Tokenization refers to the process of transforming real assets into tradeable digital contracts that live on a blockchain.Blockchain technology can empower individuals to tokenize their intellectual property licenses (e.g.This enables fans to invest in lesser known athletes who aren’t initially drafted or highly recruited.
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In return for the initial funding, successful athletes could pay fans interest on their investments, potentially in the form of a dividend or income service agreement.
Funding and sponsorship of athletes already occur through Go Fund Me’s, family members, and other grassroots campaigns, but tokenization enables fans to get rewarded for their faith and capital provided to athletes. There is still a significant earnings gap between the average athlete and the few well-established, contracted ones.
This is the second post of a three-part series about how blockchain technology will improve the sports industry.
Each part discusses new and exciting trends at the cutting edge of blockchain technology and sports. A token is an entirely programmable digital asset that can represent anything, including shares in a bond, ownership of a piece of real estate, or participation in an investment fund.
This isn’t a new concept, the Green Bay Packers have a publicly traded stock.
Generally speaking, fan ownership does not provide real benefits to the fan, other than bragging rights.Voting rights could be distributed to all shares or limited to certain types of token holders, similar to preferred vs common stock shares.Holding ownership tokens could provide other benefits, like digital collectibles, private insights from sports analysts, or discounts from partner promotions.Tokens can be programmed with specific guidelines drafted by the athlete, in conjunction with sponsors, or factor in other stakeholders.Player tokens could potentially provide dividends or act as a bond in which athletes eventually purchase their tokens back with interest.One of the most exciting potentials for tokenization involves fractionalizing a major or minor league sports team.