In the last two years, the cryptomint industry has undergone a paradigm shift as developers, projects and users have begun to apply Bitcoin Code to increasingly innovative and intriguing use cases.
Among them, the tokenization of artists, sports stars and big personalities stands out as one of the most unusual recent trends because traditional sports, entertainment and modern technologies like the Blockchain seem an unlikely pair. However, the tokenization of sports contracts, sports IP, stars and players is actually the next logical step in the evolution of the Blockchain use cases
What exactly is „tokenization“?
In a sense, the use of Blockchain tokens is a way to create a digital representation of a right, using a Blockchain ledger (the right can be the ownership of an asset or any kind of negotiable rights). Similar to the way stablecoins, such as the Universal United States Dollar (UPUSD) and Tether (USDT), represent ownership of an asset worth one US dollar held by Tether somewhere, tokenized rights represent rights in/from systems.
These digital representations of tradable rights, known as tokens, can be easily transferred between individuals with the same ease as sending a Bitcoin (BTC) payment, essentially allowing anyone to buy, sell and trade ownership of virtually anything without having to go through any intermediaries within the market and the original token issuers. They therefore greatly reduced market friction. In addition, tokenized rights can be integrated into all systems, allowing unlimited integration.
Tokenization, what it is and its impact on our digital world
These tokens are usually created through smart contracts in the Ethereum Blockchain with different smart contract standards – ERC-20, ERC-721, ERC-875, ERC-1155, ERC-1400, etc. Depending on the type of rights granted to the tokens, token issuers choose different smart contract standards for fungible, non fungible or semi fungible tokens.
Smart non-expendable token contracts have been used to give real estate, art, stocks, cars and more as tokens; they are rapidly gaining popularity as a way to bring sports personalities and celebrities closer to their fans, while potentially opening up new and exciting avenues for investment and entertainment.
Spencer Dinwiddie tokenized his contract
Perhaps the most prominent example of a tokenized sports contract occurred earlier this year when professional basketball player Spencer Dinwiddie tokenized a portion of his $34 million contract with the Brooklyn Nets, creating a unique tokenized investment opportunity, which was realized on a platform known as Dream Fan Shares.
In essence, Dinwiddie divided a portion of his contract with the Brooklyn Nets into 90 SD8 Professional Athlete Investment Tokens, which can be purchased by reputable investors for $150,000 each. In this way, Dinwiddie can access up to $13.5 million of his three-year contract, $34.4 million up front, while investors receive a tokenized bond that pays 4.95% APR – paid as a lump sum at maturity.
By providing a 4.95% interest rate, the Dinwiddie three-year bond pays much more than most other financial instruments and certainly more than most government or corporate bonds, giving investors the potential to generate lucrative returns, while Dinwiddie can extract money from its contract much faster than any other possible method.
Dinwiddie is currently the first big name to use the Dream Fan Shares platform to launch his own tokenized debt instrument, but there are plans to launch a similar token for both famous artists and influential people, opening up an even wider range of stars to decentralized investments.
The potential for bringing fans closer to their favorite athletes through tokenized investment models goes far beyond simply securing an attractive interest rate for the