Cryptocurrencies can take many forms. You probably know all about Bitcoin, which acts as both payment and a store of value, and Ethereum, which you can use to pay for goods, but is also a platform for other projects.
But another type of cryptocurrency works more of a reward system. These cryptos, known as cryptocurrency fan tokens, work differently from Bitcoin and Ethereum in that they grant holders access to membership perks for football clubs, YouTube content creators, musicians, and more.
So, what is a cryptocurrency fan token, and is it worth buying one?
What Is a Crypto Fan Token?
A cryptocurrency fan tokens are like membership tokens for a specific sport, creator, club, musician, or organization. Crypto fan token holders typically gain access to voting decisions on club matters, access to exclusive content, ticket raffles, and much more.
Cryptocurrency fan tokens are often compared to non-fungible tokens (NFTs) in that they represent ownership, membership, and entry to a specific group. However, most crypto fan tokens are fungible, i.e., interchangeable for another crypto fan token. In that, crypto fan tokens are more similar to Bitcoin or Ethereum, in that each token is exactly the same and, therefore, easily tradable.
The value of a cryptocurrency fan token comes from what the crypto fan tokens offer. Most fan tokens are owned and minted by the sports club (or content creator, musician, artist, and so on). The more benefits a fan token offers, the more likely it is to succeed. By extension, the more fans a project has, be that a football club or YouTuber, the more chance there is for user buy-in, and again, the chance for success increases.
But it isn’t always that simple, as you’ll see in a moment in our crypto fan token examples.
How Do Crypto Fan Tokens Work?
Crypto fan tokens work fairly similarly to a regular cryptocurrency. First, you research the fan token you want to buy, head to a cryptocurrency exchange that lists the token, and make your purchase.
And, like other cryptocurrencies, crypto fan tokens are subject to the whims of the crypto markets. That is, they’re volatile and are just as likely to rise as to fall, and there is absolutely no guarantee that you’ll end up with any money at all.
Crypto fan tokens mean different things, depending on the project.
The world’s largest cryptocurrency fan token site is currently Socios, which enables sports clubs to create cryptocurrencies for their supporters. For example, on Socios, you’ll find crypto fan tokens for soccer clubs like Manchester City, Paris St. Germain (PSG), and Juventus, Formula One teams Aston Martin and Alfa Romeo, eSports teams like Heretics and OG, cricket clubs from the Indian Premier League, the New England Patriots, and more.
Indeed, Lionel Messi’s PSG signing fee included some of the club’s cryptocurrency fan tokens!
Once a user buys crypto fan tokens for their favorite team (or even just as an investment), they gain the chance to vote on various matters at their club. There is no set list of matters applicable to each and every club issuing crypto fan tokens, but some of the options include:
- Club bus designs
- Dressing room designs
- Music played after scoring a goal/points
- Playing a message in the dressing room before the game
- Ticket raffles/rare merchandise drops
- Exclusive fan token content
But Socios isn’t the only site offering crypto fan tokens for sports clubs. You’ll also find crypto fan tokens on Binance, where you can buy crypto fan tokens for three soccer teams at the time of writing.
XCAD Network: Fan Tokens for Content Creators
So, while Socios and Binance Fan Token focuses on sports teams, other platforms are branching out and offering crypto fan tokens for content creators.
XCAD is one such platform, giving YouTube creators the chance to create unique cryptocurrency tokens that their fans can earn for watching their content.
XCAD, which runs on the Zilliqa blockchain, has already launched crypto fan tokens for YouTube stars such as KSI, W2S, Mr. Beast, Enes Batur, Morgz, and many more with combined YouTube views in the billions.
Viewers can download the XCAD browser extension, then when they watch the content creators signed up to the XCAD network, they’ll earn more crypto fan tokens for that creator. Fan tokens networks like Socios provide holders greater interaction with their favorite club, while networks like XCAD allow fans to earn crypto fan tokens for watching the same content as they usually would—but with an added financial bonus.
Should You Buy Crypto Fan Tokens?
As with any cryptocurrency investment, cryptocurrency fan tokens are a risk. A 2021 BBC report found that soccer fans had pumped $300 million into cryptocurrency fan tokens, though some tokens have decreased massively in price since their launch.
Crypto fan tokens for Manchester City (UK) and Lazio (Italy) dropped by 50% and 70%, respectively, though both from relatively high launch prices.
That said, some of the fan tokens have delivered better returns than Bitcoin, with tokens from Inter Milan (Italy) and Trabzonspor (Turkey) offering better gains than Bitcoin throughout 2021.
Furthermore, in many cases, the issuing sports club or team holds onto a large percentage of their tokens, distorting the market. The BBC report found that the top 13 clubs on the Socios platform hold a total of $1.9 billion worth of tokens, yet fans only own $367 million. The clubs issuing the tokens hold massive power over any potential investors, which is something any potential crypto fan owner should consider.
Finally, the rewards for crypto fan tokens linked to sports are limited in their scope. Experts believe that the balance of risk to rewards (i.e., how much you must invest to get a say in the running of the club) is also severely slanted towards the clubs, which effectively incur zero risk.
Always Research Before Investing in Crypto
Cryptocurrency fan tokens are an interesting proposition. On the one hand, you’re gaining access to your favorite sports team or helping your favorite YouTube creators.
On the other hand, your investments are always at risk. Despite the overall crypto fan token market increasing in value throughout 2021, and with many analysts expecting a promising 2022 and onwards, there is never any telling what a cryptocurrency or a cryptocurrency market might do.
As such, never invest more than you can afford to lose, and always do your research before committing.
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About The Author
Gavin Phillips (999 Articles Published)
Gavin is the Junior Editor for Technology Explained, a regular contributor to the Really Useful Podcast, and a frequent product reviewer. He has a degree in Contemporary Writing pillaged from the hills of Devon, and more than a decade of professional writing experience. He enjoys copious amounts of tea, board games, and football.