Bitcoins: The new digital currency that many understand about as much as they understand the math behind the NCAA ranking system. Or perhaps Bitcoins have never been important enough to understand.
The underlying idea of Bitcoins is something to certainly build upon. But is there a potential real-world application for something so intangible?
Solving a problem with another problem seems to be at least contradictory. Yet, every now and then, a problem seems to warrant a “problematic solution”.
Take for example, the issue surrounding the compensation of college athletes. The problem lies in the fact that the NCAA generates millions (if not billions) of dollars off of students-athletes names and likenesses, yet players receive no compensation for their efforts.
So, let’s ask ourselves: Can Bitcoin, a digital currency created on a familiar yet futuristic idea, be the linchpin to the NCAA’s paying student-athletes problem?
To Understand the Problem, First Understand Bitcoin
Bitcoin is a digital idea that is based on a real world counterpart. It’s a new form of currency that supposedly will not encounter the flaws that hard cash has.
Of course, one of the major flaws with, say the U.S. dollar, is the fact that it is no longer backed by gold. It used to be coined (eh hem, get it, coined?) the gold standard.
Now though, we typically refer to the U.S. dollar as “fiat money”, which means it “only has value because of government regulation or law; it is not convertible into anything, like silver or gold, and is declared as legal tender by the issuing country.”
The downside to this is the fact that once citizens and foreigners lose faith in its worth, it becomes useless. This wouldn’t be as much of an issue if the dollar was a worldwide currency.
Not only is Bitcoin a worldly currency, but it cannot be regulated by governments.
Nonetheless, it works a little like this: In total, there are 21 million Bitcoins, no more and no less. Each Bitcoin is, at this time, worth about $380 U.S. For what it’s worth, the Bitcoin market itself is worth over $2 billion.
That being said, Bitcoins are actually “mined” much like diamonds are. The “coins” would carry much less, if any value at all, if they were easy to come by.
Essentially, computers are given a complex mathematical problem that must be solved in order to “mine” Bitcoins. Once a computer has solved the 64 digit algorithm, the owner of the computer is now the proud guardian of 25 Bitcoins.
There is a catch, however. Every 10 minutes, algorithms are adjusted to become more difficult to ensure only one block of 25 Bitcoins are mined in that time.
This system is actually set up to preserve the face value of a Bitcoin and help to create a “self stabilizing economy” of sorts. And because the digital currency is created by a decentralized network of computers, banks and governments are unable to control the coins in any way.
After the hard-earned Bitcoins are in the owner’s “digital mits”, they can be stored online, traded, or….err spent. On the upside, the coins can be carried around in your phone, much like a digital wallet. On the downside, beware of hackers.
So, to apply something so digital, so intangible, to a real world problem sounds, well, heinous doesn’t it?
Preserving Amateurism with Bitcoins
At the very heart of the NCAA paying student-athletes problem lies the amateurism model and the balance of power.
For one thing, amateurism has been set in place to help maintain education as the NCAA’s top priority. For another, many question whether a balance of power can be upheld if athletes get paid to play.
There are some who will argue that giving anything to players, even Bitcoins, would compromise the amateurism among the NCAA and disrupt the balance of power among college sports.
There is a chance “they” are correct.
But think about this: Say schools decide to cut their tech and math departments loose on creating programming to solve the ever-evolving algorithms of what we will call the “Bitcoin mine”. Any mined Bitcoins would then be used as a source of currency for college athletes (with a slice given to the student miners).
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The NCAA could even set up its own mining operation in order to help provide enough income for each of the major schools around the nation. The coins could then be used in their raw form to help provide students with a stipend.
But even if the coins are traded for U.S. dollars on the Bitcoin market, the flow of currency is already being controlled by the finite Bitcoin mine.
Even though this idea is just a base theory that would need to be contrived into a full monetary plan, it does offer the NCAA a couple of solutions.
Bitcoin as a Solution
With amateurism at the forefront of the NCAA paying student-athletes problem, Bitcoin can offer an interesting solution.
For instance, if the NCAA were to pay players in “raw” Bitcoins, it’s important to remember that the digital currency is not accepted everywhere. This would make it more difficult for students to spend them improperly.
The NCAA could even set up a sales system in which they offer students hard goods in exchange for the Bitcoins. This will help keep players happy and honest.
Although Bitcoin claims to be anonymous, it certainly is not. The “anonymous” claim has been made simply because real world names do not have to be linked to a user’s Bitcoin account.
The problem with that is, anyone who wants to trace a transaction can do just that. Not only does this “problem” work out in the NCAA’s favor, but it would actually help them to enforce exactly how players (or even coaches) are spending their “online coin”.
With student-athletes essentially becoming “paid athletes”, perhaps they will be less likely to accept bribes from agents. Or maybe outstanding talents, like Todd Gurley, will feel less inclined to sell autographed merchandise for dough. After all, having players like Gurley suspended undoubtedly hurts the NCAA’s product.
Another key area of concern for the NCAA paying student-athletes is the balance of power across the nation. The argument states that paying athletes would entice players to attend schools that are giving more money away. In this case, it would be those schools that push their tech departments to mine more Bitcoins.
Naturally, schools like MIT would seem to have an upper hand in mining Bitcoins, which could ultimately translate to better players migrating toward the high-tech schools.
But this is where the NCAA can once again step in and mine Bitcoins themselves. The extremely touchy part would be how they go about distributing the currency to schools around the nation.
Could the NCAA award more Bitcoins to those teams that are in the Top 25? Keeping balance of power in mind, it would seem that schools lying outside the Top 25 would struggle to attract top players.
On the contrary, at the time of this writing, major football schools like Penn State, South Carolina, Clemson, and Southern California are outside the Top 25. Top recruited prospects are still going to want to go to major athletic colleges. Regardless of “Bitcoinage”, top players will still want the exposure and the experience of a school like USC.
As explained in Excuses, Not Reasons: 13 Myths About (Not) Paying College Athletes, Andy Schwarz, an Economist, “studied 10 years worth of recruiting data and found that 99 percent of the high school football players listed as Top 100 prospects on Rivals.com went to power conference schools and Notre Dame.”
A Bitcoincrete Solution?
So, maybe the subtitle is a little cheesy, but as an idea, as the foundation for a future of paid college athletes, Bitcoins can be a solution. After all, it’s because of them that the NCAA has a billion dollar revenue stream available. But, of course, these ideas are just that, a foundation.
As explained by Fast Co. Design, “money is a collective hallucination of mankind”. Dollar bills are really only worth something because we believe that they are.
So, as a new revolution, Bitcoins almost coincide with the idea of “amateurism”. They’re not accepted everywhere. They’re somewhat anonymous. There is a finite supply that is very well controlled.
So, if anyone from the NCAA is reading this, feel free to build upon these ideas for the greater good of student-athletes. Don’t use the Ed O’Bannon case to fix the NCAA, use Bitcoins to prevent future instances of the O’Bannon case.