They used to say Cash is King, but not any more.
It also used to lubricate many a motor racing transaction and, when I say cash, I literally mean big piles of it. Often in suitcases, sometimes in the proverbial brown envelope. I once had a driver, whose father owned an amusement arcade, bring me a sponsorship payment in £1 coins. Aside from the fact that it took two mechanics to lift the boxes, it was strictly below board and thus illegal.
Bernie Ecclestone’s London office contains an amusing bronze artwork representing large piles of dollar bills, perhaps a throwback to past deals. That’s the problem, however, because in days gone by cash became synonymous with undeclared income, which means tax evasion. This is one reason why governments and central banks promote the convenience, and scrutiny, of digital transactions.
While most of us are familiar with contactless payment cards, when it comes to moving chunks of money around the world things are more arcane. Central banks make a lot of money from exchange rates, transaction fees and commissions, and take their time over it.
Which is why there had been a big buzz in recent years about cryptocurrencies, starting with Bitcoin in 2008. Digital currencies which eliminate Mr Banker. Instant transactions, secure, tradable and ‘distributed’, which means decentralised. The power lies with user, not a central authority.
Two such currencies have arrived in Formula 1 this year, their PR emphasising the sport’s suitability based on speed, data and high performance. Soccer Coin announced that Romain Grosjean – a former Geneva banker – would become a brand ambassador, while Futurocoin partnered with Red Bull Racing.
Soccer Coin describes itself as a ‘revolution in the sports business’. It is focused on enabling soccer fans to transact by using their favourite club’s own currency held in a mobile app. This includes buying tickets and making purchases while inside the stadiums. Leave mid-match and you can sell your ticket to another fan.
A micropayment on each transaction goes directly to the club or, intriguingly, to an appointed charity or environmental project.
Founded in Malta but run from Salzburg by CEO Andreas Heidl, Soccer Coin’s aim is to blaze a trail for cryptocurrencies in the world of sport, generating revenue for teams, rights holders and promoters alike.
Futurocoin’s proposition is that of a cryptocurrency, named FTO, which can be used to make any kind of purchase whilst offering a faster transaction speed than the ubiquitous Bitcoin.
Founded by Polish businessman Roman Ziemian and his German partner Stephan Morgenstern, the pair met through working on Blockchain technology – the system by which a series of financial or data transactions can be made in a secure, transparent and unalterable way. Ziemian admits to being a big Formula 1 fan, although the business reasoning behind the deal with Red Bull Racing falls to Futurocoin’s CEO Paulina Wozniak.
“Our goal is to build brand awareness of our cryptocurrency, build Futurocoin as a socially responsible brand and stop the perception of cryptocurrencies as being unavailable or obscure.”
This latter point is key because, for many, the media coverage of cryptocurrencies has often majored on concerns over fluctuating values, lack of regulation, tax evasion, use on the dark web and fraud.
By using the platform of Formula 1 Soccer Coin and Futurocoin represent something rather important. An ambitious push to use educate people about the genuine benefits of digital currencies and potentially open the door to new revenue streams.
Ferrari Coin anyone?
This Article was first Published in Mark Gallagher’s monthly column for F1 Racing Magazine, May 2019