Could Cryptocurrencies Find A Home In College Athletics?

September 17th, 2018 | by Jonathan Yates
Could Cryptocurrencies Find A Home In College Athletics?
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Cryptocurrencies
While wondering why they didn’t buy bitcoin when it was selling for pennies in 2010 is obviously the biggest question every athletic director has as it now trades for about $6000.00 and was around $20,000.00 in December 2017, there are many other related issues involving cryptocurrencies and block-chain technology that will have a major impact on their department and institution.

In his book, “Naked Money,” Dartmouth professor Charles Wheelan outlines that cryptocurrencies like, “Bitcoins are ‘mined’ by computer users who solve complex algorithms and are awarded bitcoins for doing so. Remarkably, those bitcoins can be used to buy real goods and services.” Block-chain technology for cryptocurrencies such as bitcoins “…creates a shared system of record among business network members, eliminating the need to reconcile disparate ledgers…

According to The Economist, bitcoins and other cryptos have the three useful functionalities intrinsic in a currency of being “hard to earn, limited in supply and easy to verify”. Many view them as an alternative to a fiat currency such as the US Dollar or even gold as a medium of exchange divorced from governments and banks. Some go so far as to have it in their retirement accounts. As to commercial acceptance, the number of merchants accepting bitcoins went over 100,000 back in February 2015. In the surest sign of it being here to stay, the government enforcement agencies around the world are cracking down on scams by cryptocurrency criminals.

There is even a reality show about training crypto enthusiasts to lobby Congress, “Bitcoin Brigrade.”

Even though the low-hanging fruit it gone, it is for the long term in which every athletic director should think about sales, finance, purchasing, and branding. Here there is plenty of growth with block-chain technology, bitcoins and other cryptocurrencies. Many schools already function in this realm of alternate currencies. Students can spend funds from the meal plan at local establishments around town that accept it. Often times named after the mascot, these are called “Tiger Dollars” and other brand names.

More and more schools are embracing bitcoins, block-chain technology, and cryptocurrencies, too.

Some accept them for tuition and other expenses. Others offer courses. CNBC did a story about this expanding trend on February 18, 2018, “The Crypto Craze is Here to Stay…Now Its Even being Taught in High School.” As with many changes, it is those younger who accept it and eventually embrace the new way.

Utilizing bitcoins is an easy way for athletic departments to brand themselves.

This makes the department seem more attuned with the society that is evolving. If there is any question about this need in college sports just look at the articles about attendance declining at football and basketball and booming globally at Esports events. Selling tickets for bitcoins helps to raise the profile of the games in this market segment.

It also opens up an entire new industry for development.

Cryptocurrencies are booming in many different ways, some good and some bad. As with any market cohort, there will be a shakeout. When an asset falls from $20,000 to $6000 like bitcoin, there is obviously a retrenchment taking place. The survivors will become accepted members of the market. These should be embraced by the athletic department for development efforts and related activities. The fact that bitcoin has stabilized in the $6000 range with volume up evinces that it is here to stay, so the industry should be courted and cultivated.

Cryptocurrencies

Using bitcoins and other cryptocurrencies can save money for the school, too.

Overall, there are no banking fees to be paid utilizing cryptos and block-chain technology. Banco Santander, a Spanish bank, estimates that block-chain technology could save the financial services industry alone some $20 billion annually in administrative expenses. As a friend of mine who was a high ranking executive in both the public and private sector and taught at the graduate level is fond of saying, “Education is the only thing that makes the government look efficient” so imagine how much could be saved at universities by crypos and block-chain technology. Some merchants offer discounts to those using bitcoins. As just one example, the website Bitcoinwarrior lists merchants who offer bitcoin discounts. Purse.io offers users a method for bitcoin buying on Amazon at substantial savings.

It can also serve to attract also foreign students and convert them into fans and donors.

Bitcoins help to ease foreign currency fluctuations. This obviously appeals to foreign students having to convert their native currency to US Dollars. It also renders forth a level of comfort in coming to a new country and paying with a medium of exchange that you know and understand. From there, the next stop is a season ticket for football.

In addition, it can propitiate relations between the athletic department and others in the campus and local business community.

An astute athletic director could launch an initiative to make their program the most advanced in cryptocurrencies in the world. A task force could be assembled consisting of students, professors, and professionals from the university and the neighboring community to create the program. This would make the move forward with all aspects of cryptocurrency and block-chain technology a community effort, which will result in many beneficial aspects for all involved. That makes it much more likely to succeed, too. The athletic director will be applauded by many for their visionary efforts in this emerging area, if all goes well.

Overall, there is no reason and every reason for a school to create its own cryptocurrency.

There have been thousands created. More than 900 have collapsed, according to the website, Deadcoins.com. A college has every advantage for cryptocurrencies. There is a stable revenue pool, a solid customer base, and a strong brand name. The cryptocurrency can either be created or shadow another one or be pegged to a a related financial instrument. Unlike other cryptocurrency issuers, universities have established credit with bond ratings from neutral third parties. Venezuals claims to be doing well with the Petro, a cyrpto backed by its oil reserves. A school could do the same with backing from its tuition revenues and endowment fund. There are plenty institutions of higher learning investing in venture capital projects through a variety of manners, so developing its own cryptocurrency is a logical choice.

UC Berkely has had the SkyDeck Accelerator Program operating since 2012, investing $100,000 in promising small companies.

Venture capital is very risky, with only about one of every ten investments expected to work out, so why not develop a school crypto backed by its revenues, resources, and reputation rather than risking it on an outside concern that is just starting and is pretty much destined to fail? In addition, most college endowment funds badly trail the S&P 500, so why not allow their own cryptocurrency a chance since their highly paid investment managers consistently get trumped by a low cost, plain vanilla index fund? If nothing else, they will get great PR for creating their own crypto rather than endure the interminable terrible press the crappy investors receive who run the vast majority of endowment funds!

The market always proves the best test for any asset, and that certainly includes bitcoins and other cyrptos.

As billionaire real estate investor Sam Zell once noted in a speech at an investor’s conference that I attended, liquidity is the sign of a healthy market. That means there are enough buyers that transactions flow smoothly as there is a fundamental agreement between those purchasing and the sellers as to the readily accepted range of the price. The narrower the spread between bid, or what the buyer will pay, and ask, what the seller wants, the healthier the market. No big surprise here: basic supply and demand at work! The bid for Bitcoin/US Dollar (BTC/USD), the most popular crypto pairing for trading, is around $6185 and the ask is around $6190, which is narrow for that price range. By comparison, the bid for Priceline (BKNG) stock, the travel website firm, is about $1898 and the ask is around $1912, so the BTC/USD market is healthy. (All prices are approximated and will fluctuate.)

Even if not creating their own cryptocurrency, the major reason to embrace bitcoins and others is that every athletic director should aspire to be the most technologically advanced and active in the campus and local community.

Those that embraced the Internet in the 1990s prospered. Those who embraced mobile platforms in the early 2000s did even better. And those who embraced Esports and video games in the early 2010s are also doing well. The athletic director that masters bitcoins, block chains, and the cryptocurrency sector will do the best of all in the future.

Jonathan Yates About Jonathan Yates
Jonathan Yates spent much of his career working for Members of Congress in a variety of press and legislative posts. Positions he has held working for Members of Congress and state legislators include Chief of Staff, General Counsel, Legislative Director, Press Secretary, and Legislative Assistant. His journalistic work has appeared in such periodicals as The Washington Post, Foreign Policy, Investor's Business Daily, and TheStreet, among others. He has degrees from Harvard, Johns Hopkins, and Georgetown University Law Center; and has also matriculated at the U.S. Naval War College and The Johns Hopkins University School of Advanced International Studies (SAIS). Jonathan also hosts The Culture of Sports You can follow Jonathan Yates on Twitter at @politicsports13

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