At a time of great economic strife globally, many investment vehicles have taken a battering in the past six months or so.
The more speculative of those have been the hardest hit, and cryptocurrency – which still divides opinion more than a decade after it entered mainstream society – has become an almighty bear market.
Losses since the tailend of 2021 now total an eye-watering $1 trillion across the crypto space, with the digital asset’s main player – Bitcoin – suffering seven straight value-losing weeks in a row for the first time in its history.
As Wall Street and casual investors alike look to sell their riskiest assets at a time when the cost of living reaches unprecedented highs, crypto has taken a hammering – in May alone, a number of major coins have essentially gone bust. Terra Luna, a so-called ‘stablecoin’, saw its value fall from $115 (£91) to $0.0002 in the space of 48 hours, costing investors millions.
The threat of a global market plunge is just one of the reasons why critics are so against the issuing of football fan tokens, which induce investors to buy into a particular coin in order to gain perks that are, it has to be said, questionable in their worth, i.e. selecting what song is played when the team runs out onto the pitch.
One of the most prominent football fan token platforms is Socios, which runs the crypto campaigns for the likes of Manchester City, Arsenal, PSG and Barcelona. Their tokens are powered by a cryptocurrency called Chiliz, which supporters have to buy into in order to unlock their token ownership.
And you can probably guess where this story is heading. In October 2021, a single Chiliz coin was worth £0.47. At the time of writing today, they are worth £0.09 – their lowest value since launch and a real terms loss of more than 80%.
A number of other clubs associated with Socios have also lost their investors significant sums. The most expensive fan coins under the firm’s umbrella – PSG and Man City – have lost 11% and 25% of their value in the past seven days, although Barcelona’s coin has rallied to gains of 7.5% in the same period.
Kieran Maguire, who runs the popular Price of Football podcast, has alerted Arsenal fans to the potential pitfalls of investing in the Gunners’ own fan token. He said:
“At a time of economic crisis, the last thing you want to do is put your money into those kinds of ventures. It’s an unregulated, highly volatile and easily manipulated market.”
And he also told The Guardian that crypto is little more than a cynical ploy on the part of football’s money men to access a new revenue stream.
“Clubs are thinking ‘can we find another way of extracting money out of that huge fanbase?’ That’s where tokens come in.”
Socios cover themselves by telling their customers that their fan tokens are not investment vehicles, and that money can be lost. And for some well-meaning but naïve individuals, these financial losses can be catastrophic.