It appears crypto is not a secret anymore. It has finally penetrated the sports industry showing its immense power and potential as a digital currency thus far. This significant ingress into sports is affecting a wide range of aspects that were unforeseen and unthinkable. Cryptocurrencies, like Bitcoin and Ethereum, are changing players’ salaries and contracts. Sports teams are accepting it as purchases for merchandise and tickets as well as from sponsors. Sports betting is taking cryptocurrency bets as well.
What Is Cryptocurrency?
Cryptocurrency is a digital currency, money. Cryptocurrencies work from a decentralized network called a blockchain. Blockchain is a digital ledger that records and retains information that is impossible to counterfeit or steal money. The system can’t be hacked or changed because the data is spread out over many computer networks. No owner or authority is monitoring them, making it impossible to change and manipulate the information, even the government.
Cryptocurrency is referred to as an asset by the federal government and the SEC. In addition, the IRS has classified it as property.
What Is Bitcoin?
It is not an actual coin but a highly secure digital currency. It is similar to your debit card and the money in your bank account. The exception is, when you make a transaction, it is registered on a blockchain.
No person, company, country, or third party controls Bitcoin. Instead, it is run by a series of networked computers.
Bitcoin can now be used through apps like Bitpay, which allows you to use fractions of or whole bitcoins to pay for items.
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What is Ethereum?
Ethereum is the second-largest cryptocurrency behind Bitcoin. However, Ethereum is similar but different from Bitcoin. It is identical in that it has a digital currency called Ether. But, what makes it different it is referred to as a supercomputer. It has powerful technology that provides infrastructure for complex programs, blockchains, and large companies. Many cryptocurrencies use Ethereum’s blockchain infrastructure to run their digital currency applications.
Ethereum’s Self-Executing Contracts
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Smart Contracts
The Ethereum network hosts smart contracts, a collection of codes instructed to perform a set of instructions that run on a blockchain. Smart contracts are reinventing sports contracts, and the way deals are made. Smart Contracts take out third-party assistance. So, for example, athletes will not need agents to make deals and deal directly with the GM and owners. There is no need for lawyers to act in the middle of a two-part deal between the athlete and contract.
How They Work
A smart contract needs to have an agreement between two people. Once the conditions are agreed upon, the conditions are encrypted into the blockchain. Thus, the smart contract cannot be changed or manipulated by anyone once entered into the blockchain.
Under a smart contract, the payee provides the funds upfront with the agreed-upon rules. Then, the rules and money are entered into the blockchain. Once entered into the blockchain, the money cannot be taken back and this guarantees payment. Once the person fulfills the conditions of the contract, the money is released to the person. However, suppose the conditions of the agreement are not met. In that case, the funds are held in the blockchain until the conditions are satisfied.
Operating contracts in this way show that players and sports teams will not need to pay a lot of money to a lawyer or an agent to negotiate their contracts. Therefore, it cannot be changed, manipulated, or delayed. This saves both parties time and money without agent or lawyer intervention. Also, you won’t need an escrow holder. Therefore, smart contracts reduce the costs of a players’ entire contract process significantly.
For example, a player can negotiate the exact terms, rules, and regulations in his contract without an agent. It guarantees the player that the contract will be executed because the money is locked in the blockchain. If the player does not fulfill the conditions of the contract, access can be blocked. However, the money stays locked in the blockchain under the identity of the two parties on the contract. The funds cannot be returned or used for anything else. The money in the blockchain is paid and gone. Therefore, the owners cannot squelch the payment to the player to keep the money in their possession.
Why Athletes are Investing
Athletes are investing in cryptocurrency because it is the future. They see the autonomy and power that Smart Contracts will provide for them. Also, athletes are always told to invest portions of their vast amounts of money and salaries. Therefore, cryptocurrency is an excellent option for them as it influences changes in their profession. It is an investment and a way to use their investment like money- meaning it is not locked just into an investment fund.
The following professional players accept Bitcoin as either part of their salary or as part of sponsorship payment.
- Russell Okung– Carolina Panthers
- Trevor Lawrence– Jacksonville Jaguars
- Sean Culkin– Kansas City Chiefs
- Saquon Barkley- NY Giants
- Former Real Madrid David Barral signed with DUX International of Madrid, being paid only in cryptocurrency.
Sports teams also see the increased acceptance of cryptocurrency, and many teams are accepting Bitcoin as payment.
- The Sacramento Kings are the first team to accept bitcoin.
- In mid-March 2021, the Oakland Athletics started accepting Bitcoin for season suites.
- In addition, the Dallas Mavericks started accepting Bitcoin as payment for game tickets and merchandise using, Bitpay.
- In 2018, the Turkish soccer club Harunustaspor was the first soccer team to purchase a player using Bitcoin, Omar Faruk Kiroglu, 22 years old.
And now, crypto firms are becoming big sponsors in the sports industry.
- In December 2014, BitPay signed a sponsorship deal with ESPN.
- Arsenal Soccer Club signed a sponsorship deal with CashBet in 2018, becoming the club’s official partner.
- Litecoin became an official crypto partner of the UFC.
- FTX crypto company paid 135 million for a 19-year deal for the naming rights to Miami Heat’s arena.
- The crypto-trading company eToro, paid entirely with Bitcoin for a few partnerships in the Premier League. It was the biggest soccer sponsorships in Europe.
- Aston Martin Formula One became the first Formula One team to partner with a cryptocurrency firm.
Everything is going digital. Cryptocurrency and blockchains are the future. It was slow but now infesting the sports industry. Even player trading cards are becoming digital where they are producing digital prints that cannot be reproduced. When there are no more playing cards in the future, we can see how it will make more sense.
