Do you remember what you were doing during the bitcoin boom? More than likely, as the country was in the midst of a pandemic-induced “shelter-in-place” order when the popularity of cryptocurrency began to surge. 2020 saw the resuscitation of the digital coin after a huge crash in 2018. Part of this renewed interest can be attributed to the extra free time citizens had for research. A second important reason is the panic and the rush to diversify investment portfolios. More than two years later, the economy is still struggling to recover from COVID-19 and Bitcoin is still going strong. Professional sports teams and athletes are a demographic that the crypto world is tightening its grip on.
Former Carolina Panthers offensive tackle Russell Okung sent shockwaves through the industry and started a movement in December 2020 when he became the first professional athlete in any sport to be paid in Bitcoin .
Paid in Bitcoin.
— OKUNG (@RussellOkung) December 29, 2020
While some mocked Okung’s “Pay me in Bitcoin” tweet in 2019, he was laughing all the way to the bank less than four months after converting half of his salary — $7.5 million — into Bitcoin via a company called Zap. As of this date (December 29, 2020), the price of the digital coin was around $27,000. By the end of April, that number had doubled. As with any investment, there are ups and downs and when prices fell below $40,000 in May 2019, the Oklahoma State athlete doubled down and proclaimed he would never sell his bitcoin.
You do not understand.
I don’t sell my #Bitcoinsalready.
— OKUNG (@RussellOkung) May 19, 2021
You can’t really blame him for wanting to stay the course, especially when his crypto betting has made him one of the highest paid players in the NFL. Although he was the first to pull off this type of transaction, others had tried to do the same before the Super Bowl champion to no avail. Part of the reason their attempts didn’t work is because teams don’t want to deal with accounting. Without holding Bitcoin as an asset – such as cash or bank accounts – it is impossible to recognize the payment of wages in this form of currency on profit and loss accounts. However, times are changing and teams are coming around to the idea. One team that was ahead of the party was the Sacramento Kings. Although none of their players were paid in cryptocurrency, the NBA team was the first to accept Bitcoin as a form of payment in 2014. Fast forward to 2021, and the franchise is the first to offer its players and staff the possibility of being paid in cryptocurrency. The Dallas Mavericks and Oakland Athletics of MLB accept Bitcoin as a form of payment. To keep things rolling, athletics fans can pay for their full season suites with a single bitcoin free of fluctuating values. In other words, if someone pays for their straight with a coin worth $35,000, they retain value whether the price drops or skyrockets.
Of course, Okung’s profitable bet did not escape other athletes from the various professional sports associations. Several high profile players hitched their wagons – well, part of their wagons – to Bitcoin. Klay Thompson, Andre Iguodala, Odell Beckham, Jr., Shohei Ohtani, Aaron Rodgers, Cade Cunningham, and Trevor Lawrence are just a few athletes who have been paid in Bitcoin over the past year and a half. The value has only fallen by one percentage point since Thompson and Iguodala completed their deals in January this year. Of the athletes mentioned, Ohtani suffered the biggest percentage drop – around 35%. As more teams accept cryptocurrency as a form of payment, expect more athletes to seek diversification through this medium.
Bitcoin is literally everywhere, and its ease of entry and widespread use has also ushered in non-fungible tokens (NFTs). You’ve no doubt seen the animated avatars on the social media profiles of several athletes and artists and wondered, “What the hell is that?” You’re not alone. An NFT, as defined by the Sports Business Journal, is “a unit of data stored on a digital ledger, known as a blockchain”. Player cards, digital artwork and unique clips of game or practice highlights are bought and traded by fans. Think of it as an online trading card market, if you will. NBA Top Shot is home to officially licensed digital collectibles and has achieved over $700 million in sales in less than a year. The company’s trademark “Moment NFTs” deliver a “burst of basketball perfection that can’t be lost or forgotten,” as their company’s website puts it. Each limited edition, individually numbered Moment NFT contains player statistics, a description of highlights, and a description of the game. Fans can get their hands on these units through the purchase of bundles or through a marketplace. “Common” packs start at $9 while “rare” packs start at $22. If you’re feeling particularly good, you can pick up a “legendary” pack starting at $230. In the market, fans can buy and sell with each other.
Now, how exactly do individual players capitalize on NFTs? They can be paid royalties each time their name or image is used, or they can create the NFTs themselves. For an example of how lucrative this industry can be, look no further than King James. According to Stadium Talk, as of February 25, 2022, the most expensive sports NFT was an original photo of LeBron James dunking. Taken on February 1, 2020, the photo is worth $21.6 million, with the owner owning exclusive non-commercial rights and the raw file. These rights allow for future negotiations with James, which could net both the basketball star and the owner a ton of profit. Soccer player Alex Morgan was the only female athlete with an NFT on the top 30 list. The former American Football Player of the Year’s digital artwork tied for 7th on the list with a value of $2.129 million.
The NCAA’s monumental NIL decision last year also opens the floodgates of cryptocurrency to college athletes. In today’s social media age, many NCAA stars already have cult followings on platforms such as Twitter, TikTok and Instagram. NFTs are a way to build their brands – even before they sign professional contracts or endorsement deals. It also gives young athletes unprecedented control over their names and likenesses to create and sell their own digital content.
Thanks to a colossal and passionate fan base, the possibilities are endless when it comes to cryptocurrency and the sports industry. There has always been a market for exclusive items that allow the average Joe to feel connected to their favorite teams and athletes.
While many may not be able to buy tickets to experience the action of the game in person, NFTs offer a (sometimes) more affordable digital option to get not just maps and photos, but also highlights. . From franchises to gamers and fans, the versatility and increased access to cryptocurrency make it attractive to the entire industry. Although volatile, the opportunity to hit the big time will continue to intrigue even the most risk averse consumers. As athletes begin to go deeper and deeper into their power by diversifying their portfolios and managing their own likenesses, expect coins and tokens to be part of that journey.
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