As of today, we have a clearer idea on what Panini America defines for their blockchain concept. From our previous article, we can accurately define blockchain as an “electronic transparent ledger” or a record of transactions in a peer-to-peer network. However, by the looks of it, Panini America is just simply trying to make their own competition against the Topps partnership with Stock X. Let’s dive into their website and determine their features and decide if this is being set up for success or failure.

DUTCH AUCTION

To begin, they are doing a dutch auction initial offering starting at $100,000 (Auctions are HERE). Panini recently tried the dutch auction format for their 2019-20 Basketball Prizm and it became somewhat a success. They were able to sell out all of their boxes which likely became the fuel for ultimately rolling out this blockchain auction. They are going to release an initial 100 blockchain cards. As of the moment, they haven’t released the full checklist for their launch. But, according to the Panini America, “after the release of the first 100, we also plan to incorporate blockchain technology into upcoming Panini physical trading card products in the NFL, NBA and MLBPA.” Moreover, they also made clear that the public offering will give you ownership of two assets. The first one will be the digital asset of that card and the second one will be a physical asset. Therefore, the initial 100 (1 of 1) cards that they are offering are actually 200. Technically, they are still 1 of 1 cards if you categorized them as digital and physical but that’s debatable.

Wait….

So you’re telling me that a person can win the dutch auction and sell the physical card without selling the digital card or vice versa?

YES! According to Panini, “The Blockchain cards and the physical cards, are separate assets and both are yours to do with what you like.” This is where things potentially take a dangerous turn for Panini. The virtual card becomes a stand alone concept. Since they are separate assets, the digital card is not backed by anything. If I won the auction, I can just sell the digital asset and keep the more in demand asset which is the physical card. Historically, digital cards are ignored and not really considered an investment by most of the people in the hobby.

Do you even remember redeeming your digital cards you got from your hobby boxes?

…… exactly….. neither do I.

If the digital cards aren’t really backed by an actual card than how can we value the digital asset? In my opinion, it’s going to be hard to determine the digital card’s value and potentially lead them down a path of worthlessness. The way Panini described the difference of their digital assets to other crypto collectibles is that, “Unlike most digital images currently traded as crypto collectibles, Panini is the world’s largest licensed sports and entertainment collectibles company and the exclusive trading card manufacturer of the NFL, NFLPA, NBA, NBPA, FIFA, College athletics and NASCAR.”

WOW!

The only reason they can give us for people to buy the digital card is because of licensing? Definitely a bad way to pitch us a sale!  Metaphorically speaking, Panini took away the “cardness” of the card. The essence of it being a collectible card is gone. The only reasons that it can have value is that it is a one of one digital card. But then again, it’s just a digital card. Unlike a physical card, we know that the player signed it because it’s their autograph. The card ultimately has the essence of the player depicted on it. In this case the digital cards are just the shadows of the physical card. The problem that still isn’t being solved is…there is no emotional connectional to the digital card. Unless Panini gives more function to these digital cards…more than just a fancy image in their blockchain, I think this has the elements of failure.

In this case the digital cards are just the shadows of the physical card. 

AND WE HAVE FEES!

Let’s talk about our favorite subject – fees – yes, those pesky costs we try to avoid. These hobby fees have become so bad that collectors are resorting to selling within the Facebook Marketplace, Discord, or even Craigslist. Seriously guys, this is what we’ve resorted to doing…  But did you know that Panini’s Buy, Sell, Trade Blockchain System will also be profiting through fees? Yes! There will be fees according to Panini. If you read the terms and agreement regarding the blockchain fees, Panini states that, “a successful sale of a digital card will be charged with a fee depending on the sold price. The fees are as follows: $.01 to $5,000.00 will be 10.0%, $5,000.01 to $10,000.00 will be 7.5%, $10,000.01 to $50,000.00   will be 5.0%, and anything above $50,000.01 will be  2.5% of the sold price.” In comparison, StockX has a flat 3% payment processing fee and around 9.5% fee once the item is sold. Panini has lower fees in reference to StockX. But, Panini America, as of the moment, only opens the buying, selling, and trading services to digital trading cards which is a huge downer. Although, there’s still might be a possibility of it being open to physical cards. Time will only tell.

Definitely, being a pioneer of a new digital concept is challenging…no exception for Panini. But, if they were to pull this off and able to get digital assets more respected as an asset class, this would be incredible for the future of collectibles. Maybe they are just ahead of its time. Because, as I dig into this more it’s makes me moreso prefer a card that I can hold & display… rather than an online item that’s just a shadow connected with a smart contract. And if I were to have a digital card, I wish it was backed by a true card in a vault somewhere. Or maybe the digital card have some sort of function that I can use in a game similar to Magic the Gathering or Hearthstone. As an investor, licensing wouldn’t be enough of a reason to make me buy the digital card aspect of their launch.

Let’s face it…with the current model the physical card that is being offered will be either in the third party grading services like PSA and BGS or it will be in eBay. The digital version will be irrelevant. I truly hope I’m wrong, but I don’t see it playing out differently.

Ultimately as an investor in sports cards, I think this will be a high risk investment. Sports cards are already one of the medium to high risk investments in comparison to other investment vehicles (ie. bonds, stocks, savings account, precious metals). The folks that I believe will be participating are either speculators of the digital trading cards or someone who has an insane amount of purchasing power. I am sure that everyone will be watching the event unfold. But, will the story end a tragedy?

What do you think?

Post your questions/thoughts below and find me on the BreakerCulture Discord Channel (My username is: Paoskiekun) right here!

Paolo

“Paolo is a philosophy major, veteran and a sports cards enthusiast. His dreams are that, one day, he’ll be a published writer and to have better reasons in making excuses to his wife when buying a card.”

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