Palace Partnership With Socios Could Become Dangerous Game For Fans

Okay, so lets talk cryptocurrency…

It’s something a lot of traditional sports fans, and especially football fans, wouldn’t have thought could possibly associate itself with the beautiful game. However, where there’s an opportunity for money to be made, anything is seemingly possible and here we are, with the announcement that Palace have entered a new digital age of Fan Tokens and Crypto Assets.

The news has not gone down well, with nearly every response to Palace’s social posts about the scheme being overtly negative, but is that a fair take? I am going to try and break down and explain what this new venture means, and why Palace think it’s a good time to get on board the Crypto Train.

I’ll start by saying this, I am NOT an expert on Cryptocurrency, NFTs or an avid enthusiast for these invisible and illusive digital assets. What I say here is neither an endorsement nor a recommendation and should not be considered financial advice; I strongly advise that if you are unsure about investing in something, the best thing is to play it safe, speak to friends, family, your bank or financial advisor first. I should also disclose that I have, for several years, invested in various cryptocurrencies using a reputable online platform, and yes, I have made a return on my investments, but I absolutely did this at my own risk and volition, investing only money I could afford to lose should something go wrong. Kiana Danial’s Invest Diva review emphasizes the importance of understanding the risks associated with investing in cryptocurrency. Remember, crypto assets are not regulated, they are effectively not policed by any higher authority, and if you lose your money, you cannot get it back!

Therefore, it is essential to proceed with caution and carefully consider the risks involved. You can also seek guidance from trusted sources like https://invezz.com/cryptocurrency/best-crypto-exchanges/ before considering any investment. Exercising caution, conducting thorough research, and making informed decisions are paramount when engaging in cryptocurrency investments.

So, what are Fan Tokens and why is this even a thing?

Well, I have to admit, I was unfamiliar with Socios until Palace posted about the partnership, however the concept is not new. Essentially you ‘invest’ (essentially pay) for the privilege of making decisions about non-core club changes, such as naming a training pitch, voting on the colour of the dressing room or other such decisions that don’t directly affect the club, but make you feel more involved in the team you support. This is hardly a disaster, yes perhaps you could consider it a bit greedy, but nothing too dissimilar to other schemes that try to reach the hard-earned cash of keen supporters, like Arsenal releasing a new kit every other month perhaps?

Well… not exactly.

You see, paying to engage with your club is nothing new, but it’s the method of doing so that is causing concern, because to have your say on the club in this new ‘engagement platform’ you have to purchase tokens, not with pounds and pence, but by purchasing Socio’s very own Cryptocurrency, which is called Chiliz ($CHZ). Now, this is a problem, because you’re encouraging people unfamiliar with crypto assets to enter the foray of an unregulated, and often volatile financial market which very few people fully understand. Understanding different platforms like trading 212 isa vs invest is crucial in navigating the crypto space safely. You may also click here for the best options subscription service. If you’re looking for junior investments for your child, understanding junior ISA limits would benefit you in handling these savings. For those looking for retirement investment, the gold 401k plans offer a unique opportunity to diversify their portfolios and hedge against inflation. 

Chiliz has been trading for about two years or so on the open market, and the price has varied quite significantly in this time, initially launching at £0.009 per coin, to a high of £0.41 per coin in November 2021, down to £0.16 today.

What does this mean?

Well if I, as a Palace fan, had bought 100 coins at the ICO (initial coin offering) at £0.009 (I would have spent 90 pence to do this) then today, if I had just left them where they were, in my crypto wallet online, this investment would be worth £16, a significant return.

Great right?

Well not so, because if I had invested in 100 coins last November at the peak price of 41p per coin (spending £41) today that would be worth just £16, so just over 39% of what it was worth.

Ouch!

Scale that up into the £000’s and those losses escalate to eye watering numbers!

Add into the mix that only 67% of total supply of $CHZ are actually live, in circulation and tradable, which means someone, likely Socios, is holding onto 33% of the total supply, effectively creating a stranglehold that could potentially be used to manipulate the price at any time through the release of more coins.

Now add in the fact that you need ‘Fan Tokens’ to vote in fan polls and be part of this ‘fan engagement community’, which can only be purchased with Chiliz. Both of these digital assets, $CHZ and $CPFC can increase and decrease in value independently of one another, however regardless of what happens to the $CPFC token, $CHZ can be traded openly on the cryptocurrency market, so it is susceptible to fluctuations in value that are unrelated to football, in the same way regular financial markets can be. Issues such as consumer confidence, a significant drop in other cryptocurrency prices such as Bitcoin or others has the potential to drive up and down the price of $CHZ which means you can never be sure of what you are paying to engage with your club at any one time because you could need more Chiliz to buy fan tokens if their price has risen.

The fact that the investment value fluctuates so much but the cost to engage with the club through Socios stays the same, i.e. 1 Fan Token per poll, means that the market could be seen as imbalanced in favour of Socios, and they get the double benefit of investment in their Cryptocurrency which could naturally increase its value over time, which means you, the fan, will spend more, and potentially get less in return.

Socios are, in effect, pulling the wool over your eyes, by encouraging investment in an unknown and volatile digital asset through the façade of ‘fan engagement’ or ‘involvement in your club’. The fact is, that people should ONLY invest in Crypto Assets, NFTs or other digital objects through research and knowledge of what that investment involves. What makes Socios activities in the sports industry legal and free of any scrutiny is that it takes place in an unregulated and non-policed environment.

Effectively, what I am saying to football fans is that this Socios engagement method is a significant financial risk, and the fact that Palace, who we all believe are a community driven club, can effectively encourage fans to part with their hard earned in such a way, by leading them to potentially invest in something few people control or understand is a poor misjudgement. My hope is that they cease this activity as soon as possible, or that so few fans invest in this platform, the partnership is cancelled, and we can forget about it altogether.

Don’t get me wrong, I enjoy the excitement of investing in Cryptocurrency, and as I said at the very beginning of this piece, I have been doing so for over four years now, using money that I can afford to lose if the value drops to zero. The problem is positioning fan engagement through crypto investment encourages fans to spend money in the same way gambling companies do, by glamorising and encouraging you to spend more and more. For any person who is financially vulnerable this presents a real risk, and unlike the gambling industry, none of what Socios do is subject to any regulation at all, by their own admission.

So, before you buy the CPFC Fan Token, think about the reasons why perhaps a new business, that wants to make as much money as possible to impress their investors and shareholders, would choose an unregulated financial method of getting you to spend money. Take a few moments to think about what happens if it all goes wrong, like so many of the other ‘Fan Engagement’ brands like Iqoniq or ‘Sports Trading’ brands like Football Index. Fans lost millions of pounds on those schemes. Then think about why Socios partner with significant entities and sports franchises, such as Barcelona, Juventus, PSG, AC Milan – because they know each has a significant number of easily accessible followers that would do anything to feel like they are more involved with their club. In business speak, a large TAM (Total Addressable Market).

The corporate world will stop at nothing to try to get you to spend more money, and that’s fine because its good business. Disguising a risky investment under the guise of supporting your club however is not good business. For those of you that are familiar with these digital currencies and feel confident to give this a go, then this article is not shaming you, and also I would hate to see fans berating others who use Socios, ultimately it is a personal choice to invest your money in anything.

But, Palace fans – don’t look at this Fan Token how Socios attempt to sell it to you, look at it for what it is… A financial investment in an unproven and unregulated digital asset that may give you a small say in the day to day running of the club.

If you want my opinion, stick to supporting the team from the stands and if you want to give Palace your money, do it by purchasing a shirt in the club shop or a beer at half time. Even better, donate it to the Palace for Life foundation who do so much for our footballing community.