Autor Cointelegraph By Gareth Jenkinson

Touchdown! Goal! Knockout! Crypto and sports collide in 2021

Cryptocurrencies and sport have continued to collide in 2021 with synergies between the two proving to be fruitful on a number of fronts.The relationship between the sports world and the various applications of cryptocurrencies and blockchain technology has slowly been expanding over the past few years. Humble beginnings of simple sponsorships building early brand awareness for exchanges and payment platforms have snowballed into worldwide recognition and collaboration between the sectors, with 2021 seeing a variety of different use cases come to the fore.From the basketball courts of the NBA to the soccer fields of Europe, crypto continues to build exposure to new users and markets. In this New Years Special, Cointelegraph highlights the ever-growing relationship between crypto and sport through 2021.Here comes the NFTsNonfungible tokens (NFTs) have become a household word over the past 12 months. The entertainment industry has been at the forefront of this expansion with artists, musicians, celebrities, brands, institutions and content creators diving headfirst into the NFT craze to serve fans and collectors their own unique digital collectibles. Sports have always been a mainstay of the entertainment industry, serving up unrivaled and unscripted moments that leave an indelible mark on fans around the world. In the past, one-of-a-kind collectibles and memorabilia gave lucky fans bragging rights over their friends and family. The emergence of NFTs has converted this to a digital domain where fans can acquire, trade and flaunt valuable NFTs on blockchain-powered marketplaces and platforms. The NBA has blazed the trail in this regard, turning video highlights from season games into NFT collectibles that have generated hundreds of millions of dollars of revenue through the NBA Top Shot platform. The most expensive NBA Top Shot NFT, a legendary card featuring a dunk from Lebron James, sold for a mind-boggling $230,000 back in October 2020. Those numbers are not to be scoffed at. And it only got better in 2021.The world of American Football has also entered the space at both a player and team level. Tom Brady has written himself into the NFL history books and has become a commanding figure in the business and entertainment world as a bi-product of his success on the field.He made headlines in April, launching his very own NFT marketplace called Autograph. The platform has onboarded the biggest names in American sports, as well as influential figures from the world of Hollywood’s actors, musicians and other entertainment figures to mint and sell unique digital collectibles.We’re talking about the likes of golf great Tiger Woods, sprint sensation Usain Bolt, skateboarding icon Tony Hawk, United States gymnast Simone Biles and, of course, Brady himself, all offering their own unique NFTs to collectors around the world.Coming next week on @Autograph: I’ve retired five signature tricks, offering them in a collection that will last forever. Here is one that I recently did for the last time: varial 540. This trick has caused me many whiplashes over 30 years but I had to see it through. @DraftKings pic.twitter.com/iK6T2vtTex— Tony Hawk (@tonyhawk) December 8, 2021Brady’s long-time NFL partner in crime Rob Gronkowski set the bar high with his own Championship Series NFT digital trading card auction before the launch of Autograph. The series consisted of four unique “GRONK Career Highlight Refractor Card,” each of which had 87 digital editions on sale, while a fifth stand-alone Career Highlight card was the prize card of the lot.The auction lasted two days and saw a total of 349 trading cards sold at auction, as well as the one-off Career Highlight card to 95 different owners. The total trading value of the auction was 1,014 Ether (ETH) valued at $1.8 million at the time of the sale. Gronk went on to join Autograph to launch other NFTs.English boxer Tyson Fury established himself as the best heavyweight in recent times after another crushing defeat of Deontay Wilder in October. Following that success, the burly British boxer launched his own NFT which was auctioned off for $987,000.In Europe, Sorare has established itself as a notable player in the football NFT and fantasy sports space. The Ethereum-powered marketplace facilitates the minting and trade of NFTs that have been hugely popular among football fans. Users can buy and trade digital player cards that reflect their real-life player’s performances. Collectors can build a five-man team made up of their digital player cards that compete in fantasy leagues.Socios is the other major player in the world of European football NFTs, digital trading cards and collectibles. The platform allows clubs to issue fan tokens on its proprietary blockchain that allows fans to vote on club decisions like kit changes, access exclusive content and get involved in other community activities. In 2021, Socios has sold $250 million worth of fan tokens since its inception while the market capitalization of the sports fan token space has increased by 60% in the last six months of the year. Sports brands are also looking to keep with the times, and the rise of the Metaverse has pushed two of the world’s largest sports brands into the space courtesy of strategic partnerships with industry participants.Adidas entered the NFT space by minting an NFT that will serve as a digital token that will give Metaverse users access to digital Adidas wearables. The NFT was made up of 30,000 copies, essentially tokens, that were auctioned. Its opening weekend netted more than 11,300 ETH in sales, worth $43 million at the time, as Metaverse users flocked to secure their Adidas swag. Impossible is (probably) nothing 10/10 pic.twitter.com/lHbwsthfZc— adidas Originals (@adidasoriginals) December 20, 2021

Determined to keep pace with its competitors, Nike followed suit by acquiring RTFKT, one of the biggest NFT collections on Opensea, in order to mint its own Nike wearables and items in the ever-growing Metaverse. Seen by millionsMarketing and advertising are big business and the world of sport has long been a prime means to reach large audiences to market products, services and offerings. Big brands have done it for decades to a great effect, and cryptocurrency firms and service providers are taking full advantage of it lately.Crypto.com’s branding can be seen on the soccer pitches of Europe’s biggest leagues, inside the massively popular UFC’s octagon and on the circuits of the gripping Formula 1 roadshow. The company has signed sponsorship deals with leagues, teams and organizations in all of these spaces to reach a varied and large viewership.Cryptocurrency trader and entrepreneur Sam Bankman-Fried and his cryptocurrency derivatives trading platform FTX have also enjoyed a good relationship with American sports this year. FTX acquired the naming rights to the Miami Heat Stadium early in 2021 in a $135 million deal that will last until 2040. From our fam to yours ❤️ pic.twitter.com/oHMg9VPIWF— FTX Arena (@FTXArena) December 25, 2021

The exchange also secured prime time commercial airtime for the 2022 NFL Super Bowl, one of the biggest sporting events in America, as it looks to attract new users. Coinbase, America’s largest cryptocurrency exchange, scored a big slam dunk with the NBA after securing a multi-year deal to be the exclusive cryptocurrency platform partner of the league and its various subsidiaries, associated leagues and brands.Rugby is a massive sport in South Africa and the country’s Springbok national team has a big support base being the reigning World Champions. When the British and Irish Lions toured South Africa, cryptocurrency exchange Luno ran a commercial that featured the Springboks’ director of rugby Rassie Erasmus coached viewers on “how easy it is to tackle Bitcoin,” as the exchange looked to target a large viewer base to begin trading cryptocurrencies on its platform. This is a prime example of localized and global advertising taking cryptocurrencies to broader audiences, which is only set to introduce more people to a space that hopes to move to mass adoption in the decades to come. 2021 has seen some major groundwork on this front.Turn that $ into BTCA number of sports stars have begun blazing a trail for people to begin accepting or allocating a portion of their salaries to receiving or buying cryptocurrencies. NFL players have made headlines again with contributions from Odell Beckham Jr and Aaron Rodgers, Trevor Lawrence and Saquon Barkley by either receiving or investing in cryptocurrencies. Related: 7 NFL players who chose crypto over cash salariesTom Brady pops up again here after he acquired an equity stake in Bankman-Fried’s FTX that will see him receive payments in cryptocurrency in addition to being a brand ambassador for the firm.Down under in Australia, baseball club Perth Heat signed a deal with Bitcoin payment processor OpenNode to pay some of its players and staff in BTC. Again, adoption is taking place in decentralized parts of the world.Weird and wonderfulThere have been individual instances where cryptocurrency and the sports world have collided. For a third time, Tom Brady is mentioned and for an equally good reason. In October, Brady became the first NFL quarterback in history to throw 600 touchdown passes. He whipped the ball to teammate Mike Evans who scored the touchdown. The Buccaneers wide receiver threw the ball into the crowd after he’d scored, handing over a priceless piece of memorabilia to a lucky fan.During the game, an official managed to chat to the fan and Brady went on to offer the lucky onlooker 1 Bitcoin (BTC) to give him back the historic ball. That 1 BTC was worth $62,000 while estimates of the value of the actual ball that completed the milestone were worth anything between $500,000 and a million dollars.It hasn’t been all good news with a few mishaps taking place through 2021. Manchester City and Barcelona, renowned in their respective leagues, had to cancel deals with smaller cryptocurrency firms for different reasons, which served as a reminder that the space is still nascent and some projects and firms may not deliver on the products and services they are looking to offer.Spanish football legend Andrés Iniesta was cautioned online by a Spanish regulator for promoting Binance on his Twitter and Instagram profiles. The National Securities Market Commission (CNMV) warned of “significant risks due to being unregulated products” in a Tweet in response hours later.It’s fairly innocuous but it does suggest that the integration of cryptocurrencies and associated offshoots into the world of sport can sometimes border on the realm of the unknown. Some things work fantastically and gain traction while others don’t enjoy the same success, but the adoption train still carries on going.

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A fair comparison? Ethereum growth outpaces Bitcoin in 2021

2021 has proven to be a fortuitous year for the world’s second-biggest cryptocurrency Ether (ETH), which has seen a fourfold increase in value over the past 12 months.In doing so, Ether has outperformed the appreciation of the preeminent Bitcoin and has gained an increased percentage of the overall cryptocurrency market by capitalization. While the wider cryptocurrency markets have enjoyed a year of relative gains, ETH’s increase in value has been in tandem with upgrades to Ethereum’s core protocol, laying down the final pillars for its transition to a proof-of-stake consensus protocol in 2022.Certain Ethereum Improvement Proposals (EIP) have been the center of attention for the wider Ethereum community and have proved to be pivotal for “The Merge” with the proof-of-stake Beacon Chain set to take place in 2022. The London hard fork was the most anticipated upgrade that introduced a handful of EIPs. EIP-1559 proved to be contentious due to the change of fee structures earned by miners and paid by users, and there were both positive and negative aspects brought about by the upgrade.A crucial factor was the built-in ETH burn mechanism introduced that destroys a portion of Ether used to pay a transaction fee. While some miners were unhappy to see a reduction in fees, the upside of the London hard fork was the deflationary action of the ETH burn mechanism. It is believed that this EIP and its deflationary mechanism will help increase the value of ETH in the months and years to come.The Altair upgrade followed London toward the end of the year, serving as the first update to the Beacon Chain since its launch in December 2020. This allowed various teams involved in the ongoing development of the Ethereum ecosystem to carry out a dry run of “The Merge.”Another driving force in Ether’s strong performance in 2021 has been the burgeoning decentralized finance (DeFi) sector, which has attracted a significant amount of capital. Ethereum’s blockchain runs a number of the largest DeFi platforms and this has had a direct effect on the value of ETH and the increased activity on the blockchain. Reap what you sowEthereum’s popularity as a blockchain platform is a direct result of the smart contract functionality underpinning the ecosystem. Smart contracts allow for a variety of applications to be created and run on the blockchain, allowing users to create their tokens, applications and platforms.While ETH is the proverbial lifeblood of the Ethereum ecosystem, the projects and applications running on the blockchain are largely responsible for the value being derived. As the saying goes, you reap what you sow, and the ecosystem is reaping the benefits of a blockchain system that has allowed seeds to blossom into valuable and popular DApps and platforms.Ben Caselin, head of research & strategy at cryptocurrency exchange AAX, offered some insights into the main factors that have amplified Ethereum’s strong year. Caselin first highlighted the variety of use cases that have helped ETH’s cause throughout the year: “We’re referring to stablecoins, DeFi, GameFi, nonfungible tokens (NFTs), meme coins, digital bonds, central bank digital currency initiatives, yield farming, liquidity pools and the metaverse.” He further added:“Ethereum carries each of these sectors and the associated capital with outsized market share. Ethereum’s value is established differently based on the activities it powers, while Bitcoin grows steadily as it sees adoption as a base-layer savings technology for a new global economy. Each moves somewhat in unison but they are fundamentally driven by different forces and conditions.”Mattias Nystrom, community manager at Ethereum layer-two payments platform Golem Network, shared his insights with Cointelegraph. Nystrom highlighted the sum of activity on the Ethereum network as the catalyst for its success this year: “While Bitcoin is primarily built for just payments, Ethereum is unique because of its underlying technology and this is starting to catch on as Web 3.0 begins its journey to mainstream adoption.”Mati Greenspan, crypto analyst and founder of Quantum Economics, told Cointelegraph that the performance of Bitcoin (BTC) and Ether are difficult to compare, given their widely differing use cases and ecosystems. Nevertheless, he admitted that the latter has seen a clear uptrend in value over the past 12 months:“Bitcoin and Ethereum are about as different as any two assets can be, aside from the fact that they’re both digital currencies. They have vastly different functions within their respective networks and each has unique buy and sell pressures.”Influential EIPs As Cointelegraph explored in November, Ethereum is on the final road to its move away from the energy-demanding proof-of-work (PoW) consensys algorithm to the proof-of-stake (PoS) Ethereum 2.0 chain.The Beacon Chain went live in December 2020, initiating the creation of the PoS Eth2 chain, which now has over 8,600,000 ETH staked and a little under 270,000 validators online. These validators will essentially take over the work of current-day miners in Eth2, processing transactions and maintaining the operation of the blockchain. Becoming a full node validator requires a user to stake 32 ETH, while smaller amounts can be staked in pools.One of the most anticipated Ethereum Improvement Proposals went live midway through 2021. EIP-155 was the subject of much debate, given the changes it introduced to the fee structures earned by miners and paid by users.A sore point was the built-in ETH burn mechanism that destroys a portion of Ether used to pay a transaction fee. Miners weren’t impressed, given that fees form a part of their incentive to maintain the network.Related: Ether’s growth as independent asset fuels ETH-BTC flippening narrativeThe upside of the London hard fork was the deflationary effect introduced by the ETH burn mechanism. As a result, every transaction sees a percentage of ETH destroyed, leading to more ETH being gradually removed from the ecosystem, a process that is envisaged to increase the scarcity and value of ETH as an asset.Caselin believes that the implementation of the London upgrade has played its part in attracting positive sentiment from investors, but also highlights some key distinguishing factors between Ethereum and Bitcoin:“The London Upgrade reiterated that the Ethereum project is well and alive and continues to be under construction — this is attractive to investors and speculators. It is better than some projects that have ranked high in the charts, but have little to show for in activity and providing actual services. The burn mechanism speaks to a narrative around inflation and borrows from the logic Bitcoin relies on.”Greenspan meanwhile was more objective in his analysis, suggesting that the average Ethereum user would have had little or no inkling of the effect of recent EIPs that have formed part of the looming merge between the current Ethereum blockchain and the Beacon Chain which is touted to happen in 2022: “Even though it’s possible the upgrade has had some impacts on the inner tokenomics, I don’t think it has affected sentiment very much.”Nystrom believes that the technical improvements made to the Ethereum ecosystem on its way to the Merge and the variety of applications running on its blockchain have proven its versatility, which was echoed in the value increase of ETH throughout the year:“ETH is built uniquely different from BTC and has shown much more technical progress in 2021. The crypto community knows for a fact that Ethereum is a more versatile asset with an entire ecosystem behind it and more room to scale and create ambitious, valuable projects over a longer period of time.”Markets still fragileDecember has been tough on global markets, which reacted sharply to the discovery of the latest COVID-19 variant identified by South African researchers. Traditional markets shuddered and this reverberated into the cryptocurrencies markets.BTC, ETH and a swathe of major cryptocurrencies suffered losses as this sentiment spilled over into the crypto markets and there was more bad news as inflation has been on the increase in the United States. Caselin offered a measured outlook, highlighting characteristic market reactions to major news and economic events and how this might benefit BTC more than ETH in the medium term:“Markets have always moved to the tune of news stories and events of economic significance, but longer trends are mostly driven by the fundamentals. […] We may not be in a bear market just yet, but there is every reason to believe that the growth we have seen over the past two years marks only the beginning. Long-term holders are still buying.” Greenspan highlighted events in the United States as a sign of the times and the reason for the recent market downturn, while admitting that the midterm for the cryptocurrency markets isn’t clear cut at this point: “While the Fed was printing money, social media was buzzing ‘brrrrr’ memes, now that liquidity is drying up, there’s a lot less noise from the peanut gallery. Possibly by the end of the year, we’ll get to see how deep this pullback actually goes. Or not.”

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