Bitcoin has been slowly gaining steam as a mainstream way to pay for goods and services over the past few years. Its latest step toward legitimacy: a ringing endorsement from the sports world.
The NBA’s Sacramento Kings will become the first professional sports franchise to accept the digital currency, as reported by ESPN’s Darren Rovell. Beginning March 1, Kings fans will be able to use bitcoins to pay for merchandise at the team store in Sleep Train Arena, as well as to buy game tickets and merchandise online.
Accepting Bitcoin plays into the franchise’s goal of eventually enabling fans to leave their wallets at home, according to team majority owner Vivek Ranadiivé. "When I sold the NBA on keeping the team in Sacramento, my pitch included using the sports franchise as a social network to push the technology envelope," he told Mr. Rovell. “This is an example of that.”
The Kings were nearly sold and moved to Seattle last season, but the NBA ultimately rejected the sale in favor of keeping the team in town with a local ownership group led by Mr. Ranadiivé.
Bitcoins are virtual currency (also known as “cryptocurrency”) that exist digitally as strings of mathematically generated numbers. First launched in 2009, Bitcoin was largely viewed as a novelty until the past year or so, when serious investors began to take notice. Now, a growing number of mainstream retailers are starting to accept bitcoins, including Overstock.com, the dating site OKCupid, and online game maker Zynga. Store chains including Target and Whole Foods also accept Bitcoins that are processed by a third-party site.
Bitcoin’s market value has grown, too, ballooning nearly 60-fold over the past 12 months, despite some notable nosedives.
Having a direct tie with a major professional sports franchise, though, is a huge win in terms of both visibility and consumer confidence. The latter is key for Bitcoin, which has no regulating body and whose value is solely determined by the market (making it extremely volatile). Professional sports in North America are poised to rake in an estimated $67.7 billion in revenue by 2017, according to a recent report from PricewaterhouseCoopers LLP, a New York-based financial firm. As franchise owners scramble to stay current and modernize the in-game experience for fans, Bitcoin could gain even more traction.
Furthermore, Bitcoin’s infamous market volatility poses little risk to businesses – just to the customers who purchase them. That means it allows businesses to look cutting edge without much downside. The Kings will work with startup bitcoin processer Bitpay, which converts the bitcoins into cash to pay the franchise. BitPay is another big winner in the Kings deal, and it could be the start of something bigger.
“We are working with several other major brands and by the end of January we’ll have at least one more to announce,” BitPay founder Tony Gallippi told the website TechCrunch, hinting that it could be a big name in consumer electronics.
Mr. Gallippi also claimed that cryptocurrency is a safer payment method for merchants than credit cards, noting the rash of retail data breaches in recent weeks. But virtual currency isn’t foolproof. Over Christmas, Dogecoin, one of Bitcoin’s competitors, was hacked, and users lost an estimated $21 million’s worth of the virtual currency.