Practicality, Fluctuation, and Durability: A Deep Examination Penetrating the Fog of Hype

Source: Cointelegraph Original Text: "Practicality, Volatility, and Durability: A Deep Examination Through the Fog of Speculation"

Author of the opinion: James Newman, Director of Corporate Affairs at Chiliz

Understanding of blockchain—especially among outsiders to the industry—is often dominated by stories of extreme volatility, bad actors, and speculative hype.

In the past few months, the wild fluctuations of meme coins such as HAWK, Fartcoin, and LIBRA have become the focus of the industry. Looking back to 2021, the NFT craze, despite its fervor, failed to translate into long-term success due to a lack of real use cases—today, the average lifespan of NFT projects is 2.5 times shorter than that of cryptocurrency projects.

But for many people, the appeal of these assets lies precisely in their volatility, which can turn a few dollars into wealth overnight. Although NFTs and meme coins are undoubtedly part of Web3 culture, the core that sustains project development, maintains user engagement, and drives the industry forward is not volatility, but real solutions that address real pain points. Ultimately, the key lies in practical value.

Practical value creates stability

Most blockchain projects fail because they are fictitious requirements for solutions rather than solving existing problems. Assets that have no practical value at all are just a flash in the pan of a speculative bubble. As digital assets continue to break through the boundaries of technological innovation, mankind's pursuit of practicality and substantial value remains unchanged. What's more, the utility of digital assets promotes stability by shifting the focus from short-term speculation to substantive engagement.

When assessing the stability of digital assets, the duration of existence is more persuasive than short-term price fluctuations. Volatility is indeed an inherent characteristic of crypto assets, but the true standard of resilience lies in whether the project can withstand market cycles. Fan tokens have proven this stability, while NFTs, despite their initial explosion, struggle to maintain long-term value beyond the speculative frenzy.

While meme coins can create hype, their lifespans are fleeting—97% of meme coins issued in 2024 have already gone to zero. Of course, there are exceptions, but the vast majority cannot withstand the test of time.

In contrast, sports clubs have undergone the test of bull and bear markets since issuing fan tokens in 2018. Their resilience stems from practicality—fan tokens continuously innovate the way fans interact, bridging the gap between clubs and fans.

Solve problems, create value, establish permanence

The correlation between practicality and stability is apparent: only digital assets that solve real-world problems can achieve sustainable adoption. Practical assets attract not speculators seeking quick profits, but users who have genuine demand or interest in the project.

The rise of stablecoins confirms the importance of practical value.

Recent data shows that in the past six months, the market capitalization of stablecoins has increased from $160 billion to $230 billion. According to DeSpread research, there were only 27 stablecoins in 2021, and by July 2024, there will be 182, a growth of 574% in three years. What is the reason? Stablecoins provide real utility—whether it's cross-border payments for small and medium-sized business owners or developers seeking liquidity in DeFi protocols.

Institutional adoption is another barometer of asset practicality. Simply put, BlackRock's choice to launch a Bitcoin ETF instead of a Fartcoin ETF is precisely because institutions prefer assets that can create substantial value for their clients, rather than short-term speculative products filled with hype and bubbles.

For sports fans, even if they have never stepped foot in the home stadium, the emotional connection with the team remains strong. Fan tokens provide global fans with more ways to interact through direct participation and reward mechanisms, filling the gap in this emotional connection.

Whether it is participating in team decision-making votes, obtaining exclusive rights, staking tokens for additional benefits, or simply owning a part of the team's digital identity, fan tokens provide practical value throughout their entire lifecycle.

The future of digital assets

The original intention of Satoshi Nakamoto in creating Bitcoin was to solve the problem of injustice in the financial system. Today, sixteen years later, despite the myriad applications of blockchain technology, this remains the essential reality of crypto assets.

The future of digital assets will be defined by the ability to solve real-world problems, and this is being recognized by clubs. Therefore, they not only issue fan tokens but also proactively authorize IP to enhance asset credibility. When the world's top sports brands embrace blockchain in this way, a clear signal has emerged: the new era of fan interaction is not on the horizon—it has already arrived. And we have only just begun.

Beyond fan tokens, blockchain is multidimensionally reshaping the sports industry, with various application scenarios increasingly intertwined. Taking Tether's investment in Juventus as an example, the soaring price of its fan token vividly demonstrates the deep integration of blockchain in investment, sponsorship, and fan interaction. As cryptocurrency sponsorship surges in the sports world in 2024, this integration will accelerate as clubs, leagues, and brands explore new applications of Web3 technology—creating richer interactive experiences and opening up new revenue streams.

Author: James Newman, Director of Corporate Affairs at Chiliz

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This article is for informational purposes only and does not constitute any legal or investment advice. The views expressed herein are solely those of the author and do not necessarily reflect the position of Cointelegraph.