The crypto bubble knows no bounds. Gibraltar United, recently became the first football club in the world to pay their players’ salaries in cryptocurrency.
“Being paid in a cryptocurrency certainly has its advantages, it’s a very transparent platform,” explains Kyle Goldwin, the goalkeeper for Gibraltar United, a football club playing in the British Overseas Territory's Premier League. The government of Gibraltar is trying to position itself as one of the world’s top cryptocurrency hubs, so the pay deal could be seen as a gimmick. But more and more sports teams have begun to experiment with crypto, whether they are buying players, selling tickets or paying salaries.
But are we dealing with mere publicity stunts, or is this for real?
First, let’s just look at how popular it’s getting. Gibraltar United is owned by Argentinian-born fintech entrepreneur Victor Pablo Dana and his firm Quantocoin, which launched a cryptocurrency of the same name earlier this year.
Once paid, players can use their Quantocoin to either make direct purchases online, transfer it into another cryptocurrency or exchange it into more traditional “fiat currencies” like dollar, euro or sterling. Quantocoin also used crypto this August to buy Italian Serie C football side Rimini FC 1912 – the first time a club had been bought using a cryptocurrency rather than traditional money.
When Spanish football giants Real Madrid and Atlético Madrid met for the 2018 European Super Cup, the talk after the game wasn’t Atlético’s dominant 4-2 win over their local rivals. Rather, it was that for the first time UEFA had sold tickets for the game through a mobile phone-based blockchain application.
Seven Premier League teams, including Tottenham Hotspur and Leicester City, trialled purchasing football players using cryptocurrency. Turkish club Harunustaspor bought 22-year-old Omar Faruk Kiroglu with bitcoin – and the player even received nearly half his signing-on bonus in bitcoin (0.0524 bitcoin, which back then was worth some £385, plus another £470 in Turkish lira; today, the crypto-bonus is worth a mere £230). A host of former and current players, including Ronaldinho, Michael Owen and James Rodríguez have also launched their own cryptocurrencies this year, hoping that – like Quantcoin – they will be used for transactions in the sporting world.
“It’s not only the big clubs that are involved [with fintech],” says Olivier Jarosz, the head of club affairs at the European Club Association. “We have clubs just interested in the cryptocurrency aspect, such as Gibraltar United, and then others that see it also for its whole potential, like Paris Saint-Germain or Juventus. I recently discussed with an owner how he is looking to use it within the scouting area.”
But why this enthusiasm in an age of plummeting cryptocurrency values? The transparent nature of blockchain payments can help to clamp down on criminal activity in what some have called an endemically corrupt sport. Transactions and records of payments made through blockchain are visible to all, so back-handers and bung payments could easily be traced to their source.
Fans may also want to use blockchain-powered platforms to flog tickets to other supporters in a controlled way rather than relying on offline or online touts and resellers. Taking the crypto route even promises to make the admin easier. Major clubs have the means to support their players with legal and financial advice, but many smaller sides are struggling. When Gibraltar United signed Egyptian centre-forward Ayman Elghobashy, the promise of paying players in Quantocoin became rather important, because his nationality made it complicated for Elgobashy to set up a bank account in Gibraltar.
Read more: Every World Cup footballer should issue a cryptocurrency coin
To ensure that he was paid on time, the club paid him in crypto – which was also more cost-effective than setting up a physical bank account. Crypto payments could also help to clamp down on some of the human trafficking that is said to happen at the fringes of the sport; in a way, it’s similar to the challenges of the diamond industry, where blockchain can be used to give each diamond a unique ID to trace its origins and movements through the diamond trade.
In the world of football, there are plenty of stories about players paying agents large sums of money for non-existent trials and even contracts abroad. By using blockchain, each player, FIFA-approved agent and club could be be given a distinctive code that would help professionals to sidestep fraudsters, because they can check whether they are dealing with legitimate agents. Despite the obvious advantages, the football world as whole may be too conservative to grasp the opportunity.
“The main challenge is that very few people have an idea of what it is,” explains Jarosz. “There will probably be resistance to change.” Anyone who follows the sport and witnessed the controversy over the game adopting video assistant referee technology, or VAR, during the 2018 World Cup can attest to this. However, as powerful organisations in the sport such as the Premier League and UEFA successfully trial fintech technologies, attitudes are changing.
This article was originally published by WIRED UK
