Josh Metnick is the former CTO of the Chicago Sun-Times, where he helped pilot the first cryptocurrency paywall. His current blockchain project, Loki, is in stealth mode.
In this opinion piece, Metnick recalls his journey to uncover applications for blockchains in Major League Baseball, ultimately presenting a hard-fought rubric outlining the intersection between two of his passions.
"The future ain't what it used to be." – Yogi Berra
Words that start with the letter 'b' hold power in our industry.
There's 'bitcoin', the foundation-stone, then there are the 'banks'. Even ethereum can't escape the clutches of definitional terms like 'blocks' and 'build'. And there's that other academic casus belli – the Byzantine General's Problem that started it all.
Which brings me lastly to an unrelated term. I'm talking, of course, about our national pastime: baseball.
First, I love bitcoin and I love baseball, and it's with no small mental effort that these two topics have been fused together finally in this piece.
I have nobody to blame. I brought this upon myself.
Six months have passed since I lucked into a basic exploration of this topic on the spot, at a snap presentation in Chicago. But resuscitating the memory of those fading words into a cogent story left me directionless.
I forcibly alliterated my way out of this mental barricade, one 'b' at a time – could our National Pastime be one of America's lesser studied beneficiaries of blockchain technology?
Writer's block drifted all around me, and settled in with the definiteness of Bay-area fog forcing a rain delay.
Sometime mid-August last year, while standing in the checkout aisle at my local grocery store, I received a call from an individual representing both Chicago Cubs owner Tom Ricketts and the CEO of Aon, Greg Case.
They were organizing an annual event called the Chicago Cubs Executive Summit, and they wanted a "blockchain guy" – someone qualified and experienced enough in the subject to discuss it with a group of executives at Wrigley Field as a member of a three-person panel.
We were allotted 40 minutes to speak and answer questions.
Howard Tullman, CEO of Chicago's 1871 Center for Technology and Entrepreneurship, recommended me as a panelist. The last time I had discussed anything related to blockchain with Howard was about three years ago, when I lugged a Zeus Litecoin Miner into his executive office in a giant suitcase. I recall a rather puzzled (concerned, perhaps?) look that overcame Howard as I started my then introduction to bitcoin.
Did he not realize that I was transforming ephemeral electricity into immutable litecoins? Apparently with the branding power of a Greek Thunder God? In my kitchen?
Of that meeting, I only have vague recollections of firing up the noisy, demon-spawn hardware from Shenzhen, China. All while manically babbling about ASIC-resistant vs true ASIC-proof consensus algorithms.
Many of us who have tried illustrating the value of the blockchain struggle to find a concise definition that can hit its barn door sized potential. If the problem is generally defined as how to improve blockchain descriptions, though, there is at least one approach that has worked for me.
Part of the problem is with the question itself – it's too broad. An analogue might be: What are databases and why should you care? Or even, What is water and why should you care?
To TD Ameritrade, databases provide specific, more definable use cases. For a nuclear ballistic missile submarine, or your local fire department or a high capacity desalination plant, water has decidedly different uses.
Six months ago, Anthony Di Iorio, CEO and founder at Jaxx and a co-founder of ethereum, tweeted: "Can this def be improved? 'A Blockchain is a distributed database of ledger entries, digitally signed to ensure authenticity & integrity.'"
Alex Lawn, a long-standing voice to the cryptocurrency industry jokingly responded with the inspirational: "Transactions timestamped using blocks." Alex's sarcastic retort induced laughs, but it speaks to a genuine headache for those of us spreading the gospel.
Di Iorio's attempt at getting to the best 140-character description of a blockchain has wider applicability than Twitter: "Attention is the new."
Back to Wrigley Field.
An hour before showtime, and I was still searching for a succinct, accurate and engaging translation for 'blockchain'; Ideally, something that wouldn't be as sleep-inducing as listening to two last-place AA teams battling on a crackling AM radio.
I'm still lost in my head, searching for a captivating opening act for a word as alluring sounding 'blockchain'. It was only improvisational necessity that forced me to answer that question a different way.
It helps, I think, to stop defining blockchain horizontally, in terms of generalizations and faux excitability (eg "The Blockchain Will Change Everything!") and start defining it more practically, more tactically.
Intersect the blockchain with a given vertical industry, and then the blockchain explanations start to shed their oblique grandiosity and start becoming meaningful.
Speaking of my own experiences:
- When I worked for a newspaper, one set of logical cryptocurrency and blockchain uses related to content monetization.
- When I worked for a fintech company, one set of logical uses related to anti-counterfeiting and fraud prevention.
Viewing professional baseball vertically through the blockchain looking glass, the result was that specific examples were easier to delineate.
As I was speaking about this technology from inside a ballpark, I thought: 'What if Major League Baseball ran on a blockchain?' 'What problems would it solve? What opportunities would it present?'
I went on to describe some of the problems, solutions and feature examples listed below. As it turns out, there is an abundance of uses in baseball for a blockchain. Or, in the words of Dizzy Dean: "It ain't braggin' if you can back it up."
Taking a step back, I think it's helpful to first get general bearings on the larger components of Major League Baseball economics and financials.
Much of my source data for this article can be found here.
Major League Baseball is a sizable industry. It's not banking, or treasury bond big, but it's economically big enough to benefit from a blockchain.
According to Mike Ozanian of Forbes, "If MLB traded on a stock exchange it would be worth $36bn." It is estimated that the betting economy for MLB alone is between $30bn and $50bn, annually – this may develop into a significant demand component of prediction markets such as Augur and Gnosis.
Getting to first
Any economic ecosystem of this size will attract financial fraud in various forms. It will also present myriad opportunities to improve existing information systems with new technology – ie increase revenues or decrease costs. A blockchain can perform a select set of features and functions arguably better than predecessor systems.
Focusing only on the fraud committed within a subset of baseball merchandise and memorabilia – autographed memorabilia, annual sales exceed $1bn. Experts estimate $100m of that revenue derives from fraudulent, counterfeited goods.
To help combat this, Major League Baseball keeps highly granular track of the chain of custody for each and every baseball item, and it employs both current and former law enforcement to oversee the process.
It is estimated that over 50% of autographs on collectible memorabilia are fake. This one subset of a subcomponent of the baseball economy was significant enough to merit a large-scale FBI operation.
According to Shira Springer of The Boston Globe: "Operation Bullpen ... dismantled 18 forgery rings and prevented more than $15m in economic losses due to the seizure of tens of thousands of pieces of forged memorabilia through 75 search warrants and over 100 undercover evidence purchases."
Clearly, tokenizing the provenance of memorabilia on a blockchain would go a long way in eliminating the possibility of faked authenticity.
Hitting for power
Many of these esteemed ballparks are not immune from credit card theft by the stadium-full, either.
As explained by Robert Hackett of Fortune regarding The Madison Square Garden Co hack:
"Anyone who purchased food, drink, or other merchandise at the company's Madison Square Garden properties between 9th November, 2015 and 24th October, 2016 may have had their payment card information filched. According to the disclosure, affected venues may include Madison Square Garden, Radio City Music Hall, Beacon Theater and Chicago Theater."
It's old news that push payment systems like cryptocurrency present an elegant solution for combating credit card fraud. Unfortunately, mass adoption has been about as tricky to nail as a Phil Niekro knuckleball.
The advantages of putting event tickets on the blockchain is an idea almost as old as bitcoin itself. Ticketing fraud has been a loss vector that predates the Cubs first World Series victory in 1907. According to data collected by Riskified, an organization dedicated to countering fraud in the ticketing industry, chargebacks alone currently cost vendors $9bn per year.
False positive declines (rejecting legitimate orders) have cost the same merchants an additional $118bn.
Baseball influence may be immune from the long hand of Vladimir Putin – but fans are passionate about their favorite players. These pitched emotions manifest as significant MLB voting fraud. When I was a kid, I remember going to baseball games with friends, where we would scoop up as many leftover All Star Game ballots as we could carry. I recall it being one of those things that we thought "everybody did" – and we grew out of that pretty quickly. But, All Star Game ballot stuffing is a serious problem.
It is estimated that between 10–20% of MLB All Star Game votes are fraudulent. In 2015, MLB Advanced Media caught and cancelled 65 million fraudulent All Star Game votes, out a total of about 400 million votes! This is yet another idea that goes back close to the bitcoin's beginnings as well.
Ideas for new features abound, and are only limited by the breadth of imagination and depth of blockchain knowledge.
The time, location and the veracity of unique memorabilia can be registered in an immutable, readable and open public blockchain. Baseball cards as unique assets can be completely re-envisioned for our digital future, similarly to how unique Rare Pepe cards are conjured and brought to market using top-level blockchain protocols.
Smart contracts within an MLB blockchain framework can be used to enforce standardized player payments, where terms under salaries or bonuses may be tired to irrefutable blockchain truth oracles.
Individual teams can create their own branded currencies and promotional tokens, valid horizontally for team merchandise across heterogeneous retailers, or vertically for use only within a given stadium.
In filtering the base question, "Can a blockchain add utility to Major League Baseball, and is it the best technology to do so?," it helped me to create a basic table of some of the higher level functions at which blockchains truly excel.
Though it's early innings in the blockchain space, the sooner Major League Baseball starts adopting this now eight-year old technology, the sooner it will start winning against various problems that have plagued professional baseball since its inception.
In the words of Yogi Berra: "It's getting late early."
Images via Ryan Chiu and Josh Metnick