Blockchain In Motorsport - How Will It Work?
The terms “Cryptocurrency” and “Blockchain” are easily the most overly popularized words in today’s living rooms and media. So, I wanted to take a look at some ideas and see if they could actually be applied to motorsport. I believe we will see the blockchain technology impact the sport in quite a few ways, such as how teams send data to the series officials, for example. For the world championship series they could, for another example, see a positive impact on how the teams track shipping of their equipment from race to race. In this article I want to focus on two ideas that could work, and potentially become reality much sooner than readers would expect, maybe even in the within the next couple of years.
When it comes to technology in motorsport, Formula E now stands out from the others. They are one of the few series in our sport that realistically still has technology coming out of racing and going into road cars. Almost every other series is now going the other way, with technology benefiting racing only and very little, if anything, being leveraged to passenger cars. (Granted LMP1 still has a legitimate claim, but with one manufacturer it is safe to say Formula E has a much greater impact here). One other area where Formula E does very well is in fan engagement. Between their social media presence, which Formula 1 should take notes on, and their fan boost campaign, they have a big focus on allowing their fans to have an impact in their sport. This is where I can see Formula E “Green Coin” potentially coming into play. One of the very cool things that blockchain technology offers is that it rewards those who contribute. In sports and on social media we are always looking to reward our most loyal fans. If a sport isn’t doing this as a fundamental business strategy, then they need new leadership. I see an intriguing new angle here to truly increase fan engagement through the cryptocurrency concept.
So, how would it work? Well possibly, a series like Formula E either develops their own new currency (coin), or they partner with an existing coin that ‘s in circulation today. These coins initially have a set market price that can be sold to the series management, sponsors, and the fans of the series. After the initial sell, the coins can then be traded on the free market and prices will fluctuate just like currency on a forex market. The key here comes after this ICO (initial coin offering). The series can award fans who vote on fan boost, buy tickets, or post the most about their series on social media additional coins that were kept by management during the ICO. Since the coins have real world value, this can develop into a tangible value to the fans. In addition to the coins having value, drivers and teams could accept the coins as a payment, for example, for team gear and other branded items for sale. Fans could also use the coins to pay for tickets to race events. Down the road, manufactures themselves could accept the coins as not only a means to buying team gear, but potentially even as payments for their cars. That last point may seem far fetched now, but it could develop into fantastic marketing opportunities for the manufactures with how popular blockchain is in the stock market. Companies such as The Eastman Kodak Company or Long Island Ice Tea have seen their stocks jump by over 100% by just announcing blockchain focuses. Most brands are looking for ways to associate their names with these buzzwords. (See: https://www.forbes.com/sites/chuckjones/2018/01/15/kodak-and-long-island-ice-tea-embracing-blockchain-is-just-like-dot-com-in-1999-it-didnt-end-well/#4c9472a87b64). This provides a creative way for them to associate with the blockchain phenomenon and as a result, provide true customers and fans amazing incentives.
Formula E and other series could also look to partner with select charities worldwide that have a focus on supporting our environment with “green” initiatives. They would have these charities accept the coins as a donation, so that fans could also choose to do some good for the environment while supporting their favorite series, as well as having some fun themselves!
The next way the cryptocurrencies could come into effect within motorsports is my personal favorite, and one I truly believe you could actually see happen within the next year. In the early days of ICO’s, a few individuals created their own coins as a sort of “personal” currency for others to use. This mean they created and gave out their own currency to others so the initial buyers of the coins could come back and spend the coins in return for mentorship or advisement I can absolutely see drivers announcing their own ICO’s. Now they do need to be a bit careful here in the U.S. as the SEC doesn’t allow businesses to sell or create coins that represent equity in a business (yes every professional driver themselves are actually a business), but they do allow these business’ to create coins that serve a purpose. A driver could ultimately leverage his or her coins to pay for racing sponsorships.
So the first question you probably have is, why would a driver want to have their own ICO? Well it’s a fantastic way to raise money for their passion and their career, in fact in the past many drivers have “sold shares” in themselves to raise money. Most famously, the late great Justin Wilson did this on his way to Formula 1. So once again, with an ICO the driver would set the amount of coins he or she would want to sell, and what the market price will initially be set at. The driver’s would have the intent for their coins to have multiple uses. Sponsors can pay the driver’s services in the future by using his coins as a form of payment, grassroot drivers can pay for coaching from this driver by paying in his coins, and drivers can again give the coins they hold to fans and companies for engagement with them on social media or at race events. The drivers could also work with their sponsors to accept these coins as a form of payment for their products. The companies themselves would have an extra incentive to do this, because if they hold more coins themselves, without the plan to sell them on the market, then they are taking supply of this coin away from the market and therefore theoretically driving up the value of these coins. In turn as the value goes up they can themselves pay for team services, driver time, or alternatively use it themselves to drive social media engagement with fans of their own brand.
These are just a couple of my ideas for how blockchain could influence the motorsports racing world. Can you see yourself supporting your favorite series or favorite driver by buying and trading their coins? There is no doubt that the world is generally overhyping this technology, just as was done during the early dotcom era. But beyond the hype is a technology that will shape this world just as the internet shaped the early 2000’s, and personally I am very excited to see what is to come. I have no doubt this technology will effect the motorsports world in many more ways than just the two ideas I have described above.
I would love to hear from you guys on how you see this technology touching motorsports and your comments on my thoughts above! Also as my weekly blog comes out I would love to answer questions from you guys every week. Any motorsports questions on your mind could be interesting for me to tackle in future blogs!
See you all at a track soon, Dion von Moltke