A recent report has found that sports fans are pumping millions of dollars into so-called cryptocurrency "fan tokens," earning clubs massive payouts in the process.

Fans of football clubs across the top five European leagues have plunged an estimated $350 million into the controversial tokens, with the promise of being able to use their holdings to influence real club decisions.

In reality, ownership of the crypto fan tokens has an insignificant level of influence, while many of the cryptocurrency projects linked to the clubs have plummeted in value since launch.

So, why are football fans spending millions on cryptocurrency fan tokens?

Why Are Football Fans Buying Club-Linked Crypto Tokens?

Well, the answer is somewhat in the question. Die-hard football fans have jumped at the chance to gain access to their favorite club, with many of the club-issued cryptocurrencies purporting to offer a real chance at influencing decision-making.

Any opportunity to increase their support and interact with the club is snapped up for some fans, regardless of the medium.

Now, a BBC report has found that the total spent on the crypto fan tokens for football clubs is in the hundreds of millions of dollars, with some tokens increasing in value more than Bitcoin through 2021.

The primary reason behind the tokens, then, is more access to the club, or other perks such as a permanent discount in the club shop, voting rights on club songs played after a goal is scored, the decal on the club bus, opportunities to win tickets and rare memorabilia, and more.

Where Do Fans Buy Club Crypto Tokens?

The biggest crypto fan token platform is currently Socios, which hosts tokens for many of Europe's biggest football teams, including Barcelona, Paris Saint-Germain, Juventus, AC Milan, and Manchester City. Even the Italian national team is set to launch one of the tokens, although the final details of what owning that token will deliver are yet to be finalized.

socios fan tokens club listings

Football fans can convert their money into the Chiliz cryptocurrency and buy tokens for their club on the platform itself.

However, the cryptocurrency tokens for each club are subject to wild swings, and even among the wild-world of crypto-trading are considered a very volatile investment.

For example, many of the fan tokens found on Socios have dropped massively in price since their launch. Crypto fan tokens for Manchester City (UK) and Lazio (Italy) dropped by 50% and 70%, respectively, though both from relatively high launch prices.

man city crypto fan token chart

Other tokens have delivered better performance, with tokens from Inter Milan (Italy) and Trabzonspor (Turkey) offering better gains than Bitcoin since their launch.

Why Are Crypto Fan Tokens Controversial?

The issue with club-issued crypto fan tokens is that they appear to be selling something that doesn't exist. No, we're not talking about digital currency in general, but the level of access the tokens grant to the club.

When you weigh up the volatile nature of crypto versus the ability to choose a song or enter into a raffle to win tickets, all of the danger lies with the supporters.

Related: The Biggest Risks for Crypto Investors (Both Beginners and Veterans)Furthermore, as with all cryptocurrencies, there is very little protection for fans investing in these club-issued tokens, not from the platform they're hosted on or the club they're purchased from.

Another issue is that the issuing club often holds onto most of their tokens, which doesn't give a true representation of the token price or how the market really lies. For example, the BBC report found that the top 13 clubs on the Socios platform hold a total of $1.9 billion worth of tokens, yet fans only own $367 million. That imbalance is a cause for concern for anyone looking to invest in fan tokens, as the power remains heavily slanted towards the issuing club.

Fan tokens aren't exclusive to football and are found in Formula 1, American Football, UFC, and even gaming. However, the pitfalls extend across each sport, and it would be wise to complete as much research as possible before getting involved with such projects.