Michael McIntosh’s favourite physical card purchase is a 2019 Topps Finest Erling Haaland.
Kept in a thick protective slab, it features Haaland wearing the crimson red kit of former club Red Bull Salzburg. The item is in mint condition and depicts the man who boasts the best scoring return to start a career in Champions League history.
So, McIntosh holds unwavering confidence in its future worth. The longtime football collector from Scotland admits his new investment focus – the land of “non-fungible tokens'' or “NFTs” – is less certain.
He recently poured about 80 per cent of his collecting allowance into virtual football cards on Sorare, the cryptocurrency-based service where users can collect player tokens and then use them in tournaments that reward real-life athlete performance.
McIntosh is not alone in his adrenaline-aided spending shift – spiking valuations for NFTs have made the recently fledgling industry a sudden global phenomenon. “Once I got involved, I kind of just got hooked,” McIntosh told Goal.
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Sorare has exploded past being a fringe ecosystem – £9.4 million ($13m) was exchanged last month using the cryptocurrency Ethereum, according to data provided to Goal – and McIntosh said he’s already tripled his money in a couple of months.
One rare Kylian Mbappe card changed hands in December for about £47,000 (£65,000) in a deal that will likely be dwarfed by future transactions in the hundreds of thousands; in a show of its financial muscle, Sorare recently received £36.1m ($50m) in outside funding to boost operations.
NFTs have taken off amid a digital sports investment frenzy that also includes the popular U.S. company NBA Top Shot. Their future – and the trust users can put in them – remains thrilling and dicey in almost equal measures but will establish the basis for what comes next in a landscape previously ruled by the most basic of technologies: cardboard rectangles.
“As each day [of trading] goes on, there just seems to be more on the horizon,” McIntosh said, "which is so exciting if you’re an investor.”
For much of the past three years, Sorare held a small-but-devoted fan base. The company, founded in 2018, precedes the mainstream NFTs for other sports and gained steam in subtle increments until a genuine mainstream breakthrough arrived in the second half of 2020.
It offers core game components that existed before the proliferation of cryptocurrency, namely its close tie to fantasy games. Users can approach the platform primarily through that familiar lens by buying up inexpensive common cards that will produce in real life on a week-to-week basis in hopes of winning money through beginner cash tournaments.
The mandatory use of Ethereum for all transactions powers Sorare’s investment component, proving the scarcity of each card by linking them to an underlying code and making every sale easily trackable on the blockchain. It additionally allows cards to be taken into fantasy games made by other companies; users ultimately own their items, not Sorare.
Up to 100 limited-edition cards are issued for every individual player each season, as well as a single one-of-a-kind card and unlimited common versions. The rarer the item, the higher the potential score multiplier the player can attain in online competitions, thus tying the fantasy and collector dynamics together.
Zack Seward, a cryptocurrency expert who works as a managing editor for CoinDesk, explained the need for cryptocurrency with an analogy familiar to many football fans: the FIFA video game series made by EA Sports.
“The functionality here is to be able to prove outside of the walled gardens of [Sorare] that this thing is yours as a buyer, and that it has value,” Seward told Goal.
“On FIFA 21, for example, you can buy things, right? You get points. That value lives entirely within the ecosystem of EA Sports. And there's no outside visibility into that, nor is there the ability for outside developers to build a marketplace in that.
“So, what [cryptocurrency] does is that it lets these items exist outside of the walled garden of the particular game-maker.”
Sorare is growing at a rate of more than 50 per cent per month, and CEO Nikolas Julia told Goal the company wants to reach £718.4m ($1 billion) in annual card sales by 2024.
Its immediate business targets are to bring the total number of leagues in the game to 20, launch a mobile app and improve the interface of live point updates within tournaments, Julia said.
“What sets us apart today is that we’re the only one doing this, so we don’t have many competitors,” Julia told Goal.
“The short-term answer to what sets us apart from future entrants is having a better product that delights users. We’re at the very beginning of our vision and we’re iterating every day to make the experience as delightful as possible.”
Benchmark and Accel, the top contributors to Sorare’s latest round of venture capitalist funding, didn’t respond to requests for comment on Sorare’s operations. But an official for Ubisoft, which entered a business partnership with the NFT trader earlier this month, told Goal it believed Sorare’s existing infrastructure, which predates many other sport NFTs, made it an ideal ally.
Ubisoft is best known for producing video games series such as 'Assassin’s Creed' and 'Far Cry'' but has invested heavily in building up resources in blockchain-based media. It recently created a free-to-play fantasy game called the 'One Shot League'' where players can station Sorare cards in online competitions; those who top Ubisoft’s leaderboard can win coveted Sorare packs.
“They clearly were the ideal partner for such an experiment both because they already had a solid tech in place, and because their approach to fantasy football makes it easy for players to understand the concept of card ownership,” said Nicolas Pouard, the person in charge of Ubisoft’s blockchain initiative.
“Not only do you own each card you win for being in the top tier of the leaderboard each week, but you can also use it in both Sorare and One Shot League, making the sense of ownership really tangible.
“And this is a key aspect of what we are trying to achieve with One Shot League. With the rise of blockchain-driven games and NFTs, we wanted to bring a more accessible entry point for players that are new to this concept.”
That the blockchain division of Ubisoft – a corporation worth in the range of $8bn (£6bn) – would craft a flagship project around Sorare lends credence to hype generated by the start up’s vocal enthusiasts. Those kinds of developments bring about seismic expectations.
“A lot of people are talking about what the first $1m [digital] card could be,” McIntosh said. “It could come from Sorare. This could be the place where it happens, where it breaks that barrier.”
Amid all of the excitement, Sorare has drawn from collectors and corporations alike, however, there is also a counter-reaction of consumer protection fear, and not just from cynical industry outsiders.
Some generally bullish cryptocurrency experts doubt NFTs are safe enough for the average person to invest large sums of money at this point. There’s a wider scope of potential hiccups in this market than that of physical trading cards, meaning NFT investors must think far beyond typical cost analysis.
“[You also have to think] about the ability of the platform to grow and stay relevant,” said Andrew Wu, the faculty director of the University of Michigan's financial tech initiative, in an interview with Goal.
“If enough people participate, then sure, you’re going to do pretty well. But if users were to leave, then the platform could also fall apart pretty quickly. We're in a very early stage of the market.”
Sorare hopes its fantasy component and head start on integrating with football leagues and players around the world can push it to sustained relevance once similar services try to usurp it. Antoine Griezmann, Gerard Pique and Rio Ferdinand are among its top athlete backers.
But Julia’s acknowledgement that his organisation has few natural competitors at the moment speaks to how little is known about what is to come.
The CEO can grasp internal challenges ahead – “the biggest [one] as we grow is improving the product while scaling the number of football partners and Sorare managers” – but predicting the advantages other startups might seize from Sorare is more difficult to imagine.
With the headline-grabbing success Sorare has experienced, there’s no doubt emulators will try to fast-track their entries into the industry.
“There's going to be a degree of consolidation, of the market maturing in a sense that people have to really compete on finding what exactly the product is,” Wu said. “Your product cannot just be: ‘I'm tokenizing Cristiano Ronaldo.'
“[It] has to also be the added benefit of the service, be it a game or other things that I can add on to that unique item to attract and retain users to my platform.”
Because of Sorare, McIntosh devotes hours each week to being an amateur football scout. Rather than banking on names like Haaland he would gravitate to in the physical realm, he scours less-followed clubs for footballers still years away from becoming globally recognizable – and who might never pan out at all. These are where he believes the biggest profits might reside.
McIntosh said Sporting CP’s Pedro Porro represents one of his best NFT acquisitions. On loan from Manchester City, the wing-back plays regularly in Portugal and possesses the upside of ultimately moving to a bigger league.
Porro’s limited card could be obtained for the equivalent of £20 ($27) last October but is selling for upwards of £433 ($602) as of early March as Sporting continue to lean on his defensive qualities in the flesh-and-blood Primeira Liga.
McIntosh said being able to experience that growth within a social media community that celebrates its financial wins together has been rewarding. There are a growing number of YouTube channels, podcasts and analytical articles devoted exclusively to NFT markets, creating virtual friendships during a pandemic that has largely bound people to their homes.
“I think it’s fantastic, honestly,” McIntosh said. “People are super-helpful, and you don’t get that in every community. It’s one where everyone wants [the platform] to succeed, and that’s pretty rare as well.
"As we're seeing more and more Sorare accounts, the more we are seeing content specifically tailored for this, to helping newbies, and our beginners within the field, which is fantastic.”
That swelling echo chamber of upbeat Sorare consumers, pleasant as it may be, has the potential to become intoxicating. But McIntosh doesn’t overlook the potential pitfalls of investing in NFTs, and he admits he’s still learning how to best navigate them financially.
It’s surreal watching virtual cards representing unproven football prospects such as Porro escalate in value at hyperspeed, and what happens next is difficult to gauge with certainty, even for those in the know.
This is not Erling Haaland with only the goalkeeper to beat.
“Just being aware of that is more than half the battle, right?” Seward said. “You know, prices don't always go up. And if you are able to understand that, as an individual participant in these markets, you're likely to be in good shape.
"Reality can really hit hard, and you need to be aware of that possibility.”