Russell Okung # 76 of the Carolina Panthers
Grant Halverson | Getty Images
It’s often called a new form of gold, and now Carolina Panthers’ offensive linebacker Russell Okung is making a big bet on bitcoin.
After a nearly two-year battle, Okung has finally received his wish and will divert his salary to the purchase of bitcoin with the help of the mobile payment firm Strike. The National Football League and its players’ union have approved the agreement that allows the Panthers to pay a portion of Okung’s $ 13 million salary to Strike so that it can be converted into bitcoin.
“Money is more than currency; it is power,” Okung said in a statement. “The way money is handled from creation to distribution is part of the power. Getting paid in bitcoin is the first step to choosing from the corrupt, manipulated economy in which we all live.”
To be clear, the Panthers do not pay Okung directly in bitcoin. Instead, the team will divert about $ 6.5 million from Okung’s salary to the Strike, which will then presumably charge a fee and process bitcoin transactions for Okung, a longtime proponent of the currency.
Strike did not respond to a CNBC request to confirm the transaction fees associated with Okung’s deal.
Bitcoin trades at more than $ 27,000, so Okung will receive about 240 coins at that value. Since his playing days with the Los Angeles Chargers in 2019, Okung has been working to replace his salary with bitcoin.
“He hopes in the long run that the price of bitcoin will rise,” Chris Matta, co-founder of Crescent Crypto Asset Management, told CNBC on Tuesday. “And this move is a testament to its support and long-term bullishness for bitcoin that is growing even more from here.”
It’s like gold, but it’s not gold
Bitcoin was launched in 2008 and made some fortunes last year when a single bitcoin rose from under $ 1,000 to almost $ 20,000. This has fueled a bull market in new crypto-based funds.
Bitcoin has since become popular in the disruption of economies by Covid-19 as investors seek bailout during the pandemic. For decades, gold has been the usual safety net for investors, but Matta said bitcoin is now seen as an alternative.
“It has become very attractive as a hard asset, especially during Covid-19 and all the concerns that the consumer has about the world economy and geopolitical environment,” Matta said.
“The new digital gold, as it is called,” Matta added. “This has brought bitcoin to the forefront of investment portfolios this year, and as a result there is a lot of interest in it.”
Matta said Okung’s bitcoin is likely to be placed in digital offline wallets, called ‘cold storage’. The move offers Okung more protection against potential hackers who want to steal the money from his account. Bitcoin accounts are not protected like FDIC-insured bank accounts.
“Keeping it offline is a much safer way, especially for someone like Russ who is outspoken about bitcoin,” Matta said. “Anyone who speaks in the bitcoin space is a target for hacking.”
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) takes a significant risk.
Drew Hawkins, CEO of Edyoucore, a financial consulting firm, said the regular fraudulent activity around bitcoin is worrying and added: ‘A lot of guys need to understand what it is and how it works and what it’s not.
“It’s a risk in terms of what they’ll get their hands on with guaranteed dollars from a contract versus taking chances on what this value of bitcoin will or will not be,” Hawkins said.
Although it is approaching a new high, the volatility still haunts bitcoin due to its steep correction history, which brought the trading price down to $ 3000 for a single currency in 2017.
On Monday, Mark Newton of Newton Advisors told CNBC’s “Trading Nation” that his estimate shows that the current cycle of bitcoin will peak in early January. “He said there could be opportunities by then to buy bitcoin at lower prices.
“Bitcoin was an extremely volatile asset,” Matta said. “But over the longer term, it was probably the best performing asset over the last ten years. But if you do not know what you are doing and do not invest long-term in this business, there will be a lot of volatility in between.”
Hawkins added: “People did well and made a lot of money from it, but you also had an equal amount of situations that ended up not coming up with what anyone expected, or ended up in some significant losses.”
Are more athletes going bitcoin?
Strike also coordinates more arrangements that Okung’s are pursuing with players from the Brooklyn Nets and New York Yankees, according to bitcoin news site CoinDesk. The players involved were not mentioned on the website.
Matta said Okung’s move would provide more credibility for bitcoin, and it 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 has slowed the growth of bitcoin hyper,” Matta said. “I think it would have happened with bitcoin anyway; it could only have taken a few more years to get to this point.”
– Hugh Son of CNBC contributed to this report.