The value of your investment can go down as well as up.
You don’t need to be a seasoned financial trader to be familiar with this line to warn consumers about risky investments.
But there’s no such warning from former Liverpool and England striker Michael Owen, who says his NFTs (non-fungible tokens) “will be the first to not lose their original value.”
My Twitter space is about to go online, to discuss my NFT project. Despite the criticism, my NFTs will be the first that cannot lose their initial value 👊🏻
— Michael Owen (@themichaelowen) May 9, 2022
Owen is the latest famous name to launch its own line of NFTs, a type of digital asset based on blockchain technology that underpins cryptocurrencies including Bitcoin and Ethereum. This comes as football deepens its ties with this sector more widely.
For their proponents, NFTs are an exciting digital version of collectibles such as trading cards.
However, the field is closely associated with financial speculation, and a series of high-profile players including John Terry and Andy Robertson have been embarrassed after promoting NFT projects whose value quickly plummeted, leaving some fans of side.
Cryptocurrency markets have also fallen in recent days, with many tokens and NFTs losing massive value from their highs.
But Owen raised eyebrows by saying that just won’t happen with his plan, released in partnership with a company called Oceidon.
Andy Green, co-founder of that company, appeared on a Twitter Spaces show with Owen on Monday night. Owen seemed genuinely excited about NFTs and genuinely driven by a desire not to leave his fans in the face of loss.
But in a follow-up tweet, Green appeared to directly contradict Owen, clearly stating that their NFTs can lose value.
Correct, we cannot guarantee or say that you cannot lose. There is always a chance. There is no such thing in life as no proposition of risk. But what we can do is protect the collector as best we can and floor price protection will do that.
— Andy Green 🇺🇸 (agparadox.eth) (@agparadox) May 10, 2022
The idea seems to be that the NFT will contain a code that ensures it cannot be sold for less than the price it was originally bought at, so it cannot be sold at a loss. This is what Green is referring to when he mentions “floor price protection”.
But if someone buys an NFT and the price goes down, then they can’t cut their losses by selling, which means they lose the entire amount they paid.
Without some form of buyback guarantee – where people will be refunded the same price they paid for the NFTs – it’s impossible to see how his claim stands. There is no indication that this is what Owen does or how value is protected.
Martin Calladine, an independent football blogger who has written extensively about football’s relationship with the world of football and NFTs, calls Owen’s plan “economically illiterate” and argues that the main claim is contradicted by the terms and conditions of Oceidon.
These state that “we make no representation of any kind that the value of any asset proceeds…will retain the value of its original purchase price or attain any future value”.
“It’s a particularly shabby scheme because it presents itself – inaccurately – as offering a solution to the problems of other NFT schemes,” Calladine said. Athleticism. “In my opinion, the seemingly false assurance it offers makes it even worse than normal football NFTs.”
There is very little regulation surrounding cryptocurrency and NFTs, with lawyers and politicians scrambling to figure out how to handle this field, which has brought some huge wealth but others great loss.
However, the UK Advertising Standards Authority is one body that has a clear view on cryptocurrency and NFT-related advertising.
Article 14.4 of the Committee of Advertising Practices Code states that “advertisements must clearly state that the value of investments is variable and, unless guaranteed, may go down as well as up”.
“Cryptocurrencies (and investments linked to their performance) can be extremely volatile, meaning they are vulnerable to dramatic changes. So while they can rise significantly in value, they can also fall significantly, which means a loss of capital,” the guide says.
This isn’t Owen’s first foray into the world of cryptocurrency and NFTs.
The 2001 Ballon d’Or winner, now a racehorse owner, promoted DeRaceNFT, selling photos of horses as digital tokens, last November as crypto markets were booming.
I configured and named these horses myself and some will be exact replicas of my champion horses.
Don’t miss a chance to own a piece of history. pic.twitter.com/UIqcUl8tYC
— Michael Owen (@themichaelowen) November 2, 2021
Public data on the NFT trading website OpenSea reveals that some horses were changing hands as high as $100,000 at the end of last year, with an average price of several thousand dollars.
Since then, however, sales of NFTs have slowed and they now sell for a few hundred dollars.
In this case, owners can cut their losses and cash out at a lower price, an option that won’t be possible in the event that Owen’s latest scheme tanks, like so many other footballer NFT projects have done. .
(Top photo: Robbie Jay Barratt – AMA/Getty Images)
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