Has Spencer Dinwiddie Got a Deal for You

The Nets' late-bloomer is at the forefront of the NBA's investing class of players, but it isn't stocks or real estate that drive his ambitions; it's bitcoin. It's a wild ride, but for the league's most adventurous financial speculators, the potential returns are worth the risk.
photo of Leo SepkowitzLeo Sepkowitz@@LeoSepkowitzContributorOctober 12, 2018

In the summer of 2017, Spencer Dinwiddie bought bitcoin at $3,000. Or maybe it was $4,000—who could keep it straight after a year of wild volatility and frenetic trades?

Either way, his timing was impeccable—so good that it bothers him in retrospect. "If I woulda gone all-in, boy, I'd be loaded right now," he says one day over lunch. "I'd be rolling in it."

As the NBA season began in fall '17, Dinwiddie obsessively kept tabs on his investment. Before games, in the locker room, when most players were busy entering "the zone," he would open Coinbase, an app that supports crypto transactions, and watch the ticker do its thing: fluctuate erratically.

"I honestly got tired of hearing him talk about it," says Trevor Booker, who played with Dinwiddie in Brooklyn the past two seasons. "He would let me know how it was performing every day."

For Dinwiddie, the movement was exciting, dizzying, tense. As prices climbed, he would relax a little. It's doing what they said it would, he thought. Trust the process, as Joel Embiid would say.

Then, in the dead of winter, cryptocurrency caught fire. Dinwiddie's intriguing investment quickly became an epic winner. On a given day, bitcoin might spike by thousands of dollars, and then do so again a week later. The action was unprecedented.

Following along demanded a certain dedication. Unfortunately, Dinwiddie was in the middle of an NBA season. Games weren't much of an obstacle—they usually tipped off at night, during the market's mellow hours—but afternoon film sessions and run-throughs perhaps got in the way of a good investment opportunity.

"If I knew I was going to make a trade and it would intersect with practice, I would set a super-strict sell stop," he says, referring to a mechanism that will automatically sell an asset if it reaches a certain value on the market. He was serious about those automated moves; the crypto market may have gone wild, but Dinwiddie had to be meticulous. For him, this was not a series of digits moving randomly, inconsequentially across a screen; this was money. Dinwiddie was on a near-minimum contract, and it wasn't clear if the next one would pay any better, or if it would arrive at all.

And, of course, bitcoin was still somewhat of an enigma—particularly in NBA circles. Initially, even Dinwiddie viewed it as basically a regular, booming stock, not a decentralized, largely unregulated currency unaffiliated with any country. (It is based online and exists apart from the United States government.) Many players were too risk-averse to get in the crypto fray.

Every day, Dinwiddie tried to convince Booker, who runs his own venture capital firm, to invest in crypto. But, Booker says, "I thought it was too volatile and I didn't know enough at the time."

Dinwiddie, on the other hand, was curious and courageous enough to invest. He jumped into the world of bitcoin just before it reached critical mass—as a few NBA players did—but connected with it more deeply than most investors, inside and out of the NBA. He is a forward thinker with a busy mind.

"Aw, man, I got a lot of ideas," he says. "But I can't give it all to you because I haven't even started them yet."

In bitcoin, Dinwiddie recognized a readymade chance to enter on the ground floor of something special, to chance it, to get rich quick, even.

Andre Iguodala is one of the most notable figures in a growing class of NBA players who have devoted much of their off-court time to investing.
Andre Iguodala is one of the most notable figures in a growing class of NBA players who have devoted much of their off-court time to investing.Noah Graham/Getty Images

In that way, Dinwiddie was unique in the league. Increasingly, NBA players are leading businessmen, and many among them are stars—LeBron James, Kevin Durant, Andre Iguodala. In most cases, their investments are secondary, maybe even irrelevant. Through basketball, those players have banked tens of millions in career earnings, and they can activate their brands to effectively print more money at will. Dinwiddie wasn't like them and still isn't. And he's not like the standard NBA crypto investor, either. Most of those guys only caught on when bitcoin hit the mainstream, using what Dinwiddie calls "Vegas deals"—putting down a few thousand bucks and hoping for the best.

When Dinwiddie invested in summer 2017, he did so in earnest. He was just a 2014 second-round pick with a once-torn ACL, tossed aside by two franchises and fighting for minutes with his third. He was a fringe player with an uncertain future, not entirely unlike bitcoin itself. There was plenty to lose.

Then, as if by fate, Dinwiddie and bitcoin ascended together.

Dinwiddie, 25, was born in Los Angeles and grew up in an intellectual family. His mother, Stephanie, spent nearly two decades as a professor at the University of Southern California before opening her own preschool. Dinwiddie's father, Malcolm, is a real estate agent who pushed Dinwiddie to plan outside basketball. His younger brother, Taylor, studies computer engineering and has always been an academic standout.

"He probably got a lot of his business acumen from his parents," says Tad Boyle, Dinwiddie's college coach at the University of Colorado. "They're very intelligent, and they raised Spencer and Taylor to follow suit."

For a time, Spencer was a straight-A kid, just like Taylor. But, much in the way gold tends to peak as the stock market dips, "As I rose in basketball, inversely proportionally, I declined in school."

In Boulder, Dinwiddie majored in integrated physiology for two years before he switched to communications to lighten the workload.

"He could have been an Academic All-American if he put his mind to it," says Boyle. "He's a smart guy. I told Spencer when he left here, 'If you have the career you want to have, you have the capacity to be an NBA general manager.' He's smart enough. He understands the market, and there's so many guys that don't."

Bitcoin first appeared on Dinwiddie's radar in 2014, recommended by a friend who works in finance. At the time, Dinwiddie had little disposable income. In January of that year, as a college junior, he'd torn his ACL. In June, he slid to the second round of the NBA draft, where the Pistons selected him. He signed a contract with two guaranteed years for less than $1 million each. As a rookie, he appeared in fewer than half of Detroit's games and spent time in the D-League. Maybe he'd have a future in the NBA, or maybe he'd flame out, as many second-round picks before him had done.

Spencer Dinwiddie spent most of his rookie season on the Pistons bench, but did earn enough to start buying into the real estate market.
Spencer Dinwiddie spent most of his rookie season on the Pistons bench, but did earn enough to start buying into the real estate market.Rocky Widner/Getty Images

Meanwhile, he was wary of the bitcoin suggestion. He'd heard the horror stories of players who'd gone broke, and those guys had earned way more money in sports than Dinwiddie thought he might. Their tales always seemed to begin with some friend and some dubious investment. This sounded a lot like that. Cryptocurrency in 2014? Bitcoin was weird, laughable, a black hole. A good way for a 21-year-old rookie to lose it all.

So back when bitcoin cost somewhere between one-tenth and one-twentieth of what it does today, Dinwiddie told his friend: "Man, hell no! Like, no fucking way. There's no chance."

Instead, encouraged by his father, Dinwiddie entered the real estate market.

During his first season in Detroit, Dinwiddie purchased a spec home, where he planned to live throughout what he imagined would be a lengthy Pistons tenure. To afford the property, he took out a mortgage against future earnings. The real estate market was considered a safer bet than crypto, but it, too, carried some risk.

"I wanted him to get more of a solid foundation and money in the bank so to speak before he started getting debt on a house or taking risky investments," says Boyle, who formerly worked as an investment adviser at what is now RBC Wealth Management. "Not that I didn't believe in him," he continues, "but you have to get lucky, especially when you're a guy like Spencer—off an ACL, drafted in the second round. But Spencer is his own man."

After two years in Detroit, Dinwiddie was traded to Chicago, where he bought another home. Within the next four months, he was waived twice by the Bulls.

When the Nets scooped him up in December 2016, Dinwiddie became a remote landlord twice over. (He still rents out each property, and others.)

Meanwhile, on December 8, when Dinwiddie signed with the Nets, one bitcoin cost about $775. On January 1, 2017, it cost nearly $950. By the first week of February, it cleared $1,000 per share. That month was good to Dinwiddie, too, as he scored 17 points in one game and 19 the next.

By April, Dinwiddie had secured a future role with the Nets; bitcoin was rocketing toward $1,200 and beyond.

At season's end, Dinwiddie set up a Coinbase app. He was done letting bitcoin grow without him. He transferred some money from the bank and bought in. 

Dinwiddie's fortunes rose with the Nets in his fourth NBA season at the same time the value of his cryptocurrency investments were skyrocketing.
Dinwiddie's fortunes rose with the Nets in his fourth NBA season at the same time the value of his cryptocurrency investments were skyrocketing.Frank Franklin II/Associated Press

"Spencer's got the courage of his convictions," Boyle says. "I didn't get into bitcoin. A lot of people looked at it and watched, but Spencer's not afraid to take a risk, and that's something that I really respect. You don't catch fish from the dock unless you put the line in the water, and he'll put the line in the water."

As the 2017-18 NBA season opened, bitcoin cleared $5,000, banking immediate returns for Dinwiddie. By December, the price had doubled. Soon it would triple, up to $15,000.

Dinwiddie, feeling lucky, began to research some lesser-known coins. He noticed that a cryptocurrency called Tron had secured backing from wealthy investors. "If billionaires invest in something and push something, even if it doesn't have long term-success, it'll have its day," Dinwiddie says.

He bought into Tron in early December, when bitcoin's prices were spiking. Almost immediately, Tron spiked, too.

It was quite a time to be Spencer Dinwiddie. As the crypto market took off, his basketball career went with it. November 2017 was his best month ever, as he logged a career high in minutes per game and scored a career-high 25 in a win vs. Utah. December was even better. He played more minutes per game and set another career high in scoring, all while averaging 7.1 assists for the month, a—yes—career best.

During that stretch, his on-court persona finally mirrored his everyday demeanor. In conversation, Dinwiddie is confident and charismatic. On occasion, like when discussing a profitable trade, he will lean back proudly, flash a wide grin and, like any native Californian, hang 10. He believes he'd make a good guest on Shark Tank, and he's probably right. Dinwiddie welcomes a spotlight and its associated pressure. "I'm really more of an all-gas, no-breaks-type thinker," he says, and that mentality has increasingly permeated his basketball career, which he calls his "main bet."

Recently, on Nets media day, he said, "I don't believe that anybody can guard me." The comment was exaggerated and amusing, but it carried some truth. In big spots, Dinwiddie has a knack for pulling off the improbable. In January, in Detroit, he buried his old team with a wonky buzzer-beating combination move: a driving pump fake followed by a drop step followed by a hideous midair up-and-under layup-looking thing. It eluded the flailing arm of Andre Drummond and put Brooklyn ahead with but 0.9 seconds on the clock.

Despite starting just 58 games for the Nets last year, Dinwiddie matched James Harden with 103 clutch-time points. By season's end, the former D-Leaguer finished third in Most Improved Player voting, behind All-Star Victor Oladipo and star defender Clint Capela. (Yes, Dinwiddie recently had something to say about it.)

Next summer, he'll reach unrestricted free agency. To an outsider, it's easy to see how his lack of bona fides makes it difficult to pinpoint his value. He spent three years as a minimum salary-type player and one as something like a mid-level exception-type player (roughly $8.5 million annually) or better.

Despite proving to be one of the NBA's best clutch-time scorers last season, Dinwiddie's modest start in the league may complicate the offers he receives to remain with the Nets or play elsewhere.
Despite proving to be one of the NBA's best clutch-time scorers last season, Dinwiddie's modest start in the league may complicate the offers he receives to remain with the Nets or play elsewhere.Mark Blinch/Getty Images

Many athletes might deny or downplay the uncertainty of his situation. But Dinwiddie is happy to size it up with unusual clarity and objectivity.

"It's an interesting case study," he says. He and the Nets can begin negotiating an extension starting on December 8—nearly 30 games into the season. "It's a big bet because you could say, 'Hey, his first 30 games he killed it,' and I could be like, 'Well because I killed it, I ain't signing the extension.' Or the first 30 games could be bad, and you could be like, 'I'm not gonna sign him now.'"

Indeed, his parallel with bitcoin continues: after their respective rises, questions persist.

Even Dinwiddie hedges when it comes to crypto—in December, he sold some of his coins, enough to cover his principal investment. He exited Tron at the perfect time, just as it multiplied sixfold from his purchase price.

As for bitcoin, Dinwiddie mostly sold at around $15,000 per coin. It briefly continued to rise afterward, peaking at $19,783 in late December, but then, just as suddenly as it had ascended, the price began to tumble, moving from five figures to four. In recent months, it has landed around $6,500.

Dinwiddie reads everything he can on the crypto market and crypto tech. His early success felt like easy money, so he began to wonder how to make more—or whether to leave ahead. "When you realize you don't have the answers," he says, "you decide you need to learn." Dinwiddie likes to bring his crypto content with him on road trips. "That's how I chose to feed my mind the last year-and-a-half."

Other NBA players have been doing the same, and maybe that's not surprising, as most of them fall into bitcoin's most active demographic. Twenty-one percent of people aged 18-34 have made a bitcoin trade—that's three times the number among those 35-54, and 20 times the number among those 55-plus.

Wilson Chandler of the 76ers has even taken an online crypto course. "Once I learned about bitcoin, I started to learn about the alternative coins, and I started doing the research on the companies and the tech behind it," he says. "I day traded a few of the coins, got my feet wet. I was using Coinbase like everyone, then using different, bigger platforms so I could do more trading." During the season, Chandler would check prices once or twice per week.

Still, there is less pressure on somebody like Chandler, a 10-year vet whose salary this year is $12.8 million, than there was on Dinwiddie, or on, say, Pat Connaughton of the Bucks.

Bucks guard Pat Connaughton recently began dabbling in cryptocurrency as a means by which to diversify his many financial investments.
Bucks guard Pat Connaughton recently began dabbling in cryptocurrency as a means by which to diversify his many financial investments.Zach Beeker/Getty Images

Connaughton, like Dinwiddie, is a former second-round pick. He's also an avid investor—mostly real estate—who caught on to bitcoin last year. "I only dabble in the digital currency," he says. "I'm not an expert or know if it's going to boom or bust. But being a business guy, I try to diversify a little bit." Connaughton invested some money during the crypto rise. For a while, Connaughton would monitor prices consistently, too, but lately crypto has taken a back seat to some of his other investments.

For Dinwiddie, though, the battle rages on. He remains firm in his convictions. He believes cryptocurrency is here to stay, and with his expertise, he can even make it all sound philosophical.

"Blockchain in essence is transparency," he says. Blockchain is sort of a ledger that keeps track of crypto trades and accounts. It is decentralized, a network of countless computers that are checking each other to confirm transactions, making the system virtually impossible to hack or fudge.

"So if as humans we're looking, searching for transparency, we're gonna get there eventually. Now, what does that mean for the price? I don't know. Is it a $10K bitcoin, $5K, $500K? Nobody knows; I think everyone's guesstimating. But the tech base in general, if we as a people—all seven-and-a-half or eight billion of us—say we want truth and transparency, it's the next step."

To get there, it will take widespread adoption of cryptocurrencies. Until it is accepted as a regular, usable currency, bitcoin's price is only relevant to market traders; what does it matter if a bill is worth $1 or $100 if you can't buy anything with it?

Many across the NBA—in addition to Dinwiddie—understand this and are working to legitimize the currency.

In 2014, the Sacramento Kings became the first NBA team to accept bitcoin for ticket payment, and earlier this year they installed crypto-mining machines inside their arena. The Dallas Mavericks also tried accepting bitcoin for tickets four years ago, but team owner Mark Cuban says they received no inquiries. This season Dallas will try again.

"If crypto is going to have a chance of being a currency, then someone has to start accepting it for payment," Cuban says.

"We wanted to try it, see if we can get any traction and learn from the experience." Cuban envisions a day when the NBA more wholly embraces bitcoin, for jersey sales, League Pass and more.

"I need to talk to Mark Cuban," Dinwiddie says upon hearing the news. "Is that tampering? I don't know if I can talk to him, quite honestly."

After a prior experiment to accept cryptocurrency for ticket sales fizzled, Mark Cuban and the Mavericks plan to revive the plan at some point this season.
After a prior experiment to accept cryptocurrency for ticket sales fizzled, Mark Cuban and the Mavericks plan to revive the plan at some point this season.Rocky Widner/Getty Images

Would Dinwiddie go to similar lengths to legitimize the currency? Would he accept a bitcoin salary?

No, not yet. Dinwiddie notes that, because crypto isn't widely embraced, he'd have to exchange his bitcoin for U.S. dollars to buy anything. Those sales would trigger capital gains taxes—not good. And if the bitcoin market were down, meaning there were no gains for the government to tax—well, that'd be a problem, too. (Says Cuban when asked about bitcoin salaries: "No.")

So that's out. And yet Dinwiddie remains committed to the movement.

"I look at this whole time as like a big-ass reinvestment period," he says. He still has a chunk of money invested in crypto, and recently he methodically bought in some more, preparing for another boom. Maybe he'll be able to speak it into existence. That might help with his latest endeavor.

This season, Dinwiddie is debuting his signature shoe, K8IROS, which he developed with a company called Project Dream, eschewing the help of a major brand. He's the only NBA player to embark on such a mission. (As he notes, "What a lot of people don't know about Big Baller Brand is they [use] Brandblack, which is a subsidiary of Skechers.")

But Dinwiddie isn't signing any old flat-rate sneaker deal.

"Why would I take $25,000 from Nike, which is $14,000 after taxes?" he says. "If you're smart with what you do contract-wise, why wouldn't you try to make more?"

Instead, his deal is high-upside with some risk, just the way he likes it. Dinwiddie says he'll receive upward of 50 percent of his sneaker's profits, provided he can successfully leverage his platform to net any profit. (From his overall cut, 25.08 percent—representing his college and professional jersey numbers—will go to the Dinwiddie Family Foundation, which helps send kids to college.)

Dinwiddie has been wearing the sneaker all preseason and will continue to rock it. Later this season, it will hit retail in Nets shops and on his personal site.

Dinwiddie can hardly wait—he sketched out the shoe, obsessed over the supportive foam, weighed quality and sustainability against profit margins and price points, and negotiated an endorsement deal that suits him. In short, he's overseeing the entire project. Even the accepted payment methods. 

So yes, when Dinwiddie's shoe hits the market, fans will be allowed to buy it with bitcoin.