Bitcoin, Ethereum, Dogecoin. You’ve probably heard of those in different contexts, but have you heard of the new kid on the block, Chiliz?
For many years, crypto has lurked in the shadows, making a success of those who understood it but making traditional banking systems uneasy. The relationship between old and new, traditional and evolving, is still not settled; recently, many banks stopped their customers depositing money into crypto exchanges, with no signs that mutual trust is building at all. However, crypto is headline news in 2021, thanks to Elon Musk in no small part. His company buying up huge amounts of Bitcoin made news around the world, and helped drive people towards crypto for the first time.
Another reason crypto is gaining traction is the world of non-fungible tokens or NFTs. It is hard to explain an NFT to someone with no basic knowledge of crypto. Its definition of being a ‘unique, rare, and indivisible blockchain-based asset that comes with many benefits for the digital world’ isn’t clear. You need to know that NFTs are backed by blockchain, usually Ethereum. In the last six months or so, a new form of NFT has taken the world by storm, backed by another cryptocurrency, namely Chiliz (CHZ).
The NFT in question is the fan token adopted by many soccer clubs and sports brands worldwide. Here in the US, provider Socios recently moved into MLS, NBA and NFL, offering their fan tokens to supporters around the globe. By buying a fan token, the customer doesn’t own part of the club, but they own part of their digital reach. There are benefits, such as taking part in exclusive polls and having access to special content, and if they wish, they can sell their token to another fan. It is like a subscription service; only you own your token, it has value, and you can get your money back. Behind fan tokens are CHZ, a cryptocurrency you really need to know about.
CHZ are unique in that they’re not inextricably linked to the wider crypto market. For instance, when Elon Musk tweets about bitcoin, the whole market tends to take the hit; most cryptocurrency is linked to one of the big players, and the whole market takes the brunt of a drop. CHZ isn’t immune to that, but it can also raise in value due to forces other than the wider market. For instance, when Lionel Messi, a top soccer player, signed for Paris St Germain, he took part of his payment in fan tokens, and by association, CHZ. That saw the crypto spike through real-world events rather than a rise in the crypto market.
In October, CHZ jumped from $0.243 to $0.657, a rise of 171%. This wasn’t driven by a tweet from Musk or a South American country launching CHZ as a new national currency; it was affected by the fan token market. In October, live in-game NFTs launched, and there was a rapid expansion of their commercial partners. In that respect, CHZ behave more like a stock market commodity than a cryptocurrency.
With plans for further fan token expansion in the US, the market forces which impact CHZ are likely to be largely positive. Brand exposure is increasing too; the Socios logo was recently front and center of the prestigious Ballon d’Or awards in Europe, which adds validity not only to fan tokens, but by association, CHZ as well. Whilst the current mid-December crash is a concern across the industry, fan tokens might be the saving grace for CHZ.
As mentioned earlier, it isn’t entirely immune from a crash; when the whole crypto market lost value in mid-December, CHZ was affected, and the price fell back to around $0.20. CHZ rose 2,229% in the wider market in the past year, contrasting with a general rise of 287% across the rest of the industry. CHZ is tied to the crypto market in some respects, confidence in crypto as a whole leaves it vulnerable during a crash, but it also has those key elements other currencies do not, which makes it a handy investment.
Whether CHZ can continue to go from strength to strength is unclear, but with increasing commercial partners and big names getting on board, there’s every likelihood it could be the booming cryptocurrency of 2022. Who knows, maybe even Elon Musk will pick up on it.