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Crypto literacy and the NCAA's new name, image, and likeness policy
We should promote financial literacy in our youth, but crypto literacy is just as important.
I’m a third-generation USC Trojan and Adjunct Professor of Finance and Business Economics at the USC Marshall School of Business. Needless to say, Trojan spirit runs through my veins. I’m also a big college football fan, so when USC’s football program hired Lincoln Riley in quest to return to glory and claw its way back to national prominence, naturally I was ecstatic.
More importantly, the rumors that Riley was swayed by a nine-figure contract after raging success in Oklahoma reminds us of a not-so-hidden truth about college football in America: it’s big business.
Name, image, and likeness
The NCAA’s new “name, image, and likeness” (NIL) policy is long overdue for young student-athletes competing in the big business of college football. For those that are unfamiliar, student-athletes were previously forbidden from earning any compensation outside of scholarships and living expenses, and especially forbidden from signing endorsement deals as amateurs. The new rules, announced in June 2021, allow for:
Compensation for third-party endorsements related to athletics, without school or conference involvement.
Compensation for other student-athlete opportunities, such as social media, new businesses, and personal appearances, without institutional involvement or the use of trademarks/logos.
Companies are already pouring money into sponsorships of college football players, the most notable being Alabama quarterback and national championship contender Bryce Young, who has already secured $1 million in endorsements, including from the bitcoin and payment platform Cash App.
The cryptocurrency arena is coming for college athletes, and players must arm themselves with knowledge to both profit and protect themselves.
Financial literacy and crypto literacy
In 2003, the US government passed legislation that in part created the Financial Literacy and Education Commission so that Americans “make informed financial decisions,” but with little follow-through at the high school level, many young Americans are still clueless when it comes to managing money and understanding financial concepts. Under the new NIL policies, college athletes who suddenly have access to large endorsement deals might be prone to poor financial decision-making because of insufficient financial literacy infrastructure in the US.
Adding cryptocurrency to the mix is potentially a recipe for disaster. My long-stated mission is to educate the world about bitcoin and promote its usage for the betterment of humanity, and that’s why I believe it’s my duty to issue a warning to student-athletes, their families, coaches, athletic departments, and universities: crypto literacy—understanding bitcoin and the crypto ecosystem—is essential to avoid scams, money grubbers, and swindlers in this new NIL era.
Avoiding crypto pitfalls
Here are four broad guidelines for student-athletes to consider when approached with payment in the form of crypto:
There are thousands of cryptocurrencies, but only one bitcoin. I recently wrote a post called “Bitcoin and crypto aren’t the same” to explain why I do not focus my research on the crypto asset class and instead am determined to continue studying the global macroeconomic implications of bitcoin. Almost all other cryptocurrencies have varying degrees of centralization, in which committees and executives have the power to apply changes to the characteristics of each token. Bitcoin has no such center and derives a major portion of its value from the fact that no person, corporation, or government can control it. Bitcoin is the world’s first truly neutral digital currency and why it often invites comparisons to gold—a commodity that is governed by chemistry, not a group of people in a board room. Bitcoin has $1 trillion in total market value, its futures contracts are traded on the Chicago Mercantile Exchange, and publicly-traded bitcoin funds trade all around the world. It is legal tender in El Salvador, a life-saving technology for victims of currency collapse in countries such as Turkey and Argentina, and has an active market between itself and local currency in over 100 countries. Remember, bitcoin and crypto aren’t the same. While bitcoin might be criticized for its price volatility, bitcoin’s volatility pales in comparison to crypto’s flavor of the day, currently pixelated ape graphics using Ethereum. Trying to pick which crypto to accept, outside of bitcoin, is as good as gambling. Cryptos blow up or fail every day. Bitcoin’s steady long-term growth and worldwide adoption all but guarantee its survival for decades to come. Bitcoin turns 13 years old today, January 3, 2022, already representing about 75% of a high school senior’s life. If student-athletes are approached with payment in a currency that is not bitcoin (BTC), they must conduct due diligence and be extremely careful.
Learn about bitcoin: wallets, seeds, keys, and addresses. This is true crypto literacy. The “crypto” in cryptocurrency comes from cryptography, and therefore crypto literacy should entail understanding some cryptography basics. It’s not difficult, but the few hours spent learning about wallets, seed phrases, private keys, and public addresses will bring the newly crypto literate competence and confidence in the bitcoin era. It’s also very important to understand the difference between bitcoin on Cash App or Coinbase and bitcoin held yourself. I recommend starting here to dive down the bitcoin rabbit hole.
Think of non-fungible tokens (NFTs) like signed trading cards. This is what NIL is all about. If you can make money by selling NFTs of yourself, which could be in the form of a trading card, autograph, or other personal association, you should. But what currency will you receive for selling your NIL through an NFT? This is where you have to be wary. Crypto literacy means being able to understand when to accept crypto, whether or not to sell it, and how to store it. I recommend starting here to better understand the crypto ecosystem.
Don’t start your own coin. This might be offered by a company trying to force you to accept currency in the form of your own token and putting a pretend price on it. This type of deal might seem exciting and innovative, but it falsely assumes an athlete’s coin will be able to indefinitely withstand market forces.
Most importantly, do your own research. Crypto is now a multi-trillion dollar landscape, and crypto companies everywhere will approach student-athletes with offers big and small. Understand bitcoin and its permanence before rushing to capitalize on the latest craze.