The value of your investment may 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 is no such warning from former Liverpool and England striker Michael Owen, who claims his NFTs (non-fungible tokens) “will be the first ever that can’t lose their initial value”.
My Twitter Space is about to go live, to discuss my NFT project. Despite the critics, my NFTs will be the first ever that can’t lose their initial value 👊🏻
— Michael Owen (@themichaelowen) May 9, 2022
Owen is the latest famous name to launch his own range of NFTs, a type of digital asset built on the blockchain technology which underpins cryptocurrencies including Bitcoin and Ethereum. It comes as football more broadly is deepening its ties with this sector.
To their advocates, 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 top players including John Terry and Andy Robertson have been left embarrassed after promoting NFT projects which have quickly crashed in value, leaving some fans out of pocket.
Cryptocurrency markets have also been tanking in recent days, with many tokens and NFTs falling in value massively from their peaks.
But Owen has made the eyebrow-raising claim that this simply won’t happen with his scheme, issued in partnership with a company called Oceidon.
Andy Green, that company’s co-founder, appeared on a Twitter Spaces broadcast with Owen on Monday evening. Owen sounded genuinely enthused about NFTs and sincerely motivated by a desire not to leave his fans facing losses.
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 risk propositions. But what we can do is protect the collector as best we can and that's what the floor price protection will do.
— Andy Green 🇺🇸 (agparadox.eth) (@agparadox) May 10, 2022
The idea seems to be that the NFT will contain code which ensures it cannot be sold for lower than the price it was initially bought for, so it therefore cannot be sold at a loss. This is what Green is referring to when he mentions “floor price protection”.
But if somebody buys an NFT and the price falls, they then cannot reduce their losses by selling up, meaning they lose the entire amount they paid for it.
Without some form of buy-back guarantee — where people will be refunded at the same price they paid for the NFTs — it is impossible to see how his claim stands up. There is no indication this is what Owen is doing or how the 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 scheme “economically illiterate” and argues the headline claim is contradicted by the Oceidon terms and conditions.
These state “we do not make any representations of any kind that the value of any products of assets… will retain the value of its original purchase price or attain any future value”.
“It’s an especially shabby scheme because it presents itself — wrongly — as offering a solution to the problems of other NFT schemes,” Calladine told The Athletic. “In my view, the seemingly false reassurance it offers makes it even worse than normal football NFTs.”
There is very little regulation surrounding cryptocurrency and NFTs, with lawyers and politicians scrabbling to figure out how to deal with this field, which to some has brought huge riches but to others almighty losses.
However, one body that does hold a clear view on cryptocurrency and NFT-related advertising is the UK Advertising Standards Authority.
Section 14.4 of the Committee on Advertising Practice code states “ads must make clear that the value of investments is variable and, unless guaranteed, can go down as well as up”.
“Cryptocurrencies (and investments linked to their performance) can be extremely volatile, which means they are vulnerable to dramatic changes, so whilst they may go up significantly in value, they could also severely drop meaning a loss of capital,” the guidance says.
This is not Owen’s first foray into the world of cryptocurrency and NFTs.
The 2001 Ballon d’Or winner, now a racehorse owner, promoted DeRaceNFT, selling pictures of horses as digital tokens, last November while crypto markets were booming.
Together with NFT horse racing #metaverse @DeRaceNFT we're releasing an exclusive Manor House Stables NFT horse collection!
I've 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 for up to $100,000 late last year, with the average price in the thousands of dollars.
Since then, however, sales of the NFTs have slowed to a trickle, and they are now selling in the low hundreds of dollars.
In this case, owners can cut their losses and cash out at a lower price, an option which will not be possible in the event Owen’s latest scheme tanks, as so many other footballer NFT projects have.
(Top photo: Robbie Jay Barratt – AMA/Getty Images)