How F1 has become a battleground in a new digital space

If 2022 did not already feel like a new era in F1, spare a thought for us sponsorship watchers. I’m talking about the tidal wave of blockchain, cryptocurrency and non-fungible token (NFT) deals that have been announced in recent months.

Blockchain, the underlying technology behind the rise of cryptocurrencies, takes a little explaining. So strap yourselves in. It’s a decentralised ledger – a collection of financial transactions – held across a peer-to-peer computer network. The key word here is ‘decentralised’ meaning that there is essentially no need for a central clearing authority, such as a bank. It also requires a cyber-secure currency to be created – hence the birth of cryptocurrencies.

Each block in the sequence of transactions is completely secure yet transparent such that each link in this ‘chain’ is fully known and unalterable. It’s a powerful technology, using cryptography to guarantee the security and timeliness of each transaction. 

Cryptocurrencies – such as the original Bitcoin – only exist because of blockchain technology. There remain large parts of the world in which people have no access to traditional banking services, so cryptocurrencies offer a real alternative.

As the world of business and finance has awakened to the benefits of cryptocurrencies secured by blockchain technology, a battle has broken out between providers – a land grab to secure as many of the estimated 300 million cryptocurrency users as possible.

In the midst of this war for the hearts and minds of cryptocurrency users, sports such as F1 are benefitting. That large, technology-loving, global fan base is extremely attractive.

Alfa Romeo sports the Socios blockchain, Vauld crypto lending platform and Floki’s crypto coin among its range of partners

Photo by: Mark Sutton / Motorsport Images

As a sponsor of F1, the Aston Martin team and the Miami Grand Prix, Crypto.com is particularly high profile. Its app-based exchange offers users the opportunity to trade in over 250 cryptocurrencies.

Crypto.com is estimated to have spent $400million on sponsorships in the past two years. Included in its portfolio are American pro basketball team the Philadelphia 76ers, footballing giants Paris Saint-Germain, and the Ultimate Fighting Championship.

FTX is a Bahamas-based cryptocurrency exchange partnered with Mercedes in F1. In the first half of last year, it reported daily trading volumes of between $150million and $1billion. Yes, per day. Meanwhile, down in Maranello, Ferrari’s new partner Velas is a leading player in blockchain technology using the Ethereum cryptocurrency, second only to Bitcoin in popularity.

Blockchain, cryptocurrencies and NFTs illustrate an important point: no currency – including coins and bank notes – has any intrinsic value other than what society places upon it

The Tezos blockchain partners Red Bull and McLaren, Binance’s cryptocurrency and blockchain offering can be found at Alpine, while AlphaTauri promotes the Fantom blockchain, and Alfa Romeo sports the Socios blockchain, Vauld crypto lending platform and Floki’s crypto coin.

Which brings us to every fan’s new favourite: NFTs – non-fungible tokens – an intrinsic part of many of the deals above. In the same way as a fan might buy a piece of merchandise or memorabilia, you can now seek to own a digital asset, be that the image of a car component, helmet design, livery or any item that can be provided in digital form. The ‘non-fungible’ aspect means your NFT is unique, tradeable and possessing a value which you and the market attributes to it.

All of this is about value, because blockchain, cryptocurrencies and NFTs illustrate an important point: no currency – including coins and bank notes – has any intrinsic value other than what society places upon it. In a world where cash is disappearing and digital is now king, F1 has become a battleground for the future of how we value, trade and transact.

The cryptocurrency world has made F1 a key battleground

Photo by: Glenn Dunbar / Motorsport Images