‘I like things that make sense’: Wizards’ Spencer Dinwiddie plays the cryptocurrency long game
Why is the Mona Lisa the most famous, most valuable painting in the history of the world?
Sure, it was painted by Leonardo da Vinci. But he painted other paintings, too. And there are hundreds of other famous painters who’ve painted well-known and celebrated portraits. But their best works of art do not hold the Mona Lisa’s place in our collective heads.
Of course, the Mona Lisa is unique. But every painting is unique, if you think about it. Other da Vinci works have sold for $450 million, but the Mona Lisa, if the French government ever decided to move it out of the Louvre Museum, would likely command up to twice as much, at least, if its present insured value of about $850 million is any indication.
But, again: Why that painting?
This is how you can stick a toe into the world of Spencer Dinwiddie, and Bitcoin, and cryptocurrency, and TikTok stars, even (perhaps especially) if you don’t know the first thing about crypto — by thinking about how things become valuable. Basically, they do so because of scarcity.
A large number of humans — and it’s important that it is a large number, not just a couple of guys standing on a street corner talking about it — have collectively decided over the centuries that that particular painting, for various reasons, is incredibly important. Thus, it has incredible value. And because there’s only one, the value is, if not infinite, incredibly high — to the point where people can, with a straight face, suggest that France sell the painting for 50 billion Euros (approximately $57.9 billion USD) to help defray its debt from the COVID-19 pandemic.
On a much smaller scale, the Wizards’ new point guard is also interested in creating value. As many know, he’s an acolyte of crypto and non-fungible tokens and other emerging monetary technologies. For the uninitiated – like, in this case, me – cryptocurrency seems exotic and unsettling. And it kind of is. But creating interest and demand for new currencies beyond what we all currently accept as “money” is the game of someone thinking long, long term. Such things don’t happen overnight, if at all.
Dinwiddie is a patient man.
“I like things that make sense to me, to keep it as simple as possible — whether that’s food, basketball, investing, whatever it is — I like things that make sense,” Dinwiddie said last week.
“The quick and skinny of how I got into it — beyond the friends that referred me to it in 2014, and I actually got into it in 2017 — (was) just looking at money, the way it moves, the way it flows,” he continued. “I’m a man that would love to be a billionaire one day, right? Investing in a traditional fashion won’t get me there. If I get seven, even 15 percent return, and I’m fortunate enough to make, let’s call it $150 million (gross), in my NBA career, the likelihood that I get there in any reasonable time frame is very low. Because you’re not accounting for taxes, fees, agents, expenses, whatever. I’ll still probably walk away with maybe $50 million saved, $100 million saved, whatever it is, but not on that type of level. So you look at things that have an asymmetrical kind of yield curve.”
When thinking about investments that could produce that kind of return, Dinwiddie looked at venture capital, emerging markets, emerging technologies. He soon got into Bitcoin, the most popular cryptocurrency. A cryptocurrency is any digital currency that is encrypted and where records are kept independently from a centralized authority, like a bank. He was hardly the first NBA person to lean into it; the Kings started accepting Bitcoin as payment for tickets and team apparel in 2014. Dinwiddie viewed Bitcoin as a hedge against the possibility that the dollar and other currencies might not necessarily hold up in a changing world.
Bitcoin has had its ups and downs as a cryptocurrency, but it’s still here. Newsweek published a story in May claiming 46 million Americans own at least one share of Bitcoin. Some have questioned whether that number is accurate, but there’s no doubting cryptocurrency has gained something of a foothold.
“I think crypto is going to be huge. I personally think it will be bigger than the internet itself,” says Laura Shin, an independent journalist who has written about the emerging cryptocurrency markets for Forbes and the New York Times, and whose new book, “The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze,” comes out next February.
“The reason I say that is a really good way to think about this is a tweet I saw the other day, that said ‘Web 1.0=read. Web 2.0=read and write. Web 3.0=read, write and own,'” Shin said. “People are starting to realize how they can apply this technology in many, many different ways. We’re just getting a glimpse of it with the NFTs. … You can look at Bitcoin as a big, decentralized organization – there’s no CEO. But, somehow, Bitcoin is as valuable as some of the biggest companies in the world. It wasn’t worth anything 10, 12 years ago. Now it’s as big as Apple. … the market cap of Bitcoin is $1.2 trillion. Bitcoin is worth much more than Goldman Sachs.”
Dinwiddie is one of the true believers.
“Once it went up, boom, I made a little bit of money,” he says. “But it also crashed out, so I wound up going a little bit crazy. It sparked a learning curve.”
Dinwiddie liked that Bitcoin was based on distributed ledger technology, known more commonly as blockchain technology. Blockchain is a kind of digital ledger that connects millions of computers on a network. It tabulates peer to peer transactions, confirming them to the other users on the network. So, the idea goes, blockchain is much harder to be hacked or manipulated, because all the computers and users in the network have the same information.
“Think about everything that needs an escrow,” Dinwiddie said. “Basically, every type of money flow needs some type of escrow or counter escrow system, whether that’s purchasing a real estate property, whether that’s even sending a wire. Usually, they have an escrow account in the other country. Like, Chase will have a Chinese affiliate with yen. They’ll have an affiliate in Mexico with the peso, all of those around the world. When a wire’s sent … those accounts can just spit out the money. And that’s why it takes days. They have to do all these clearinghouses and processes. But with blockchain, it’s more secure. And it happens in 20 minutes or less. Often, it can happen in seconds, depending on the blockchain that you use. It was like, okay, this makes a ton of sense.”
Now, Dinwiddie is investing in blockchain in a different way: trying to reach, as he puts it, “the intersection of the entertainment industry, blockchain technology or distributed ledger technology, and figuring out how that naturally works.”
His new company, Calaxy — a mashup of “Creator’s Galaxy” — seeks to unlock the potential of intellectual property of athletes and entertainers by finding ways to monetize their celebrity through a crypto app. The idea is, again, scarcity. A sports star or a social media influencer has followers and fans that want to connect with them on a regular basis. Will those fans be willing to pay money for unique content associated with those stars, such as a live appearance online?
Creators — the stars/influencers — issue what are known as “non-fungible tokens,” or NFTs, to their fans. (Wow, there are a lot of acronyms, aren’t there?) Fans purchase those NFTs, which have unique serial numbers to keep them from being copied or manipulated, and then get access to unique events and content provided by those stars and influencers. The stars and influencers are paid by the purchase of the NFTs. Theoretically, it’s a win-win. And Dinwiddie has convinced others of that theory, raising $7.5 million this summer in a fundraising round, getting investments from the likes of Dallas Cowboys running back Ezekiel Elliott; Sacramento Kings coach Luke Walton; former NBA player Iman Shumpert and his wife, the singer Teyana Taylor, and some pretty serious venture capital companies.
The hope is that this is the next evolution for athletes and entertainers, going beyond the terrestrial types of endorsement deals with major labels or brands, or royalties, or equity and partnerships. It’s not how LeBron James and superstars will make money, but there are lots of other people in the public eye who don’t get paid anywhere close to that level.
Shin noted how the band Kings of Leon issued NFTs to fans to purchase their new album last March. A major part of their sales came from auctions that offered four lifetime front-row seats to the highest bidder to Kings concerts. But the band also made significant money from the sale of the digital NFTs. The band brought in more than $2 million total.
“What we’re talking about in terms of intellectual property and monetizing themselves, we’ve all seen the shift in the internet doing the same thing,” Dinwiddie said. “Now we’re seeing the rise of the Patreons, the Reddits, the OnlyFans, Cameos, all that stuff, where people are trying to figure out, how I can get paid just to be me? Social media has started to dictate who’s famous, who’s not. The only caveat of that is, the problem with it — Drake actually has a line; he says, ‘These days, fame is disconnected from excellence.’ The problem with being famous but not having excellence attached to it is that it’s very hard to extract value at the moment.
“So you have this following, you have this influence, but you’re still broke,” he continued. “How my company was born was kind of sitting at the intersection of (being), I would say, B-List celebrity in term of fame, but excellent in terms of basketball. So it’s made me a ton of money. Fame — eh, debatable. Famous-ish. Where there are some people on Instagram with five million followers. They can walk in a room and — ahhhhh! But can’t make no money. So how can you sit at the intersection of that, understand the pain points in these industries, and solve for that?”
But Dinwiddie is smart enough to know not to proselytize crypto or Calaxy to teammates.
“He explains it every so often,” guard Aaron Holiday said during training camp, “but I’m not really into that. … I’m, for sure, asking him about it probably here shortly, so he can explain it again. But, yeah, that’s not my thing.”
Dinwiddie prefers people do their own research before coming to him, anyway.
“I never want to be the guy that said, ‘Throw a million dollars in Ethereum,’ or whatever, and it goes down, and they’re like, ‘Spencer made me broke,'” he said. “You never know what somebody’s situation is, how they’re investing, what they’re investing, all that other stuff. A lot of people want to get rich quick. If they think they can (get) a 3x (three times their investment) or a 5x or a 10x, they might put their life savings in it, and the timeframe just might be off. I could say ‘I think Ethereum is going to go to 10,000 per token in the next two months,’ but it takes four months to get there, and you only had two months of run time, now you’re screwed, and you’re looking at me like I’m crazy. And I’m like, ‘Well, it did what I said it was going to do; it’s just a little bit late.’ You never want to be in those situations, especially with people you play basketball with. So I’m just kind of like, when you’ve kind of dove in a little bit, if you really want to chop it up, like really chop it, I’m down.”
But again, Dinwiddie’s playing the long game. He knows he is speaking a language a lot of people still don’t understand. So he has the patience to wait, both for the payoff and for people catching up to him and understanding the concepts he espouses. It is, as he has explained many times, part of why he chose going to Colorado rather than Harvard, which was his second choice of school. He wanted to go to the NBA in two years; it took three. He was a first-round talent who went in the second after tearing his ACL during his junior season in 2014.
“I remember from the very beginning, I was the guy who was a little too nerdy for basketball, a little bit too basketball for nerds, didn’t really fit in,” he said. “So you end up being to yourself a little bit. Like, you’re used to not really clicking on the same wave as everybody else, so you end up just kind of end up being yourself. And you learn patience through those conversations. You can be right. There’s sometimes, now, where I’m right, and it’s not worth the headache, or somebody saying that you’re wrong. I used to, when I was younger, I used to do it for the ‘I told you so’ moments. Because I felt like it validated me in a sense. But now, some of that stuff doesn’t matter. The delayed gratification in just about everything.”
Remember when Dinwiddie wanted to get his $34 million deal with the Nets in 2019 tokenized? The league shot that idea down. But Nets owner Joe Tsai said last month that the league is now looking into allowing fans to buy tokens of their teams, potentially raising billions of dollars in revenue. The seeming change of heart makes Dinwiddie smile.
“I wasn’t — still wouldn’t — sacrifice my entire NBA career just to prove a point,” he said. “Would I sacrifice my NBA career for an ‘I told you so’ moment? No. Could I possibly win (legally)? Possibly, depending on if I had enough money to outlast them. … History will tell who is right. Fortunately, if you look at things that have happened, for example, the NBA coming back and then partnering with Dapper Labs, and doing NBA Top Shot, I’m an investor in Dapper Labs. And I think, on that investment, I’m like at 180x – in part, because of the NBA partnering with Top Shot.
“So I’m like, ‘Yeah, y’all stopped me from doing my contract, but you’re a partner with one of my partners, and I’m doing like 180x return.’ So there’s things to be mad about, and there’s things like, ‘Thanks, boss. Appreciate it.'”
‘I like things that make sense’: Wizards’ Spencer Dinwiddie plays the cryptocurrency long game
Why is the Mona Lisa the most famous, most valuable painting in the history of the world?
Sure, it was painted by Leonardo da Vinci. But he painted other paintings, too. And there are hundreds of other famous painters who’ve painted well-known and celebrated portraits. But their best works of art do not hold the Mona Lisa’s place in our collective heads.
Of course, the Mona Lisa is unique. But every painting is unique, if you think about it. Other da Vinci works have sold for $450 million, but the Mona Lisa, if the French government ever decided to move it out of the Louvre Museum, would likely command up to twice as much, at least, if its present insured value of about $850 million is any indication.
But, again: Why that painting?
This is how you can stick a toe into the world of Spencer Dinwiddie, and Bitcoin, and cryptocurrency, and TikTok stars, even (perhaps especially) if you don’t know the first thing about crypto — by thinking about how things become valuable. Basically, they do so because of scarcity.
A large number of humans — and it’s important that it is a large number, not just a couple of guys standing on a street corner talking about it — have collectively decided over the centuries that that particular painting, for various reasons, is incredibly important. Thus, it has incredible value. And because there’s only one, the value is, if not infinite, incredibly high — to the point where people can, with a straight face, suggest that France sell the painting for 50 billion Euros (approximately $57.9 billion USD) to help defray its debt from the COVID-19 pandemic.
On a much smaller scale, the Wizards’ new point guard is also interested in creating value. As many know, he’s an acolyte of crypto and non-fungible tokens and other emerging monetary technologies. For the uninitiated – like, in this case, me – cryptocurrency seems exotic and unsettling. And it kind of is. But creating interest and demand for new currencies beyond what we all currently accept as “money” is the game of someone thinking long, long term. Such things don’t happen overnight, if at all.
Dinwiddie is a patient man.
“I like things that make sense to me, to keep it as simple as possible — whether that’s food, basketball, investing, whatever it is — I like things that make sense,” Dinwiddie said last week.
“The quick and skinny of how I got into it — beyond the friends that referred me to it in 2014, and I actually got into it in 2017 — (was) just looking at money, the way it moves, the way it flows,” he continued. “I’m a man that would love to be a billionaire one day, right? Investing in a traditional fashion won’t get me there. If I get seven, even 15 percent return, and I’m fortunate enough to make, let’s call it $150 million (gross), in my NBA career, the likelihood that I get there in any reasonable time frame is very low. Because you’re not accounting for taxes, fees, agents, expenses, whatever. I’ll still probably walk away with maybe $50 million saved, $100 million saved, whatever it is, but not on that type of level. So you look at things that have an asymmetrical kind of yield curve.”
When thinking about investments that could produce that kind of return, Dinwiddie looked at venture capital, emerging markets, emerging technologies. He soon got into Bitcoin, the most popular cryptocurrency. A cryptocurrency is any digital currency that is encrypted and where records are kept independently from a centralized authority, like a bank. He was hardly the first NBA person to lean into it; the Kings started accepting Bitcoin as payment for tickets and team apparel in 2014. Dinwiddie viewed Bitcoin as a hedge against the possibility that the dollar and other currencies might not necessarily hold up in a changing world.
Bitcoin has had its ups and downs as a cryptocurrency, but it’s still here. Newsweek published a story in May claiming 46 million Americans own at least one share of Bitcoin. Some have questioned whether that number is accurate, but there’s no doubting cryptocurrency has gained something of a foothold.
“I think crypto is going to be huge. I personally think it will be bigger than the internet itself,” says Laura Shin, an independent journalist who has written about the emerging cryptocurrency markets for Forbes and the New York Times, and whose new book, “The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze,” comes out next February.
“The reason I say that is a really good way to think about this is a tweet I saw the other day, that said ‘Web 1.0=read. Web 2.0=read and write. Web 3.0=read, write and own,'” Shin said. “People are starting to realize how they can apply this technology in many, many different ways. We’re just getting a glimpse of it with the NFTs. … You can look at Bitcoin as a big, decentralized organization – there’s no CEO. But, somehow, Bitcoin is as valuable as some of the biggest companies in the world. It wasn’t worth anything 10, 12 years ago. Now it’s as big as Apple. … the market cap of Bitcoin is $1.2 trillion. Bitcoin is worth much more than Goldman Sachs.”
Dinwiddie is one of the true believers.
“Once it went up, boom, I made a little bit of money,” he says. “But it also crashed out, so I wound up going a little bit crazy. It sparked a learning curve.”
Dinwiddie liked that Bitcoin was based on distributed ledger technology, known more commonly as blockchain technology. Blockchain is a kind of digital ledger that connects millions of computers on a network. It tabulates peer to peer transactions, confirming them to the other users on the network. So, the idea goes, blockchain is much harder to be hacked or manipulated, because all the computers and users in the network have the same information.
“Think about everything that needs an escrow,” Dinwiddie said. “Basically, every type of money flow needs some type of escrow or counter escrow system, whether that’s purchasing a real estate property, whether that’s even sending a wire. Usually, they have an escrow account in the other country. Like, Chase will have a Chinese affiliate with yen. They’ll have an affiliate in Mexico with the peso, all of those around the world. When a wire’s sent … those accounts can just spit out the money. And that’s why it takes days. They have to do all these clearinghouses and processes. But with blockchain, it’s more secure. And it happens in 20 minutes or less. Often, it can happen in seconds, depending on the blockchain that you use. It was like, okay, this makes a ton of sense.”
Now, Dinwiddie is investing in blockchain in a different way: trying to reach, as he puts it, “the intersection of the entertainment industry, blockchain technology or distributed ledger technology, and figuring out how that naturally works.”
His new company, Calaxy — a mashup of “Creator’s Galaxy” — seeks to unlock the potential of intellectual property of athletes and entertainers by finding ways to monetize their celebrity through a crypto app. The idea is, again, scarcity. A sports star or a social media influencer has followers and fans that want to connect with them on a regular basis. Will those fans be willing to pay money for unique content associated with those stars, such as a live appearance online?
Creators — the stars/influencers — issue what are known as “non-fungible tokens,” or NFTs, to their fans. (Wow, there are a lot of acronyms, aren’t there?) Fans purchase those NFTs, which have unique serial numbers to keep them from being copied or manipulated, and then get access to unique events and content provided by those stars and influencers. The stars and influencers are paid by the purchase of the NFTs. Theoretically, it’s a win-win. And Dinwiddie has convinced others of that theory, raising $7.5 million this summer in a fundraising round, getting investments from the likes of Dallas Cowboys running back Ezekiel Elliott; Sacramento Kings coach Luke Walton; former NBA player Iman Shumpert and his wife, the singer Teyana Taylor, and some pretty serious venture capital companies.
The hope is that this is the next evolution for athletes and entertainers, going beyond the terrestrial types of endorsement deals with major labels or brands, or royalties, or equity and partnerships. It’s not how LeBron James and superstars will make money, but there are lots of other people in the public eye who don’t get paid anywhere close to that level.
Shin noted how the band Kings of Leon issued NFTs to fans to purchase their new album last March. A major part of their sales came from auctions that offered four lifetime front-row seats to the highest bidder to Kings concerts. But the band also made significant money from the sale of the digital NFTs. The band brought in more than $2 million total.
“What we’re talking about in terms of intellectual property and monetizing themselves, we’ve all seen the shift in the internet doing the same thing,” Dinwiddie said. “Now we’re seeing the rise of the Patreons, the Reddits, the OnlyFans, Cameos, all that stuff, where people are trying to figure out, how I can get paid just to be me? Social media has started to dictate who’s famous, who’s not. The only caveat of that is, the problem with it — Drake actually has a line; he says, ‘These days, fame is disconnected from excellence.’ The problem with being famous but not having excellence attached to it is that it’s very hard to extract value at the moment.
“So you have this following, you have this influence, but you’re still broke,” he continued. “How my company was born was kind of sitting at the intersection of (being), I would say, B-List celebrity in term of fame, but excellent in terms of basketball. So it’s made me a ton of money. Fame — eh, debatable. Famous-ish. Where there are some people on Instagram with five million followers. They can walk in a room and — ahhhhh! But can’t make no money. So how can you sit at the intersection of that, understand the pain points in these industries, and solve for that?”
But Dinwiddie is smart enough to know not to proselytize crypto or Calaxy to teammates.
“He explains it every so often,” guard Aaron Holiday said during training camp, “but I’m not really into that. … I’m, for sure, asking him about it probably here shortly, so he can explain it again. But, yeah, that’s not my thing.”
Dinwiddie prefers people do their own research before coming to him, anyway.
“I never want to be the guy that said, ‘Throw a million dollars in Ethereum,’ or whatever, and it goes down, and they’re like, ‘Spencer made me broke,'” he said. “You never know what somebody’s situation is, how they’re investing, what they’re investing, all that other stuff. A lot of people want to get rich quick. If they think they can (get) a 3x (three times their investment) or a 5x or a 10x, they might put their life savings in it, and the timeframe just might be off. I could say ‘I think Ethereum is going to go to 10,000 per token in the next two months,’ but it takes four months to get there, and you only had two months of run time, now you’re screwed, and you’re looking at me like I’m crazy. And I’m like, ‘Well, it did what I said it was going to do; it’s just a little bit late.’ You never want to be in those situations, especially with people you play basketball with. So I’m just kind of like, when you’ve kind of dove in a little bit, if you really want to chop it up, like really chop it, I’m down.”
But again, Dinwiddie’s playing the long game. He knows he is speaking a language a lot of people still don’t understand. So he has the patience to wait, both for the payoff and for people catching up to him and understanding the concepts he espouses. It is, as he has explained many times, part of why he chose going to Colorado rather than Harvard, which was his second choice of school. He wanted to go to the NBA in two years; it took three. He was a first-round talent who went in the second after tearing his ACL during his junior season in 2014.
“I remember from the very beginning, I was the guy who was a little too nerdy for basketball, a little bit too basketball for nerds, didn’t really fit in,” he said. “So you end up being to yourself a little bit. Like, you’re used to not really clicking on the same wave as everybody else, so you end up just kind of end up being yourself. And you learn patience through those conversations. You can be right. There’s sometimes, now, where I’m right, and it’s not worth the headache, or somebody saying that you’re wrong. I used to, when I was younger, I used to do it for the ‘I told you so’ moments. Because I felt like it validated me in a sense. But now, some of that stuff doesn’t matter. The delayed gratification in just about everything.”
Remember when Dinwiddie wanted to get his $34 million deal with the Nets in 2019 tokenized? The league shot that idea down. But Nets owner Joe Tsai said last month that the league is now looking into allowing fans to buy tokens of their teams, potentially raising billions of dollars in revenue. The seeming change of heart makes Dinwiddie smile.
“I wasn’t — still wouldn’t — sacrifice my entire NBA career just to prove a point,” he said. “Would I sacrifice my NBA career for an ‘I told you so’ moment? No. Could I possibly win (legally)? Possibly, depending on if I had enough money to outlast them. … History will tell who is right. Fortunately, if you look at things that have happened, for example, the NBA coming back and then partnering with Dapper Labs, and doing NBA Top Shot, I’m an investor in Dapper Labs. And I think, on that investment, I’m like at 180x – in part, because of the NBA partnering with Top Shot.
“So I’m like, ‘Yeah, y’all stopped me from doing my contract, but you’re a partner with one of my partners, and I’m doing like 180x return.’ So there’s things to be mad about, and there’s things like, ‘Thanks, boss. Appreciate it.'”
