Russell Okung # 76 of the Carolina Panthers
Grant Halverson | Getty Images
It’s often known as a new form of gold, and now Carolina Panthers offensive linemen Russell Okung are making a massive bet on bitcoin.
After a battle of almost two years, Okung finally granted his wish and his salary will be diverted to buy bitcoins with the help of mobile payment firm Strike. The National Football League and its players union approved the deal that allows the Panthers to pay a portion of Okung’s $ 13 million salary to Strike so it can be converted to bitcoin.
“Money is more than currency; it is power,” Okung said in a statement. “The way money is managed from creation to dissemination is part of that power. Receiving payments in bitcoin is the first step to deviating from the corrupt and manipulated economy we all inhabit.”
To be clear, the Panthers don’t pay Okung directly in bitcoin. Instead, the team will divert about $ 6.5 million from Okung’s salary to the strike, which will presumably charge a fee and process bitcoin transactions for Okung, a long-time currency advocate.
Strike did not respond to a request from CNBC to confirm the transaction fees associated with the Okung deal.
Bitcoin is trading at more than $ 27,000, so Okung will receive approximately 240 coins for this value. Since his playing days with the Los Angeles Chargers in 2019, Okung has been pushing for his salary to be replaced by bitcoin.
“It’s long-term expects the price of bitcoin to go up,” Chris Matta, co-founder of Crescent Crypto Asset Management, told CNBC on Tuesday. “And this move is a testament to its long-term support and bullishness for Bitcoin to grow even more from here.”
It’s like gold, but it’s not gold
Bitcoin was introduced in 2008 and last year produced fortunes for some when a single bitcoin rose from less than $ 1,000 to nearly $ 20,000. This led to a bullish market for new cryptocurrency-based funds.
Bitcoin has gained popularity since Covid-19 upsets economies as investors seek custody during the pandemic. For decades, gold was the usual safety net for investors, but Matta said bitcoin is now considered an alternative.
“It has become a huge attraction as a hard asset, especially during the Covid-19 and all consumer concerns about the global economy and geopolitical environment,” Matta said, referring to the fund manager’s comments billionaire hedge fund Paul Tudor Jones to invest more in bitcoin.
“The new digital gold, as they say,” Matta added. “This year has brought Bitcoin to the forefront of investment portfolios and as a result, there’s a lot of interest around it.”
Matta said Okung’s bitcoin would likely be placed in offline digital wallets known as “cold storage.” The move provides Okung with more protection against potential hackers who want to steal the currency from his account. Bitcoin accounts are not protected like bank accounts, which are insured by FDIC.
“Keeping him offline is a much safer way, especially for someone like Russ who talks frankly about bitcoins,” Matta said. “Anyone who is vocal in the bitcoin space is a target of cyber hacking.”
Russell Okung No. 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
A risky move?
But like any investment, Okung, 32, runs a considerable risk.
Drew Hawkins, CEO of Edyoucore, a financial consulting firm, said the frequent fraudulent activity surrounding Bitcoin is a concern and added: “Many guys need to understand what it is, how it works and what doesn’t.
“It’s a risk in terms of what they’ll get into their hands with guaranteed dollars from a contract rather than taking risks in terms of that value of bitcoin or not,” Hawkins said.
Although approaching new highs, volatility still haunts Bitcoin due to its strong history of corrections, which in 2017 reduced 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 could be opportunities to start buying bitcoins at lower prices by then.
“Bitcoin has been an extremely volatile asset,” Matta said. “But in the long run, it’s probably been the best-performing asset of the last ten years. But if you don’t know what you’re doing and you don’t invest in that thing in the long run, there’s going to be a lot of volatility in-between.”
Hawkins added: “People have done well and made a lot of money with it, but you’ve also had an equal amount of situations that have ended up not analyzing what someone was anticipating or ended up with some substantial losses.”
Are there more athletes going to bitcoin?
Strike also coordinates more arrangements emulating Okung with players from the Brooklyn Nets and New York Yankees, according to bitcoin news site CoinDesk. The site did not name the players involved.
Matta said the Okung move would provide more credibility to Bitcoin and this could cause more athletes to invest in digital currencies. Potential investors can also buy bitcoins through other mobile payment apps, including PayPal, Cash App and Square.
“Covid-19 loaded the growth of bitcoin,” Matta said. “I think this would have happened with Bitcoin anyway; maybe it would have taken a few more years to get to this point.”
–NBC’s Hugh Son contributed to this report.