Football clubs want you to buy their cryptocurrencies: In August, the captains of Barcelona and Juventus made the first public exchange of football-related cryptocurrencies before kickoff at a friendly game between the two teams. The moment was designed to promote the clubs’ new fan tokens, a growing trend in European football that is offering cash-strapped clubs a new source of revenue but delivering questionable benefits to their fans.

Crypto meets football: Over the past 18 months, 24 European football clubs have launched crypto-based digital assets, a venture that the BBC estimates has netted clubs USD 350 mn in revenues. Some tokens operate as club-specific virtual coins that can be traded like any other cryptocurrency, primarily on exchange platform Socios, and using the fintech provided by sports and entertainment blockchain firm Chiliz. Others function more as non-fungible tokens (NFTs) — digital collectibles that are sold to fans.

How it works: Teams partner up with Chiliz to launch their own fan tokens or collectible digital assets on Socios. Fans first buy CHZ (the cryptocurrency accepted on Socios), and then use their CHZ to buy fan tokens, which can be traded on coin exchanges and on the Socios app.

Owning tokens gives fans mostly inconsequential but sentimental perks, like voting on what music should be played as players walk onto the pitch or getting a say on a question that they think should be asked to players at a press conference, with more tokens equaling more influence. Socios promises token-holders future access to exclusive events and the ability to vote on certain — so far unimportant —club issues. Barcelona fans got the chance to vote on a mural design for the team's changing room. Most other clubs are yet to explain how much democratization will be afforded to token-holders in the future.

Football crypto has the potential to be big: The top 13 clubs in Europe own tokens with a combined value of over USD 1.9 bn, according to the BBC, with Juventus and Paris St-Germain being the first to jump on board. Now, most of the sport’s biggest names are inviting their fans to buy into their own currencies, and national sports teams are starting to get involved too.

This isn’t just a football thing: Sports across the world — the NBA, NFL, and UFC in the US, Formula One, the Indian Premier League, and competitive video-gaming — have all jumped on the bandwagon and signed up with Socios to sell tokens to fans.

Socios is the fan token kingpin: The company works with more than 90 teams and franchises around the world, has 1.2 mn users, and has sold almost USD 300 mn worth of coins through its app. It is the partner of Europe’s biggest football teams, including Barcelona, Juventus, PSG, and AC Milan

But others are getting involved: Crypto exchanges Binance and Bitci are also making a play for the market and are so far providing tokens to a number of football clubs around the world, national teams, Formula One franchises and basketball teams.

Fan tokens are creating new digital revenue streams for clubs: Barcelona’s initial fan token offering in June 2020 sold out in less than two hours and generated USD 1.3 mn for the club. In the days leading up to Lionel Messi’s transfer to PSG earlier this year, trading volumes for PSG fan tokens soared upward of USD 1.2 bn, generating a rumored EUR 30 mn (USD 33.8 mn) in sales. The Argentine’s two-year contract with the French side included USD 29-35 mn worth of cryptocurrency fan tokens in his welcome package.

Covid could be an accelerator: Finding new sources of funding has become vital for many teams in Europe in the midst of financial distress due to covid-19. Even teams like Barcelona and Juventus, who have stayed at the top of the European game for years, are facing huge financial difficulties after last year’s lockdowns caused a sharp shortfall in revenues.

Managing your own currency also comes with risks: Despite the bns of USD of supply, users currently hold less than USD 380 mn. This is because clubs need to exert careful control on how much currency they release to the market to maintain its value. "If they sell too much at once, they run the risk of crashing the price,” one crypto analyst told the BBC. "We can clearly see this happening with the Lazio, FC Porto, Santos FC, and Manchester City sales."

Not everyone is buying into the hype, with critics accusing Socios of exploiting the fans’ relationships with their clubs. West Ham, one of the early football clubs to launch fan tokens with Socios in 2019, announced last year that it was ending its partnership with the platform without selling a single fan token, following widespread fan opposition. Supporters of Leeds United criticized the club’s agreement with Socios for encouraging fans to enter the unregulated crypto market.

… and luring people into buying into a product they don’t fully understand: In an investigation for the Athletic, UK-based sports columnist Joey D’Urso says that fan tokens amount to a crypto trading game that rewards savvy traders and blindsides crypto-illiterate fans. D’Urso argues that the trading frenzy around Messi’s signing on fee, for example, was a classic example of traders “buying the rumor, and selling the news.” And because clubs control 80% of token supply, it’s easy for them to control the market price and maximize their income.