Blockchain in Sports: Protecting Private Data and Creating Blockchain-Based Identities
Part 3: How athletes and fans can monetize their data while protecting their personal information.
This is the third post of a three-part series about how blockchain technology will improve the sports industry. Each part discusses new and exciting trends at the cutting edge of blockchain technology and sports.
- Part 1: Tech’s Impact on Sports and How Blockchain Improves Collectibles and Memorabilia
- Part 2: Fractionalized Fan Ownership, Athlete Crowdfunding, and Smart Contracts for the Sports World
- Part 3: Protecting Private Data and Creating Blockchain-Based Identities
The Basics: What is blockchain?
Blockchain is a powerful, open-source digital platform enabling “smart contracts” which automate the exchange of products, content, and money across peer-to-peer networks, all protected by cryptography. This underlying technology has numerous applications for sports.
At the heart of the blockchain revolution is the desire to remove central points of failure. Equifax’s breach of customer data is a prime example of a centralized failure. One of the key opportunities with blockchain technology is the potential to protect confidential or sensitive data while still enabling the ability to conduct data-driven analysis.
bASIC idea with a fresh twist: Player Data
It’s well known that data is the most valuable asset that exists today. It’s even more valuable when it relates to the outcomes of billion-dollar sports teams. Player data is valuable for performance analysis, injury prevention, and other various purposes. Imagine a team and player can understand their zone of injury. For example, when a specific performance metric drops into the “at risk zone” a player can be identified as more likely to get injured. At that moment players could be benched, given cryotherapy cooling treatments, or receive additional physical therapy.
I’m certain we can all agree that global companies need to do a better job when it comes to protecting customer data. After all, we’ve seen numerous hacks and breaches in the last few years that have impacted hundreds of millions of people around the world. This presents a large risk for sports organizations, players, team owners, and other stakeholders, all of which have highly sensitive data and personal information.
There are various opportunities for the intersection of health data and blockchain. In the most basic application, blockchain can be used for player records to collect, secure, and anonymized performance data. More specifically, sports organizations could use blockchain solutions to collect anonymized biometric impact data for injury assessment. Additionally, sports clubs could tie performance bonuses to player output. Players could eventually de-anonymize their data to sell it to research studies, sponsors, or the league.
Protecting and utilizing sensitive player or fan data requires the creation of a digital identity. This isn’t a completely novel idea. Our smartphones which hold our credit cards, photos, apps, and information are digital passports. However, blockchain technology enables a more robust and secure method to create digital identities. Take a knee and let’s dive deeper.
Under the Helmet: Fan Identity
If there’s one thing everybody knows about sports, it’s that there are stats based on other stats. For example, we can see the percentage that Russell Westbrook will get a triple-double (another stat), based on how many three-point shots he takes from the corner left arch.
Stats are even sponsored, such as NBA analyst Ernie Johnson’s “Neat-O stats of the night” segment which airs on the postgame show, Inside the NBA, so popular that it sometimes out-rates the preceding game. More meaningfully, player data has been used to revolutionize basketball and drive change in nearly every sport. However, this data mindset has struggled to convert into understanding a team or sports fanbase. Sports organizations and leagues neither know their fans very well nor fully understand the experience their fans desire (other than more championships, of course).
This gap has been noted by management in nearly every major sports league.
Doris Daif, Senior VP for customer data strategy at the NBA, remarks, “In the next five to 10 years, the consumer has to be king — and they haven’t been.”
The problem isn’t about data availability, it’s about the siloed operations of sports businesses, lack of interoperable data management, and a misaligned fan-sponsor-organization relationship.
In fact, sports organizations control very little of their fan interaction process. Sports teams and organizations typically don’t even directly sell tickets to fans, ceding that business to intermediaries like Ticketmaster and StubHub. Twitter, Facebook, and Instagram control fan engagement data. While the existing systems work for many, it isn’t optimal for the organizations, sponsors, or fans. The system can be improved to optimize revenues while simultaneously increasing the experiential component of sports.
Blockchain-based identities for athletes, fans, and business partners can enable not only new, never before possible, and meaningful experiences but also create new net value in the form of more fan revenue, crowdfunding of assets, digital collectibles, and verifiable superfan stardom. Veri-what? Verifiable superfan stardom. Think of it as a fan profile or a sports organization issued license. This fan profile could enable non-cash incentives such as a digital Stanley Cup Trophy for fans who attended or participated virtually in a certain percentage of regular-season games. The profile or sports organization issue license could also prove you’re not a bandwagon fan.
However, protecting identities and personal information of fans is also crucial, especially given the massive identity breaches of companies such as Facebook, Marriott, and Equifax. While our society has become desensitized to these events, the negative economic impact of these breaches cannot be understated. Equifax compromised the sensitive data of 147 million consumers, which caused the company’s stock to drop nearly 4 billion dollars, and will likely result in breach-related losses of over 600 million dollars once the cost of government investigations and civil lawsuits are included.
Imagine being able to share your social security number or passport without having to show the actual number. Blockchain technology, through the use of cryptography, provides these types of unique solutions. For example, 3box (a ConsenSys portfolio company) is working to enable identity creation on the Ethereum blockchain and developing innovative ways to change how personal information can be managed and shared with other parties. Blockchain enables an anonymous fan or player to securely control who can access their data. Digital identities prevent the corruption or theft of personal data which is incredibly important for athletes and fans because digital assets are connected with certain identity characteristics.
With blockchain-enabled identities, sponsor-driven fan experiences become game 7 overtime level exciting.
MetLife purchased the naming rights for Meadowland Stadium — home of the New York Giants and New York Jets — which provides them the ability to interact with tens of millions of fans. Imagine a marketing campaign in which MetLife can track fans through their anonymous identity from the first touch to conversion without knowing their names or address. The organization wouldn’t need to rely on expensive third-party analytics or unfocused mass advertising campaigns with abysmal conversion rates.
Fans have the power to opt-in to such marketing campaigns and selectively share their information in exchange for rewards, discounts, or other loyalty programs. It’s relatively easy to see why fans would opt-in. MetLife can load their campaigns with so many incentive goodies that it would be impossible for true fans to resist. After all, who could say no to a Saquon Barkley signed jersey and helmet?
This sports journey is tied together with micro-targeted customer experiences all while preserving consumer privacy. That’s a home run solution.
The Future of Sports
Sports will continue to evolve and technology will evolve alongside, slowly shaping and enhancing the way organizations, fans, and athletes play the game.
Key Takeaways from the three-part series:
- Tokens enable fan engagement tracking across touchpoints.
- Smart contracts make sponsorships simple enough to generate automatically.
- Blockchain delivers new funding mechanisms for leagues, teams, and players.
- Tokenization of ownership will allow any spectator to own part of their favorite team.
- Crowdsourced sponsorship will enable athletes to unlock new revenue streams and identify their most loyal followers.
- Digital blockchain identities establish unique fan and player profiles.
- Distributed ledger technology enables the protection of player and consumer data while still facilitating data-driven analysis.
The beauty of sports is that we can always get better. Athletes get faster. Records are broken. New legends and fans are born. Sports businesses and organizations need to follow suit. Processes can be improved. Fan engagement needs to get better. Organizations need to adopt not only new technologies … but also new mindsets!
If you think that leagues, teams, and players should show the same love that a fan shows them, let’s get together and make it a reality…now.
Twitter: @bradfein
A special thank you to Mason Nystrom, Dr. Andreas Freud, Constantin Kostenko, Howard Handler, and the many other talented ConsenSys team members who shaped this article.
This is the third post of a three-part series about how blockchain technology will improve the sports industry. Each part discusses new and exciting trends at the cutting edge of blockchain technology and sports.
Disclaimer: The views expressed by the author above do not necessarily represent the views of Consensys AG. ConsenSys is a decentralized community with ConsenSys Media being a platform for members to freely express their diverse ideas and perspectives. To learn more about ConsenSys and Ethereum, please visit our website.
