Why Crypto and Formula One are a Bad Mix (and where it should be invested instead)
Tell me it’s 2021, without telling me it’s 2021…
“We are very excited to welcome FTX, one of the world’s leading cryptocurrency exchanges, to the Mercedes-AMG Petronas F1 Team. Their innovative spirit and creative energy in such a rapidly developing global industry make them a well-matched partner in our own relentless pursuit of performance.”
- Toto Wolff, Team Principal and CEO of Mercedes-AMG Petronius F1 Team
Okay, now tell me it’s 2022…
“As a first step, we have suspended our partnership agreement with FTX. This means the company will no longer appear on our race car and other branded assets from this weekend. We will continue to monitor closely the situation as it evolves.”
It took barely a year to go from the excitement of a sponsorship deal worth an estimated $27 million, to logos and fascias being scrubbed.
Since then, Red Bull, Ferrari and AlphaTauri have all split with crypto-related partners. A not inconsequential run given that, according to RoadAndTrack.com, as recently as November 2022, nine out of ten F1 teams had some sort of crypto deal. With many crypto currencies collapsing in price in recent months, the concern is that this will reflect badly on Formula One and their other sponsors, and maybe even destroy the credibility that crypto has worked so hard to build.
For us, this is just another example of the media MASSIVELY missing the point…
Crypto Isn’t the Problem
Imagine (it’s not that hard if you try) that the financial system went through another 2008 crash and, as a result, a slew of banks and related organisations pulled their sponsorship deals with various sporting organisations.
Now imagine, that the media headlined this as:
Formula 1’s Money Sponsorships Are Crashing
Ferrari removes dollar sponsor from partner list
F1 questions validity of pound after losing banking sponsor
Nonsense, right?
When the economy crashes, no one says, “Oh dear, looks like money is a really bad idea.” Why? Because the problem isn’t the money (the method of tracking what people own) the problem is corruption and/or incompetence by financial organisations and governments.
In the same way, the much-publicised crash of FTX and various other platforms, along with the price of many tokens, isn’t about crypto — decentralised token protocols — it’s about some of the CENTRALISED trading and investment platforms that have been built on top of them.
With some exceptions, crypto-related sponsors moving away from F1 is a knock-on effect of the FTX collapse, and not a problem with the underlying tech.
Remember, crypto was invented as an alternative to corrupt and incompetently-run centralised financial systems; not as a means to make tech bros rich.
It’s easy to tell the difference.
Centralised crypto projects want to emulate the IRL financial systems and mirror their corporate domination. Whereas decentralised crypto projects want to create an alternative to the status quo, or a means to power new technologies that could not function in any other way.
Crypto and Formula One are a bad mix because crypto, on its own, doesn’t make the kind of money that can pay for multi-million dollar sponsorship deals. It’s only the centralised applications, chasing outrageous profits, that have sufficient clout for this kind of arrangement. And its these same “businesses” that are sullying the noble goals that crypto and the blockchain are seeking. And it doesn’t help that the media keeps conflating the two.
Crypto sponsorship, ultimately, is simply doing what most big corporations do… chasing the money and enjoying the champagne right up until the day that something goes wrong and it all burns down.
Rant over. Here’s how we make things better…
The Next Generation is the Future of Crypto
Broadly speaking, it’s the younger generation who are best-placed to understand and appreciate why crypto and blockchain technology are trying to achieve. These are the ones that are, for example, embracing challenger banks and new innovative ways of lending and investing.
Rather than trying to convince an older, jaded, cynical generation, who assume crypto is just going to repeat the wider financial market’s disasters, crypto pioneers should be looking to the youth culture to attract a brighter, more open-minded audience.
Which is why, we’re pleased to report, that Exorde Labs is now a proud sponsor of the 4L Trophy.
The 4L Trophy: The World’s Biggest Rally (for 18–28 year olds)
If you’re not familiar with it, the 4L Trophy is an annual rally across the Moroccan desert. Covering around 6,000 kilometres, thousands of young people race to deliver tons of school furniture to Moroccan children.
Competing in pairs (driver and partner), each car has to travel to their destination using only the maps and instructions provided. GPS is strictly prohibited.
In keeping with its charitable, socially-conscious theme, the rally is also used as an opportunity to teach ways in which the drivers can protect the environment.
Aside from the fact that this event is enormous fun, this is, we believe, exactly the kind of event that crypto and related Web3 project should be sponsoring. It’s focused on the younger generation, it invites them to think about social and environmental issues, and its about active participation rather than simply sitting on the sofa watching millionaires drive in circles (J/K, we love F1 as much as the next person 😊)
Now in it’s 26th year, this year’s race runs from February 16–26, 2023. If you’d like to learn more, you can visit the official website at www.4ltrophy.com.
What Next for Crypto Sponsorship?
Despite crypto skeptics rubbing their hands with glee over the collapse of F1 sponsorships, their joy may be short-lived. In recent times, crypto prices are climbing again, and while the collapse of the world’s second largest crypto trading platform was always going to create waves, this is only one part of a large and diverse blockchain-based industry.
A few days before writing this article it was announced that Crypto Casino is partnering with F1’s Alfa Romeo team, in a deal worth $100 million.
It’s hard to get excited about yet another gambling platform getting involved in sport, even if it is a crypto-based one. But at least it suggests that crypto is starting to warm up again.
Let’s just hope that in the future we see more worthwhile crypto projects investing in more worthwhile projects.
