowly and surely embraced it as the future and alternative to fiat currency. Indeed, it is correct to say that the blockchain technology has greatly evolved and with it, a whole lot of benefits across industries (from finance to medicine).
Many businesses across different sectors are now looking for ways in which they can integrate the blockchain technology into their infrastructure. Without a doubt, it is correct to say that the future is here. We are firmly in the era of the blockchain technology and cryptocurrencies are slowly providing a paradigm shift to the way we view fiat currency and even transact. That said, how do businesses benefit from the blockchain technology?
If you thought that solutions brought about by blockchain are confined to the exchange of cryptocurrencies, you couldn’t be more wrong. Through its decentralized nature, businesses across various sectors and industries stand to benefit in the following ways.
1. Increased And Greater Efficiency
As a decentralized digital currency, blockchain has fully done away with the need for middlemen especially when making payments or engaging in transactions of whatever nature be it in the real estate or any other lucrative industry. When you compare blockchain to conventional financial services, there is no denying that it’s faster, instantaneous, and its peer to peer decentralized nature made transactions to be more efficient.
If there is something that puts blockchain on a different level, it has to do with the fact that transaction ledgers for public addresses is accessible for viewing by pretty much anyone. This level of transparency and an unprecedented layer of accountability is one of the reasons why blockchain has become very popular with businesses. This greater transparency has in essence held businesses to higher standards and essentially made them to be more open and ascribe to higher levels of integrity in so far as their dealings with customers is concerned.
The beautiful thing about the blockchain ledger is that every single time there is an exchange of goods or a transaction recorded in the blockchain, there is an audit trail. This audit trail is instrumental in providing an irrefutable proof of ownership or simply to let a person know where goods came from. This improved traceability provided by blockchain is instrumental especially in industries or sectors where verifying authenticity of transactions or traded assets improves efficiency and customer confidence.
Where security is concerned, blockchain is way ahead of other record keeping systems. Why is this the case? Well, every new transaction is not only linked to a previous transaction but also encrypted. There are zero chances of a transaction being altered and this gives individuals a sense of security and trust. The decentralized nature of blockchain also ensures that individuals can transact without having to answer to central governments.
To sum it up, if you are a business in whatever sector, you cannot afford to wish away the key benefits of blockchain outlined in this post. If you are keen on being transparent, efficient, and keen on winning the trust of your customers through secure transactions, blockchain is the way to go. The future that was blockchain is now here with us.
Private distributed ledger technology or public blockchain?
Some people think that permissioned distributed ledger technology can perform better than open blockchain because it is tweaked to address the issues of the latter. Such systems are also called “permissioned blockchain,” as if blockchain is a high-level concept and “permissioned” is one of its variants. But this statement is controversial and down below, you will come to understand why.
Is “permissioned” decentralized?
There are a lot of other options to choose from in DLTs: permissioned, private, enterprise, federated DLT, etc. And frankly, sometimes, it is not easy to distinguish between them. Therefore, for this level of discussion, let us compare just DLTs vs. blockchain.
A permissioned DLT and the mentioned variety thereof are not decentralized. There should not be any fallacy around this, as it might be fatal for a project. While some opponents to this statement might claim that decentralization can have a degree, and of course, permissionless blockchain is more decentralized.
Let us put it simply. If there is someone between two counterparties in a transaction, and you can do nothing about this, it is centralized. In a public blockchain, if an ordinary user does not want to rely on a miner for their transaction to be included in a block, they can draft their transaction, and mine a block themself. If the block is valid, the network will accept it. Of course, mining nowadays requires enormous computational resources, but there are no technical or formal barriers to it — you don’t need to seek permission to mine. In DLT, users of the network have different roles and authority, and ordinary users are not able to create and validate blocks. There is nothing wrong with having a centralized system; it is just a matter of understanding what you are dealing with.
Permissioned DLTs can be decentralized only from one perspective, i.e., by having a consortium of independent members (organizations, companies, etc.) running the network with the exclusive authority to create blocks. Having a few affiliated companies controlled by one beneficiary will not make it decentralized.
And keep in mind, any consortium structure with independent members can be decentralized but only for these members — it will always be centralized for all those outside of the consortium.
Is DLT a cartel?
A consortium (private/permissioned) DLT can be considered a cartel. Sooner or later, an antitrust body may question this. A safe strategy would ensure that the terms and conditions of the consortium were built in compliance with the antitrust laws.
By the way, to be completely centralized system is much safer. But a centralized system will never achieve the same level of reliability and credibility that blockchain can. It will be vulnerable as any other centralized system is, and here is why.
A centralized DLT is not immutable. The ledger can be rewritten arbitrarily by the one (or more) who controls it or due to a cyberattack. Because of its open and competitive nature (mining, staking, etc.), any blockchain can achieve immutability and hence its records will be credible. Thousands of independent nodes can ensure an unprecedented level of resistance to any sort of attack.
Usually, it comes next after the discussion about immutability. How to correct a mistake? What if you need to change your smart contract? What if you lost your private key? There is nothing you can do retroactively — alteration in the blockchain is impossible. What’s done is done. In this regard, the DLT is usually the opposite of an alternative to blockchain. You will hear that DLTs can be designed so that those who control the network verify transactions on entry and therefore, non-compliant transactions are not allowed to pass through. But it would be a fallacy to think that censorship in the network will ultimately exclude all mistakes and unwanted transactions. There will always be a chance for a mistake. Then what? A retroactive change as the last resort? But if you can alter history, you undermine the whole idea of blockchain. No other technology can ensure such a level of the immutability of data. It is not one of the advantages of blockchain — this is its distinguishing advantage.
Nevertheless, immutability is perceived as something that impedes its legal application. Say, your circumstances changed, and you need to alter the smart contact. The answer to this is the proper design of an application that does not undermine the immutability of the ledger. The smart contract should be designed in a way that the user can attach a new transaction to reflect a change toward the previous one. Blocks are firmly chronological and only the latest transaction will reflect the current state of affairs, while all previous transactions will be a historical reference. You don’t need to change history. The blockchain is a public repository of evidence for everything that happened. There are different methods of designing applications that address all possible legal issues; for example, this and this academic paper proposed solutions to manage property rights in blockchain registries. These issues are also discussed in the series of articles that I published last year.
Permissioned is not blockchain
If anyone questions it regarding your system, they will be right. Further discussion about why permissioned is not a blockchain can be found in this academic paper, but in a nutshell: Not every chain of blocks is a blockchain. Connecting timestamped chunks of data with hashes was invented by Haber and Stornetta in 1991. But nobody has ever called it “blockchain” because blockchain is more than just a chain of blocks. It is about how these blocks are created and validated. Blocks that are created are the result of an open, decentralized and uncensored competition. This is the definition of blockchain and this is what Satoshi Nakamoto designed. Hence, anything that is centralized (permissioned, private, etc.) is whatever but not blockchain.
Unfortunately, anyone is free to attribute the word “blockchain” to any technology they want, as there is no legal copyright or any legal protection to this word. DLT proponents tried hard to erase the boundary between these concepts. But it is only a matter of time until a few high-profile knockdown hacks of private DLTs show the real difference between DLT and blockchain and dramatically change the situation. There is a big difference in how many nodes ensure the security of the network, i.e., a handful of known nodes in the DLT network, or thousands and anonymous nodes around the world in the blockchain network.
We can argue about this on the theoretical level, but when it comes to losing money due to vulnerabilities in the system, nobody will listen to enthusiastic speeches about DLT. People will start asking questions. If you use “private/permissioned,” you should be ready for this.
If you still want permissioned
A safe strategy would be to use the word “DLT” in all communications. It might not address possible vulnerabilities, but you can then say: “We had never said it was blockchain.” By the way, ENISA (the European agency on cybersecurity) always uses “distributed ledger” instead of blockchain in their reports. Conversely, their colleagues in the National Institute of Standards and Technology in the United States used “blockchain” in their earlier report.
Do you want to create your own public blockchain network? It is not necessarily a good idea unless you have reliable technology and a robust plan. First, [permissionless] blockchain does not mean safe by default. To achieve a decent level of immutability and resistance to attacks (hence, credibility and a high capitalization of your coin), you need thousands of independent nodes all over the world. If you have enough resources to create your community on this hard path, your network will survive and you will reap the rewards. But what are the odds?
If you are still considering creating your private or permissioned network, think about how this infrastructure will be maintained. If this is solely your network, you can have a solution to this because its maintenance can be covered by the commercial applications that you develop on it. But you have to understand — the network maintenance is completely on your shoulders.
If you have a consortium of members, how do they redeem expenses on infrastructure? In a blockchain, there is a native mechanism to this — cryptocurrency. Independent nodes compete to mine coins. This is how the whole infrastructure is created and maintained. Those who develop applications on the blockchain need to worry about fees, not infrastructure.
But how about your DLT? Is your DLT only for private use among the members of the network? In this case, the end must justify the means, so the reason why independent players on the market created their own DLT network must cover the cost they bear to create and support it.
Consider another story about DLT by members who develop a network for outside users. Inevitably, you will need to design a viable economic model for the network members. No one will spend their resources for nothing or the resources will be applied unfairly — you will end up with a common tragedy. A possible solution to this is to create a native token of the network — say hello to cryptocurrency.
Private DLT o a blockchain?
Is a permissioned/private DLT better than a blockchain? This is not an appropriate question. They are different and their use depends on what you are trying to achieve. But it would be a fallacy to attribute the features of blockchain to a permissioned DLT.
Leading existing blockchains can provide you with reliable infrastructure for an application. The idea that immutability impedes the application of blockchain is a misconception. On the contrary, it is the major advantage as no other technology can provide such a level of credibility to records. Various methods exist to create mature applications without bumping up against the immutable ledger.
A solely controlled DLT is centralized and therefore requires as much attention to cybersecurity as any other centralized technology. A consortium DLT is decentralized for its members, but will always be centralized for outside users (if, of course, the DLT is designed for public use). At the same time, the use of such a DLT can be fruitful in a private application among independent members, but be careful with objectives as it can be considered a cartel and questioned by antitrust bodies.
Visa Announces Layer 2 Payments Channel for CBDCs and Stablecoins
Credit card giant Visa is delving into cross-chain interoperability for digital asset transfers with the announcement of a Universal Payment Channel.
On Sept. 30, Visa’s Global CBDC Product Lead, Catherine Gu, wrote that the company’s research and product teams are working on a new blockchain initiative called Universal Payment Channel (UPC).
The cross-chain interoperability hub will connect different DLT networks to facilitate transfers of digital assets.
Gu used the example of splitting a bill between friends using different types of money, such as a central bank digital currency (CBDC) and a stablecoin like Tether. She described it as a kind of universal adaptor for money:
“Think of it as a “universal adapter” among blockchains, allowing central banks, businesses, and consumers to seamlessly exchange value, no matter the form factor of the currency.”
Visa to Settle Cryptocurrencies?
Visa is confident that digital currencies will be a part of daily financial life in the future. The payments giant is also confident that there will be more CBDCs launched, even if the United States is still dragging its feet on that front.
Visa’s UPC aims to connect all of these newly released CBDCs and stablecoins in one cross-chain platform to enable seamless transfers. The UPC hub would connect dedicated payment channels between blockchains such as CBDC networks for different countries or vetted private stablecoin networks.
Gu also pointed out that there were certain transaction speed advantages that Visa could offer over existing public blockchains that are much slower, though she didn’t name names. The new platform would act as a layer 2, processing transactions off the main chains.
“UPC’s specialized payment channels would be established off the blockchain and leverage smart contracts to communicate back with the various blockchain networks, delivering high transaction throughput securely and reliably and improving speeds overall.”
The UPC solution aims to serve as a network of blockchain networks, she added, “adding value to multiple forms of money movement, whether they originate on the Visa network, or beyond.”
There was no mention of the ability to transfer cryptocurrencies such as Bitcoin or Ethereum, but the infrastructure laid out would most likely permit it. Visa referred to BTC as digital gold earlier this year and is clearly eager to be a part of the space.
Cardano Partner COTI Launches Visa Debit Cards
In a related development on Sept. 30, digital fintech platform COTI announced new products that will provide Visa debit cards and bank accounts to users.
In July, Visa approved the first debit card that would allow Bitcoin payments for the Australian market.