Demystifying Blockchain

Demystifying Blockchain

Q&A with James Newman, Director of Corporate Affairs for Chiliz &

With more than 15 years experience in communications and regulated industries, James Newman, Global Director of Corporate Affairs, managing external affairs for Chiliz and and our CEO, Neil Joyce caught up at SXSW to discuss, debate and ultimately explode the myths around Blockchain, starting with asking the all important question…WTF is blockchain?  From this very lively and thought provoking one on one chat, James shares his view on the power of Web3.0 and just how crucial of a component it is when it comes to improving fan engagement.

Read the interview below.

The FRI 2023 report provided strong evidence that fan demand for Web3.0 propositions is high, despite current adoption. What do you think is key in supporting this?

I think there has always been strong demand from global fans across sport, media and entertainment to access and engage digitally without the limitations of the physical capacity and geographic locations of stadiums and the live event. You can see that from global viewing figures and social media followings. Therein also lies a wider issue, clubs are beholden to Facebook, Google, Amazon and Apple to connect with those fans, whilst the optics of shares, likes, views and TV ratings currently do not translate to a direct engagement with fans. The biggest clubs in the world have global fan communities, however the clubs have yet to find an effective way of building a direct relationship with those communities and making them feel engaged and recognised for the role they play. Web3 propositions, whether fan tokens or NFT based community memberships, offer a way for those clubs to build a direct to community relationship.

We are still early days in the proposition, for example at since we launched with many major premier league, Serie A and La Liga clubs, we have grown the engagement opportunities immensely, however we are still scratching the surface. There’s a lack of awareness and understanding around web3 technology, whenever the word “blockchain” or “crypto asset” is added to a project it attracts many misconceptions, sometimes including from the early adopters! I think, as with many new technologies, such as the use of the internet, real mass adoption will be driven by exciting use cases. No one ever taught us how to use the internet, but we started using it as there was cool stuff to do there, and so we need to keep growing and the adoption will come. 

2) )How would you explain blockchain technology to someone who is unfamiliar with the concept, considering that limited fan and consumer understanding is currently a barrier to its adoption?

Blockchain technology just refers to the way that proof of ownership is verified and demonstrated. On a blockchain, transactions and activity, such as someone buying a token or an NFT, are verified by a block of computers rather than verified or recorded by one single centralized computer or system (think of a CRM system or a database that you manage yourself – This is centralized and would rely on you or one individual keeping it up to date). There are many benefits to blockchain, such as security and transparency. Other big benefits include the ownership mechanics and how participants on the blockchain can be recognised and rewarded for being an active member of the community. As it’s the members of the blockchain who verify what happens on the chain, rather than an individual.

3) What makes blockchain the perfect method for clubs to connect with fans globally?  

The demand from fans is there, they want a direct relationship and the ability to play a more active role in the community. Sports teams are very good at the sporting part of their operations both around the matchday but also around the active role they play in their communities. But what they often don’t have is the technology infrastructure, the people, process or data required to build a global and scalable membership or community program. A web3 based membership allows clubs to build a direct relationship with that community. The community already exists; but the clubs don’t own that direct relationship. A membership program that exists on blockchain / web3 allows clubs to join up many fan and engagement experiences, whether it be streaming, e-commerce, social media, or a rewards and voting app like, and build an eco-system of fan experiences.

4) Will you explain the concept of Fan Tokens, how are they different to NFT’s? 

Fan tokens are fungible, which means that one is created the same as another. While NFts, non fungible tokens, are not fungible, they are unique and one offs. That is why NFTs are often used for owning art or memorabilia.  A token based model allows clubs to build a scalable and flexible system of membership. Providing different levels of access and rights for token holders with many different levels, e.g 1-5, 5-10 and so on. Rather than any rights or utility that would be assigned to a unique asset like an NFT, a token model not only allows clubs to continually update and evolve their offering to fans, it also allows fans to move from one level to another.

5) What do you think brands or clubs testing Web3 should focus on in 2023?

First and foremost the value exchange. 

I think we would be the first to admit that we’re just beginning these digital memberships and web3 propositions. I see lots of people suggesting that web3 projects should offer access to the community for free while the adoption grows and the utility grows. In some cases we have seen clubs offer free tokens to their existing members of existing schemes. But I think it’s more important to focus on getting that value exchange right from day one. Fans don’t mind paying for tickets, or for access to content or experiences as long as that experience is something that they enjoy and they feel brings them closer to the team. If clubs can offer rewards or access that fans across the globe want, web3 gives them a great way to monetise that engagement in a sustainable way.

6) How do brands remain authentic as they enter the Web 3.0 and NFT space?  

My personal view is that you can take the web 3 and blockchain part out of that question and you still have the important question that all brands, particularly in sport i think, have to answer. How do they remain authentic?

Football fans in particular have very strong b*llshit radars, and for good reason. Clubs need to offer a good value exchange, whether that’s the price of a pie and pit or if it’s a digital membership that for the price of five tokens, you get a chance to vote on a new kit and get early access to the sale of that kit.

7) With the increase in regulation, how is and the industry coming together to both implement and support these areas? 

Regulation for blockchain is needed for sure. However crypto / blockchain covers a broad church, it’s the technology that is used to deliver a number of different products, from bitcoin to stable coins to owning your house or a piece of art via an NFT. Regulation that is tailored to the risk profile of each type of crypto asset, such as utility or membership based tokens, is essential. Regulation that focuses on transparency, consumer protection, and due diligence will be important to ensure that bad actors are removed from the space and that trust with fans and all stakeholders increases.

 8) Highlight of 2023 so far?

We’re still a very young company and at the beginning of our journey for what we can offer fans and clubs through the app. We’re deepening the value of  fan polls, such as kit designs and allowing fans to name the new stand or training grounds for their clubs, but I think one area I have been really excited about this year has been our move into bringing web3 technology to sports memorabilia. 

This year we launched a landmark activation with Serie A, where as soon as a goal was scored in the Super Coppa final, the ball was taken by the referee and handed over to our tech team. The ball is then chipped with an NFC chip which allows fans to scan and relive the goal and the match memory. Blockchain is used to provide proof of authentication, meaning not only do fans have the transparency and governance of blockchain to demonstrate their ownership of an authentic Supper Coppa final ball, but they also have the digital experience, the video of the goal and the data around the match. It’s a digital experience as well as a physical one. 

We then gave Inter Milan token holders the chance to receive the balls as rewards through the rewards app. Rather than showing off your memorabilia collection in your man cave at home, fans can carry it around with them in their digital wallets, to show their friends but also re-live it anytime they want. I think it’s an exciting example of how web3 technology can enhance traditional fan experiences like collectibles and memorabilia, and make it more exciting and engaging.