Cryptocurrency Adoption in Sports

Technology development has resulted in noticeable changes over the years, including the emergence of mobile applications, social media platforms and networks, and improved modes of payment. Also, cryptocurrencies and blockchain technologies have emerged and continue to be used in different industries, including the sports sector. Cryptocurrencies are digital currencies that utilize blockchain technology to secure and record all transactions. Bitcoin and other cryptocurrencies are used in sports to promote transactions without using physical currencies such as American dollars. The advent of blockchain and cryptocurrency technologies has led to the rapid growth of the sports sector (Lv et al., 2022). For example, major football clubs in the Premier League, including Manchester City, Aton Villa, Leeds, Manchester City, Everton, and Crystal Palace, have adopted blockchain and cryptocurrency. FC Barcelona has also used blockchain and cryptocurrency to generate revenue, sell tickets, and provide fans with club fan tokens.

The sports industry is expected to revolutionize blockchain technology as an acceptable form of financial exchange. The purpose of this paper is threefold:

• First, establish how blockchain technology and cryptocurrency impact the sports industry economically and socially.
• Second, describe how club fan tokens can potentially change the way fans engage with their clubs.
• Third, discuss fans' issues with the increasingly corporate nature of major sports leagues and teams.

Blockchain Technology and Cryptocurrency

Cryptocurrency can be described as a medium of digital exchange that utilizes encryption techniques to secure and control the development of monetary units and verify the transfer of funds (Houben & Snyers, 2018). Bitcoin is the most common cryptocurrency in the world, resulting in the invention of blockchain technology. Therefore, cryptocurrency acts as a medium of exchange, such as the American dollar, and it is electronically created and stored in the blockchain through encryption techniques to promote the creation and transfer of funds (Houben & Snyers, 2018). Cryptocurrencies such as Bitcoin have no physical form, are not controlled by a central bank, and lack intrinsic value.

Yaga et al. (2018) explained that "Blockchains are tamper-evident and tamper-resistant digital ledgers implemented in a distributed fashion (i.e., without a central repository) and usually without a central authority (i.e., a bank, company or government)" (p.1). Based on the definition, blockchain is a digital ledger developed without a central repository and a central authority. Blockchains' role is for users to record their transactions, and once published, the transactions cannot be changed. Blockchains were conceptualized in 2008, and the technology was widely known following the launch of Bitcoin (one of the leading cryptocurrencies) in 2009. Also, "Blockchains simply distributed digital ledgers of cryptographically signed transactions grouped into blocks" (Yaga et al., 2018, p.1). Blockchains are tamper-proof because they comprise digital ledgers that host cryptographically signed transactions grouped into blocks. The blocks are also hard to modify and change, making them more reliable and effective in cryptocurrency.

Impact of Blockchain Technology and Cryptocurrencies on the Sports Industry

Blockchain technology and cryptocurrency can positively affect the sports industry economically and socially. The sports industry is fast-growing, and it is a suitable niche for using blockchain technologies and cryptocurrencies. The PR Newswire estimates that by 2024, the global sports industry will be valued at US$253.465, resulting from a compounded annual growth rate of 8.1% (Lv et al., 2022). Boggs (2022) pointed out that "sports as an industry has realized the potential that cryptocurrencies and blockchain technologies can bring to monetize fan engagement further, attract sponsors, and engage a global market in ways that were unimaginable decades ago" (p.1). Thus, the potential economic benefits of cryptocurrencies and blockchain technologies include attracting sponsors, engaging fans, monetizing sports, and being part of the global market. Teams, clubs, and sporting bodies worldwide invent new ways to survive in the innovative digital age, including the blockchain sector, to meet fan expectations. For example, in 2014, BitPay and ESPN Events collaborated to promote using Bitcoin in the sports sector (Boggs, 2022). BitPay has also, in the past, sponsored the Saint Petersburg Bowl, a football game in the United States for colleges to promote the use of Bitcoin in sports.

Major sports organizations, sponsors, and sportsmen and women worldwide continue to recognize the potential of using blockchain technology and cryptocurrency to promote fan interaction, offer new revenue models, and streamline existing operations. Bitcoin and Ethereum are the leading cryptocurrencies in the sports industry, supporting revenue generation, fan interaction, and streamlining processes. Lv et al. (2022) posited that "some foreign companies use blockchain technology and cryptocurrencies in sports to promote sports competition performance and betting practices. Sports betting sites and companies use Bitcoin and other cryptocurrencies as an appropriate approach for revenue generation and helping society. Bernstein (2018) contended that she proposed intelligent contracts and blockchain technology in the sports industry to replace traditional sports contracts. Therefore, blockchain technology and cryptocurrency can significantly transform the sports industry by converting conventional agreements into smart contracts and improving business transactions. Grow and Grow (2017) contended that using blockchain technology and cryptocurrency in sports could help protect sports trade secrets. In the professional sports industry, protecting trade secrets is a significant challenge. Still, the advent of blockchain technology promises its applicability in safeguarding commercial data from being shared and leaked.

Sports are conducted globally and across borders, and blockchain technology and cryptocurrency can significantly reduce transaction challenges. Yu (2018) studied sports' extensive data integration and transmission paths in the sports industry supported by blockchain technologies. Sports organizations have realized the potential benefits associated with the utilization of blockchain technologies and cryptocurrencies. Zhou et al. (2018) explored blockchain technology and cryptocurrencies in the sports industry and perceived the two as innovative ideas for the sector. The findings indicated that sports blockchain significantly positively impacts cross-border transactions, particularly for Esports and other international competitions.

Furthermore, blockchain technologies can protect intellectual property rights in the sports sector (Zhou et al., 2018). Huang et al. (2019) studied the core value of blockchain technologies and their utilization in the sports industry. The findings suggested that although innovations, blockchain technologies were applicable in the sports industry and had a transformative effect. Blockchain technology can promote intellectual property rights, including protecting sports logos. Zhang and Zhang (2019) conducted a study to determine the applicability of blockchain technologies in modern society for protecting sports logos. The findings supported the idea that blockchain is a practical innovation that can protect logos from being copied by other parties.

The use of blockchain and cryptocurrencies is expected to transform the sports industry worldwide significantly. Sharma (2020) explains that "As blockchain and smart contracts become more commonplace in businesses around the world, it is only a matter of time before the sports industry also evaluates the use cases of blockchain?technology" (p.1). There are continued considerations for using blockchain technology to improve the sports industry positively. With a revenue of more than $1.3 trillion in the sports sector, blockchain can harness big data and fan engagement. SportyCo is an example of a London-based blockchain startup that will "allow investors to invest in professional athletes with the help of smart contracts and distributed ledgers" (Sharma, 2020, p. 1). Therefore, investors can use the blockchain to invest in sports and athletes, increasing the sports industry's efficiency and flow of finances. Blockchains and cryptocurrencies are as reliable as banks and are used for financial transfers, supporting the Ultimate Fighting Championship pay-per-view streams, and authenticating users online (Sharma, 2020). Based on these findings, blockchain technologies can economically and socially impact the global sports industry.

Bitcoin, one of the initial cryptocurrencies, has been used to purchase players in the sports industry. For example, at the onset of 2018, "Harunustaspor, a Turkish football club, became the world's first football team to purchase a player using Bitcoin, and the player, Omar Faruk Kiroglu (22 years old), received 0.0524 in Bitcoin (￡385) and 2,500 (￡470) as part of the?deal with Harunustaspor" (Boggs, 2021p. 1). Thus, blockchain supports the use of Bitcoin when making financial transfers of players in the football sector. Additionally, bitcoin is used to pay players salaries because of its convenience and reliability. For instance, in July 2018, Gibraltar United Football Club players were paid using cryptocurrencies and blockchain technologies in partnership with Quantocoin (Boggs, 2021).

In collaboration with the TIXnGO, Lancashire Cricket?successfully offered a blockchain mobile tickets platform used by fans to purchase their tickets through the online platform. In 2020, SecuTix activated secure mobile tickets for international and domestic fixtures at Old Trafford 2020. The purpose of using blockchain technologies and cryptocurrencies was to develop a unique smartphone-encrypted ticket to reduce fraud and scamming. Also, the encrypted ticket is traceable, and as a result, the risk of counterfeit tickets is prevented, saving the football clubs millions of dollars lost through fraud and counterfeiting of tickets. Blockchain technologies and cryptocurrency applications in sports have simplified ticket transferring or reselling processes for the end-consumers.

Blockchain has gained traction in the Esports ecosystems. With a projected " annual growth rate of around 14% with the number of casual viewers and Esports enthusiasts rising to 557 million" (Protokol, 2020), Esports is fast-growing, attributed to the young generations. Blockchain allows stakeholders to connect peer-to-peer by eradicating intermediaries and complexities. Other benefits of using blockchain in Esports are increased trust, improved transparency, and accountability. For example, fan club members have firsthand experience of what is happening in their Esports network (Protokol, 2020). Smart contracts are also enhanced by blockchain technologies, which help eradicate the risk of unfair distribution of prize money and game developers failing to be paid. Therefore, blockchain offers flexible fan engagement, reduces potential fraud risks, and ensures that members can participate in Esports regardless of their geographical locations.

Impact of Club Fan Tokens on Engagement with Teams and Clubs

Club fan tokens are sports cryptocurrencies used to reward fans, engage them, and promote exclusive access to sports. Jaiswal (2022) explained that club fan tokens were "digital assets that enable sports teams, leagues, clubs, associations, and players to strengthen fan engagement" p.1). Therefore, club fan tokens are digital assets that help teams ensure that the club remains in touch with their fans distributed in different parts of the world. The advantage of using Club fan tokens is the ability to connect with fans because they lack the freedom and opportunities to link directly in most cases. Examples of clubs that have embraced fan tokens are Aton Villa, Leeds, Manchester City, Everton, Crystal Palace, and FC Barcelona.

Club fan tokens "provide fans exclusive access to sports content, a closer association with the team or club concerned, and monetary rewards" (Jaiswal, 2022). The club fan tokens are provided in the form of cryptocurrency, and unlike virtual currencies, they are supported by blockchain technology. Therefore, fan tokens allow users exclusive access to sports content and easily connect with the club and team. Jaiswal (2022) further explained that club fan tokens effectively connect fans with their respective teams and clubs. Instead of fans supporting and cheering their team in clubs, bars, and restaurants, club fan tokens provide an online platform for fans to have exclusive access and viewership regardless of their geographical location.

Football clubs such as Manchester City and FC Barcelona have integrated club fan tokens to raise revenues. Also, these teams have improved engagement and interaction of the club, team, and players with their fans across the world. For instance, in 2020, FC Barcelona "generated 1.2 million euros ($1.3 million) with its inaugural sale of "fan tokens," which were sold to the fans in the initial round (Fox Sports, 2020). The fan tokens were sold within two hours, indicating that FC Barcelona fans were interested in interacting and engaging with their club and team. The use of blockchain technology in sports to provide fans with virtual currencies allows interaction with the players, participation in a virtual ecosystem, earning points, and discounts. According to Fox Sports (2022), the "virtual tokens earned buyers exclusive voting rights in club-specific polls and the chance of winning rewards that could include watching Barcelona games as VIP guests or meeting with team players" (p.1). Thus, other than generating income for the football clubs, fans club tokens allow the fans to gain the power to vote, watch games as essential guests, and attend meetings with players. In support, Kshetr and Voas (2018) noted that blockchain technologies created tamper-proof voting audit trails that reduced voter fraud. Also, blockchain-enabled electronic voting (BEV) is based on blockchain technologies to increase voter access.

Fan club tokens are sufficient assets that assist clubs in overcoming the hurdles of distance when communicating with their respective fans (Jaiswal, 2022). Tokens also provide fans with a sense of involvement and participation in the club's decision-making, which is achieved through voting rights. Fan tokens issued by Aton Villa, Leeds, Manchester City, Everton, Crystal Palace, and FC Barcelona have given buyers exclusive voting rights (Fox Sports, 2022). Fan club tokens also allow the fans and subscribers to be involved in the goal celebration song and select the training kit color. With more than 450 million fans, FC Barcelona can reach its fans through blockchain technology. As a result, blockchain technology utilization and integration in sports assist clubs and teams in engaging, involving, and growing their international fanbases.

Corporate Nature of Major Sports Leagues and Teams

??Major sports leagues and teams are more centralized, and their corporate nature prevents interaction and engagement of the fans. Most clubs and groups operate based on the traditional aspects of the British and American cultures. As a result, fans need more ability to interact with their players and make significant decisions related to their clubs and teams. However, adopting blockchain and crypto is more likely to change this positively. For example, fan tokens and crypto-assets have played a significant role in decentralizing the power and engagement of fans (Boggs, 2021). The fans will develop the power needed in voting and decision-making. A fan engagement token gives fans and viewers exclusive access to sports and influence over specific decisions for the sports teams (Fox Sports, 2022). Furthermore, the tokens give the fans the right to vote on matters related to charity initiatives, training grounds, and kit designs. Fan club tokens are similar to membership cards, offering special VIP treatment to fans.

Effect of Blockchain and Cryptocurrencies on Other Industries

Various industries have been influenced and changed by utilizing blockchain and cryptocurrencies. For example, Cryptocurrencies and blockchain technology are the next big thing to be experienced in the world after the internet. The financial sector is already being affected by Cryptocurrencies and the underlying blockchain technology. According to CBInsights (2021), "As digitized, secure, and tamper-proof ledgers, Blockchains could serve the same function, injecting enhanced accuracy and information sharing into the financial services ecosystem" (p.1). Therefore, Blockchains are believed to provide reliable and accurate platforms for supporting cryptocurrency in the banking sector. Banks such as JP Morgan Chase have entered the blockchain ecosystem through the JPM Coin designed to facilitate financial transactions.

Citigroup and Goldman Sachs have also conducted experiments with cryptocurrencies and Blockchains. CBInsights (2021) further explained that stock trading and hedge funds worldwide had been disrupted by cryptocurrency and blockchain technology. For example, T?.com, an Overstock subsidiary, has integrated "cryptographically secure distributed ledgers with existing trading processes to reduce settlement time and costs and increase transparency and audibility" (CBInsights, 2021, p.1). Crowdfunding is also conducted online using blockchain technology and cryptocurrencies such as the?Ethereum blockchain to fund Braid film. Other companies, such as Coin List, have collaborated with Protocol Labs and AngelList to provide digital assets by assisting blockchain companies to create legal and compliant Initial Coin Offerings (ICOs).

The manufacturing industry has embraced cryptocurrency and blockchain technologies for business transactions. For example, Tesla was the first electric car manufacturer to accept Bitcoin as a form of payment for its products. The company has embraced blockchain technologies and cryptocurrencies for business transactions. PricewaterhouseCoopers [PwC], 2021) explained that manufacturing industries are more interested in blockchain technologies than cryptocurrencies. The benefits of using blockchain technologies in manufacturing include reduced costs, increased production, improved traceability, enhanced security, and greater transparency. PCW (2021) established that manufacturing companies depend on blockchain technology after digitalizing their operations because it is tamper-proof and prevents data modification and hacking.

Blockchain has also impacted the music industry positively. For example, cryptocurrency is being used in the music industry to promote access to entertainment and music and protect copyrights. CBInisghts (2021) explained that "Entertainment entrepreneurs are turning to blockchain technology to make content sharing fairer for creators using smart contracts, whereby the revenue on purchases of creative work can be automatically disseminated according to pre-determined licensing agreements" (p.1). As a result, blockchain effectively supports intelligent contracts, purchases of music and entertainment material online, and licensing of contracts and agreements. Furthermore, Spotify in 2017 acquired Mediachain, a blockchain startup that created a "decentralized media library to enable identifications of songwriters, promote copyrights, and enhance royalties' payments (CBInsights, 2021). De Leon and Gupta (2017) explained that cryptocurrency and blockchain technologies promote speedier payments of articles through Bitcoin.

?Conclusion

Blockchain technologies and cryptocurrencies are transformative and integrated into different sectors, including manufacturing, banking and finance, arts, photography, and sports. Blockchains act as digital ledgers for supporting cryptocurrencies, including Bitcoin. Major sports organizations, sponsors, and clubs have embraced blockchain and cryptocurrencies to support revenue generation, fan interaction, and streamlining operations. Also, sports blockchain significantly positively impacts cross-border transactions, particularly for E-sports and other international competitions. Bitcoin is used to purchase players and pay their salaries in major leagues. Club fan tokens are used in significant teams and clubs such as Aton Villa, Leeds, Manchester City, Everton, Crystal Palace, and FC Barcelona. Tokens also provide fans with a sense of involvement and participation in the club's decision-making, which is achieved through voting rights. Also, club tokens give the fans the right to vote on charity initiatives, training grounds, and kit designs to use. The music, banking, and manufacturing industries have embraced blockchain technologies for speedier transactions, transparency, and accountability. The benefits of blockchain are numerous, and more industries are expected to integrate digital currencies for financial transactions and ensure stakeholders' responsibility.

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