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Cryptocurrency and blockchain technology are rapidly transforming the world. Once the purview of technologists and millennial chat rooms, these concepts have been mainstreamed in recent years with user-friendly videos from YouTube, itself a relatively new and transformative platform. To truly appreciate the rapid uptake of cryptocurrency, consider that El Salvador, a lower-income or emerging economy, has even gone so far as to adopt Bitcoin as its national currency. More businesses are accepting crypto as payment, more people are investing in various forms of crypto, and now, more athletes are engaging with crypto as competition prize awards and overseas currency options. So what is this cryptocurrency prize money trend, what are the pros and cons of receiving prize money in cryptocurrency instead of traditional fiat currency, and why would athletes and competitions want to go this route? This article is intended to broaden engagement with crypto for competitive athletes, endorsers, corporate sponsors, and event promoters. For specific questions, be sure to check out my contact links at the bottom of this page.
Trends in Crypto Awards in Competitions
More organizations are now opting to award prize money to winners in the form of cryptocurrency instead of traditional fiat currency. Most recently and notably, the 2021 Rogue Invitational, an elite CrossFit competition, incorporated cash, Bitcoin, and ticket sales into the overall prize purse. An explanation of the winnings read,
“Rogue has made an initial 1.25M contribution to the fund to establish the baseline payouts for competitors. $975,000 of this investment is held in cash and the $275,000 balance is held in Bitcoin. Bitcoin payout amounts will grow for each athlete accordingly based on coin price at that time of payout. Rogue’s minimum guaranteed price for each coin will be no less than $35,000 per.”
Per the invitational’s website, the purse rose from $1,250,000 to $1,490,583 at the time of payout. Though the invitational was arguably the largest-scale competition in prize money and viewership (2.5M live views) to date to incorporate crypto, it was not the first. Earlier this year, an offshoot of the Meltwater Champions Chess Tours, the FTX Crypto Cup, added an additional $100,000 of Bitcoin to the winner's prize fund. And in 2018, a Lithuanian marathon encouraged participants to use an app, Lympo, which enabled the runners to receive cryptocurrency along the route as they achieved personal fitness goals.
Despite the growing traction with awarding athletes crypto as part of the overall prize purse, there are various pros and cons associated with utilizing these awards. From an athlete’s perspective, receiving crypto presents numerous advantages over cash prizes. However, there are some disadvantages as well. While crypto awards might be great for some competitions, they may not yet be suitable for all events.
How Should Athletes Manage Crypto Awards
Rewards are great motivators for athletes. Everyone wants to win a trophy, but some competitions also offer prize money. But what’s an athlete to do with an unexpected crypto award? Here are some ideas:
Unlike gold or silver that is backed by its own physical value, fiat currencies are backed by the governments that produce them; the most common example being cash. As evidenced above, crypto values remain in flux, so an immediate conversion to fiat currency via a marketplace, peer-to-peer exchange, Bitcoin ATM, or an alternative method, could be a means to avoid the crypto volatility.
2. Invest in a hardware wallet.
Hardware wallets are exactly what they seem – a tangible object that houses cryptocurrencies. These devices range anywhere from $59-$209 and have been ranked by Decrypt. These wallets can provide a true “handoff” from the competition to the athlete.
3. Maintain a well-encrypted software wallet.
If the appeal of a purely cloud-based currency is too strong to overcome, a digital or software wallet is of course an option. However, it is best to ensure that whichever wallet the athlete chooses to house all of their cryptocurrency has encrypted, well-maintained, and as hacker-proof-as-possible standards in place to ensure that their hard-earned crypto prize money is safe.
4. Identify marketplaces that operate on solely crypto exchanges.
Assuming the athlete isn’t interested in converting their crypto prize money into fiat currency, another option is to use their cryptocurrency in exchanges that can convert one type of cryptocurrency into another. As one might imagine, fees between exchanges and currencies can vary greatly, so extensive research in this area is recommended.
5. Get a crypto debit card.
Various platforms have started offering debit cards that are linked to crypto accounts (just like an existing debit card is linked to a checking account). With these cards having the MasterCard or Visa seal, for example, on their plastic, they can be used wherever those carriers are accepted. Which is…as one might imagine…a lot of places.
There are a lot of potential advantages and disadvantages to consider when deciding whether a cryptocurrency prize purse should become commonplace in athletic competitions. Some states and municipalities may move to the forefront as prime locations for competitions with cryptocurrency baked into the prize purses. Photos of champions with their newly minted hardware crypto wallets could replace photos of the ever-popular oversized checks. Yet, depending on how some of the cryptocurrency cases are decided, more regulations could alter this playing field as we know it today.
But if an athlete believes cryptocurrency’s future is bright or an entity already plans on accepting cryptocurrency as part of its business strategy moving forward, then it only makes sense to pay athletes for their hard work in cryptos too! Working with attorneys who know the ins and outs of the landscape is the best way for athletes and competitions to navigate this incredibly evolving terrain.
As cryptocurrencies continue to gain popularity and approval around the world, athletes will have more options than ever before as to the type(s) of currencies they receive. For now, top-performing athletes will always have a special place in cryptocurrency history as some of its earliest adopters.
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