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Sports NFTs: What they are and how they work
Sports are an expansive genre in NFTs, including cards, games and collectibles.
Non-fungible tokens, or NFTs, have become useful tools in a wide range of industries. While many applications involve digital art, NFTs have secured a foundation within the sporting world. As a result, sports NFTs are one of the most popular categories in the sector.
What are sport NFTs?
Sports NFT projects combine sports and teams with NFTs and blockchain technology. NFTs, or non-fungible tokens, are crypto tokens used to represent a digital asset’s ownership. The tokens live on a blockchain — typically Ethereum — which makes them extremely secure, easy to authenticate and simple to transfer.
In comparison to cryptocurrencies, such as BTC and ETH or fiat currency, NFTs are non-fungible. This means that they have unique identifiers that prevent them from being copied or substituted.
Sport NFTs can be anything involving sports and blockchain tech, including collectibles, fan tokens, sports metaverse games and trading cards. Many sports NFT are officially licensed by major league sports like the NFL or NBA.
Due to their programmable nature, NFTs can be preprogrammed to provide fans with additional perks, generating more fan support and enthusiasm among teams.
How do sport NFTs work?
There are multiple types of sport NFTs, and how they work varies.
While not technically classified as NFTs, fan tokens are often grouped with NFT sports projects due to the level of interaction they offer fans.
These fan tokens allow fans to vote on internal processes of a team, such as choosing the team’s playlist before a game, designing a new training kit, or redesigning a club’s emblem. The more tokens held, the more voting rights a user has. Alternatively, some teams also allow holders to gain first access to tickets, merchandise and specific club discounts.
Developed by platforms such as Socios.com, fan tokens can be purchased for a range of teams worldwide including Juventus, Manchester City and A.C. Milan.
Sport NFT metaverse games
NFTs bring fans closer to the action, at least that’s the idea when it comes to sports metaverse games. By leveraging NFTs and the blockchain, game designers offer a level of gameplay not possible with traditional computer games.
The Formula 1 racing game, F1 Delta Time, allows players to race against each other on F1 race tracks from all over the world. However, every car within the game is purchased as an NFT. The addition of NFTs brings in a new level of complexity to an otherwise simple racing game.
The use of in-game purchases extends beyond cars. Players can change drivers, front wings, power units, rear wings, tires — all of which are represented by NFTs.
ZED RUN is another sports NFT project utilizing blockchain technology. This game focuses on horse racing. Each racehorse is represented by an NFT, to race against other players. Winning horses are entitled to cash prizes. Horses can also breed to generate new digital offspring.
Image source: F1 Delta Time
Sport NFT trading cards
Trading cards have long been integrated into the sports community. However, now trading cards are moving from the physical realm into a digital one.
Similar to physical trading cards, digital cards represent a host of sporting characters. In the form of an NFT, they’re easily stored and transferred on the blockchain. This means exchanges and trades can be completed in seconds with anyone, regardless of location.
A number of NFT companies have generated sporting card packs for teams around the world. Sports with tradable NFT cards include wrestling, car racing, football, baseball and basketball. Like regular trading cards, rarity, skill and fan sentiment determine NFT value.
Sport video clips
Sport highlight video clips are popular in the sport NFT sector. NBA Top Shot specializes in selling highlight reels of players, their tagline spouting “Rare NFTs of the NBA’s best moments.” Many of these highlight clips are iconic plays. On NBA Top Shot, you can buy packs including multiple video clips.
Sport NFT marketplaces
NFT sport marketplaces have the unique advantage of being officially licensed by a team or league, adding to their value and validity. Many mixed NFT marketplaces feature NFTs from smaller, unverified artists or projects, but sport NFTs can be backed by their official team or league.
One of the best examples of this is NBA Top Shots — a project created by Dapper Labs in collaboration with the National Basketball League (NBA). The collection depicts a range of highlight video clips from world-class basketball games. Some of these NFTs are exchanged for hundreds of thousands of dollars.
Image source: NBA Top Shot
Sorare is another example of an officially licensed marketplace and fantasy game, focusing on global football (soccer) leagues. It has 215 officially licensed clubs from around the world.
Users can purchase real-life players and build their own team. Each player is represented by an NFT, which holds a specific value. The internal play-to-earn model allows users to compete in tournaments for a chance at monetary rewards.
How to buy and sell sport NFTs
Buying a sport NFT starts with finding a marketplace that sells the NFTs you’re interested in: Basketball? Check out NBA Top Shot. Soccer? Visit Sorare — and so on.
Once you choose a marketplace, follow these four steps:
- Get a wallet. Digital wallets are used to hold and display digital assets. You have the option of software or hardware wallets — software typically being the free option with a browser extension download.
- Buy crypto. Most NFTs are bought with cryptocurrency, so you’ll need to go to a cryptocurrency exchange that’s approved in your state. Some marketplaces allow for fiat transactions, but it’s rare. Most NFTs are tokenized on the Ethereum blockchain, so you may need ETH to get the sport NFT you want. Exchanges require usernames and passwords, completing your know-your-customer (KYC) verification, possibly a government ID and other personal information.
- Create account for NFT marketplace. Most marketplaces require an account and connecting a digital wallet. After you create your account, you can start buying NFTs on the platform.
- Browse the NFTs for sale.
Marketplaces don’t charge users anything to explore projects or collections. However, buying an NFT means paying a gas fee — a transaction fee that powers the blockchain. These fees vary, and apply if you list, mint or sell an NFT.
After you buy an NFT, it’s either sent to your marketplace account or your digital wallet. If you want to sell it, access your assets in your account or wallet and follow the marketplace’s steps to sell it.
Most marketplaces have the following steps to sell an NFT:
- Select the asset to sell. If one of your NFT’s value has appreciated, you may be able to sell it for a profit.
- Choose a sale method. Marketplaces typically allow for auction or fixed-price sales. Auctions are often timed.
If you successfully sell your NFT, it’s sent to the buyer after verifying the transaction and paying the gas fee. Marketplaces may also take a small percentage of a final sale price, often between 5% to 15%.
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How to store and protect your sport NFTs
Your digital wallet is the first line of defense in protecting your purchased or minted sport NFTs. There are software wallets that require you download a browser extension, and hardware wallets that you plug into your computer generally costing around $60 to $200.
A digital wallet comes with a seed phrase, or master password, that’s required to access the assets in it. If someone gets that seed phrase, then they could take the digital assets in the wallet. Protect your NFTs with these tips:
- Never share your account information with anyone.
- Report any suspicious activity to the wallet’s company and only talk to a representative.
- Store your wallet’s account information and seed phrase offline.
- Use a secure Internet connection.
- Consider a cold hardware wallet that’s only online when plugged in for more security.
There are different kinds of wallets as well, such as hot (always online), cold (online when plugged in), and custodial and noncustodial wallets. A noncustodial wallet means you have control over where and how your wallet’s information is stored, whereas a custodial wallet means a third-party takes care of your passcodes for you.
How to make money with sport NFTs
NFTs are treated like an investment to many, though some simply collect them for fun. But if you’re looking to make money on NFTs, then consider these strategies:
- Hold and sell. Marketplaces often host exclusive, limited drops of NFTs. If you access these rare drops, then buying a limited NFT and attempting to sell once the value has appreciated could earn profit. However, this isn’t a guarantee and requires keeping a close eye on the market.
- Buy and sell quickly. A tactic that often involves riding the hype and value of a recently released project or NFT collection by buying and selling assets quickly, when prices are high.
- Create and sell your own NFTs. You could try your hand at creating your own NFTs and selling them to earn crypto and royalties. The original creator of an NFT can earn a percentage of subsequent sale prices, typically between 5% to 10% with each sale. However, many sports NFTs work because they are affiliated with a major sporting brand behind them.
Why buy a sports NFT?
A big motivation for buying sport NFTs is the potential to earn. However, other fans may only want merchandise associated with their favorite team. Common reasons for investing in sport NFTs include:
- Buying and selling rare NFTs for profit.
- NFTs for use in gaming, such as F1 Delta Time or fantasy football games.
- Fan tokens to give users real-life perks, such as tickets or team discounts.
- Collectible culture, similar to baseball cards.
What makes sports NFTs valuable?
The more useful an NFT, the more it’s likely to be worth. Ownership history and authenticity also contributes to a sport NFT’s value. However, rarity is typically the biggest factor in an NFT’s value and desirability.
Another key element when valuing sports NFTs is fan sentiment. An NFT may be rare, but if it represents something or someone that has lost favor with fans, the value will likely fall accordingly.
List of top NFT sport projects
|NBA Top Shot||Basketball|
|NFL Moments & Heroes||American Football|
|F1 Delta Time||Formula 1|
|ZED RUN||Horse racing|
|Socios.com||Fan tokens (varied)|
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