This all makes pretty good sense to me, in general.
DWid worked hard to secure this contract, and now he wants to play with a chunk of his future money instead of waiting for it to dribble in every two weeks. And his tweet makes it sound like he's indeed planning on investing in bitcoin specifically.
SOB200 wrote:For NYC Cabbies when medallion were close to 1.5M per there were banks that would write loans vs the medallion.
I know there are hedge funds that loan money to athletes (for interest), I wonder why it's just not a more normally practiced thing.
BK-Jon wrote:I'm sure athletes get loans against their contracts all the time. I think the reason this is being reported is because of the crypto aspect mainly. Though also the securitization aspect is something that has only been tried a few times in the past according to the article.
FYI, now that medallions are worth something like a few hundred thousand dollars, the cabbies are going bankrupt and some of the banks are getting accused of fraud and predatory lending. There definitely seems to have been some market manipulation which got the reported value of those medallions up to that level. (Basically some of the owners of lots of those medallions have been reported to have be colluding on sale prices to jack the reported price (e.g., I will buy a medallion from you for $1.5m in June, if you agree to buy a medallion from me at $1.5m in July. Then we tell everyone about these two sales and in August these medallions look like they are worth $1.5 million.)
I'm not much of a finances guy myself, but I'm guessing DWid has some close family and/or buddies who are real high on bitcoin as opposed to other crypto-currencies or other investment methods. Enough so, that he expects the financial penalties he'll undergo by borrowing against his contract to be more than repaid by this investment method.
There's also the fact that we don't know how much of his contract he's actually borrowing against. Hopefully for his sake it's nothing too crazy, like maybe a single year of his salary, which after taxes I guess would be about $6M.
What I also find interesting about all this is that if I personally hit a semi-payday contract, then borrowed against it to pursue a pet project, I'd be thinking more along the line of starting my life-long dream business. Then again, maybe he figures that the goal right now is fortune acquisition, and later on he can pursue his pet projects near the end of his career, or after. Indeed, I bet some of these guys who start a dream business in the middle of their careers get overly distracted at points, causing both things to suffer.