Stars of English football including Wayne Rooney and John Terry are promoting a form of collectable digital art to their fans, which some sceptics have warned is a volatile and risky form of investment.
Non-fungible tokens (NFTs) are digital tokens indicating ownership of a unique asset such as an artwork, a piece of music or a video.
Even though a digital image can be easily copied, NFTs serve as a certificate of “ownership”, with a record of who owns what stored on a public digital ledger known as “blockchain” – like with Bitcoin.
In recent weeks a number of high-profile football stars have started promoting NFTs on their social media channels.
What exactly is an NFT?
NFT stands for non-fungible token.While an asset that is fungible can be exchanged for identical or similar assets – a £10 note can be exchanged for two £5 notes, for example – a non-fungible asset cannot.It is a one-of-a-kind, or one of a limited edition collection.NFTs are not tangible, but serve as a sort of certificate of ownership for a digital asset, proving the buyer owns the original digital file.
How can someone prove they are the true owner of a particular file?
A record of who owns what is stored on the blockchain, a decentralised public ledger that cannot be altered, deleted, or destroyed.
How much can NFTs sell for?
Last year artist Beeple, whose real name is Mike Winkelmann became one of the world’s top three most valuable living artists when he sold an NFT for a record-breaking $69.3 million.“Everydays – The First 5000 Days” Sold at auction by Christies, the piece sparked a global debate over the future of art.Twitter founder [Jack Dorsey sold his first tweet] for a relatively modest $2.9m (£2.1m) earlier this year.
It read: “”just setting up my twttr”.
What are the financial risk involved?
Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses, the Financial Conduct Authority has warned.
Furthermore, there is no guarantee that NFTs can be converted back into cash.
Former England and Manchester United captain Rooney recently announced a partnership with Blockasset – a platform that bills itself as the “go-to NFT launchpad for elite athletes”.
Rooney published enthusiastic posts on his social channels expressing his “delight” at the deal, while fellow ex-skipper Terry has spoken of his desire to become part of the “NFT community”.
This week, Trent Alexander-Arnold, who plays for England and Liverpool, changed his Twitter profile photo to an a Blockasset NFT of boxing champion Muhammad Ali.
However, investment in NFTs is currently unregulated, and the Financial Conduct Authority has warned consumers investing in them need to be prepared to lose “all their money.”
Interest in the form has skyrocketed after the sale at auction house Christie’s of an NFT by digital artist Beeple for £50m , although former auctioneer Charles Allsopp told the BBC the idea of people buying NFTs makes “no sense”, adding “I think people who invest in it are slight mugs.”
Rooney features in what Blockasset claims to be the world’s first “multi-athlete generative NFT collection.”
Blockasset has said of its collection: “[It is] inspired by childhood memories of opening sports cards and stickers, not knowing which athlete you’ll land.”
In this instance however, all 10,000 NFTs were sold via Blockasset at 2 Solana (a type of crypto-currency) each, equating to about £360 each.
According to Blockasset, Rooney and the other sports stars or their estates will “profit from the initial sale of the item, in addition to collecting a royalty on future transactions”.
Yesterday, many of the Legend NFTs listed on resale sites had dropped in value to less than 1 SOL, or £180.
David Lee, an associate at Fladgate, which advises businesses and high net-worth investors on cryptoassets, told i: “There’s no guaranteed value of any of this.Consumers should be careful and ensure they understand what they are purchasing.”
Currently in the UK, there is no specific regulatory framework for digital tokens, including NFTs, to protect consumers.
The Financial Conduct Authority said it was unlikely to begin regulating NFTs as the body’s remit is decided by Parliament.
However, it added: “The FCA has continually warned of the risks of investing in cryptoassets.
If people invest in these types of products, they should be prepared to lose all their money and they are unlikely to have access to any redress or compensation schemes.”
Representatives for Rooney and Terry did not respond to requests for comment.
i has been told Alexander-Arnold did not receive payment for his endorsement of artist Dosbrak’s work for Blockasset and that he had a “genuine interest” in the art and the project..
