Russell Okung No. 76 of the Carolina Panthers
Grant Halverson | Getty Images
It is often referred to as a new form of gold, and now Carolina Panthers offensive lineman Russell Okung is making a big bet on bitcoin.
After a battle of almost two years, Okung finally got his wish and his salary will be diverted to the purchase of bitcoins with the help of the mobile payment company Strike. The National Football League and its players’ union approved the deal that allows the Panthers to pay part of Okung’s $ 13 million salary to Strike so that it can be converted into bitcoin.
“Money is more than money; it is power,” Okung said in a statement. “The way money is managed, from creation to dissemination, is part of that power. Being paid in bitcoin is the first step out of the corrupt and manipulated economy that we all live in.”
To be clear, the Panthers are not paying Okung directly in bitcoin. Instead, the team will divert about $ 6.5 million of Okung’s salary to Strike, who will then presumably charge a fee and process bitcoin transactions for Okung, a longtime currency advocate.
Strike did not respond to a request from CNBC to confirm the transaction fees associated with Okung’s contract.
Bitcoin is trading for more than $ 27,000, so Okung will receive approximately 240 coins in that amount. Since his playing days with the Los Angeles Chargers in 2019, Okung has lobbied for his salary to be replaced by bitcoin.
“He expects, in the long run, that the price of bitcoin is going up,” Chris Matta, co-founder of Crescent Crypto Asset Management, told CNBC on Tuesday. “And this move is a demonstration of your long-term support and optimism for bitcoin growing even further from here.”
It’s like gold, but it’s not gold
Bitcoin was launched in 2008 and last year generated fortunes for some, when a single bitcoin went from less than $ 1,000 to almost $ 20,000. This sparked a bull market in new crypto-based funds.
Since then, Bitcoin has gained popularity with Covid-19, affecting economies, as investors seek protection during the pandemic. For decades, gold has been the usual safety net for investors, but Matta said that bitcoin is now seen as an alternative.
“It became extremely attractive as a solid asset, especially during Covid-19 and all consumer concerns about the global economy and the geopolitical environment,” said Matta, referring to comments by billionaire hedge fund manager Paul Tudor. Jones to invest more in bitcoin.
“The new digital gold, as it is called,” added Matta. “He brought bitcoin to the forefront of investment portfolios this year and, as a result, there is a lot of interest around him.”
Matta said Okung’s bitcoin would likely be placed in offline digital wallets known as “cold storage”. The move gives Okung more protection from potential hackers looking to steal his account currency. Bitcoin accounts are not protected like bank accounts, which are insured by the FDIC.
“Keeping offline is a much safer way, especially for someone like Russ, who talks openly about bitcoin,” said Matta. “Anyone who has a say in the bitcoin space is a target for cyber hackers.”
Russell Okung # 76 of the Los Angeles Chargers leaves the field after the game against the Seattle Seahawks at CenturyLink Field on November 4, 2018 in Seattle, Washington.
Otto Greule Jr | Getty Images
Risky move?
But, like any investment, Okung, 32, is taking a considerable risk.
Drew Hawkins, the CEO of Edyoucore, a financial advisory firm, said that the frequent fraudulent activity around bitcoin is a concern and added: “Many guys need to understand what it is and how it works and what it is not.
“It is a risk in terms of what they are going to get into their hands with guaranteed dollars from a contract rather than taking a risk on what bitcoin’s value will be,” Hawkins said.
Although approaching new highs, volatility still haunts bitcoin due to its steep correction history, which in 2017 lowered the trading price to $ 3,000 for a single currency.
On Monday, Mark Newton of Newton Advisors told CNBC’s “Trading Nation” that his estimates show that the current bitcoin cycle “peaked in early January”. He said there may be opportunities to start buying bitcoin at lower prices until then.
“Bitcoin has been an extremely volatile asset,” said Matta. “But in the long run, it was probably the best-performing asset of the past 10 years. But if you don’t know what you’re doing and you’re not investing in it in the long run, there will be a lot of volatility between.”
Hawkins added: “People did well and made a lot of money from it, but you also went through an equal amount of situations that ended up not working out for what someone was anticipating or ended up with some substantial losses.”
Are more athletes using bitcoin?
Strike is also coordinating more arrangements emulating Okung’s with players from the Brooklyn Nets and the New York Yankees, according to bitcoin news site CoinDesk. The website did not mention the players involved.
Matta said that Okung’s move would give bitcoin more credibility, and that could cause even more athletes to invest in digital currencies. Potential investors can also buy bitcoin through other mobile payment apps, including PayPal, Cash App and Square.
“Covid-19 overestimated the growth of bitcoin,” said Matta. “I think this would have happened to bitcoin anyway; it may only have taken a few more years to reach that point.”
–Hugh Son of CNBC contributed to this report.