At least one cryptocurrency exchange seem to be settling into the accustomed round of corporate donorship that creates name recognition with the public. FTX.US, affiliated with global crypto exchange FTX, has given Cal Athletics (University of California, Berkeley) $17.3 million for the right to call the field at field at California Memorial Stadium “FTX Field” for ten years.
FTX has been creating recognition with other strategic donations as well:
FTX has been on a sports and e-sports sponsorship spending spree this year. In March, the exchange secured the naming rights to the home arena of NBA team Miami Heat for a reported $135 million, while in June, the exchange paid $210 million to acquire the naming rights for e-sports organization TSM. The latest deal involves FTX featuring its branding on press backdrops and launching a platform with Cal Athletics to support philanthropic projects.Tanzeel Akhtar, “FTX Signs $17.5M Deal to Sponsor UC-Berkeley Athletic Department” at Coindesk (August 23, 2021)
A key element of the deal is payment in cryptocurrency:
Cal and FTX share a connection in FTX.US’s Chief Operating Officer Sina Nader, who earned his bachelor’s degree in legal studies from Cal and was also a walk-on member of the Golden Bears football team during his time there.
Nader commented on the agreement, “We’re excited to partner with one of the world’s great universities and expand crypto’s presence into the collegiate athletics landscape. This historic partnership will also allow us to collaborate on charitable initiatives that align with our organization’s core values. Personally, I am excited to work alongside my alma mater to collaborate with local communities around a variety of causes. In the spirit of giving back, we are also committing an additional $200,000 on top of this partnership, which will specifically be used to help fight homelessness in Berkeley, and to support organizations that help underrepresented student groups at UC Berkeley.”FTX.US, “Cal Athletics and FTX Unveil 10-Year Landmark Relationship” at Cision PR Newswire
That amounts to saying that Berkeley buys the idea of cryptocurrency — and not just in principle. The institution expects to pay its own expenses with it.
All very mainstream. But, without buying into Warren Buffett’s characterization of cryptos as “rat poison squared,” one can argue that the field may require bigger, broader transitions than naming stadiums and giving to approved causes.
Some thoughts on needed changes, based on recent news stories:
➤ Cryptos are going mainstream but are they really going to take the world by storm without structural reforms? Recently, Bernard Fickser offered a seven-part series on why cryptocurrency blockchains do not work well for the rapidly growing market in non-fungible tokens (NFTs), concluding with “12 steps to make NFTs economically viable without Ethereum.”
➤ All those “stuff of legend” dramas surrounding cryptos must fade into ancient history, like pirate lore. Yes, we are talking about stories like “Everyone can see, no one can access — the millions trapped in the ether by a password known only to a dead man.” Ditto “Making headlines, a pair of South African brothers vanished, taking with them a massive trove of other people’s Bitcoin worth over 3 billion dollars.” That sort of thing is good business for adventure film moguls but not for banking hopefuls.
➤ How many different cryptos are there anyhow? Wouldn’t mainstreaming inevitably require pruning? As of August 17 of this year, Finocent was aware of 1583 of them. That is certainly more than the number of sovereign state fiat currencies in the world. While monopolies can stifle creativity, fragmentation can result in unforeseeable risks and loss of reputation created by bit players.
➤ Mainstreaming will also mean more routine critical evaluation and comparison. When the new kid on the block becomes just another kid on the block, people are less inclined to assume either the best or the worst. We look more closely. June, for example, was a tough month for cryptos and no one seems to know why: “The viability of cryptocurrencies to replace assets is increasingly coming into doubt, since, despite the worldwide focus on them, they still don’t represent any meaningful usage of currency.” (Jonathan Bartlett) Financial markets are much less attractive if they are hard even for experts to analyze.
On the positive side, as cryptocurrencies are coming to be seen as part of a balanced portfolio, we are seeing more of the responsible mainstream analysis that any field badly needs. There are winners and losers in that process. For example, one international research group of economists found last year that Ethereum was a better long run bet than Bitcoin.
Now, these economists may be right or wrong. But their attention to the question implies a shift that will please some and not others: less adventure and creativity; more safe, routine transactions and, hence, rigidity.
But that would be the price of success. No one claims that banking and minting are as much fun as starting a digital revolution.
You may also wish to read: Cryptography: Are non-fungible tokens a scam? Or can they work? By Warren Buffett’s logic, if cryptocurrencies are rat poison squared, non-fungible tokens are rat poison to an infinite power. But is that all there is to be said about them? Blockchain technology allows for digital collectibles to be scarce even if they are replicable, thus creating value, like Jack Dorsey’s famous initial tweet.