CAN YOU INVEST IN BROADWAY WITH CRYPTOCURRENCY?
It is possible to invest in a Broadway show using cryptocurrency. Sounds like an easy answer. Well, sort of. The short answer is that it is "possible". You may be able to invest in Broadway with Bitcoin or Ethereum one day (maybe soon).
What is Cryptocurrency?
Cryptocurrency is essentially a digital currency which can be used to buy goods or services. They are often built using cryptography and exchanged via a method which stores transaction records through a blockchain.
There are several types of cryptocurrency, or crypto, which have reached mainstream use. Some of these include Bitcoin, Ethereum (or Ether), Litecoin, and Ripple.
What is an Accredited Investor?
The securities laws generally limit availability of Broadway investments to an accredited investor. This means that if you had enough cryptocurrency to meet a minimum investment in a Broadway show, you may still have to qualify as an accredited investor. Typically, this means someone whose net worth is over $1,000,000, or who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year. There are other categories of who might qualify, but these are the most common Broadway investors.
Can I Use Bitcoin To Invest In Broadway?
If you meet the qualification of an accredited investor, or the production is accepting unaccredited investors (which they may under certain circumstances allow up to $1,000,000), then you may be able to use cryptocurrency to invest in a Broadway show. How can this be done? Here are a few steps which could make it possible. It may be very risky for the production to hold the cryptocoins as an investment, but it could in theory accept the currency as funds for the investment. Here's how it could work:
1) Broadway production starts to raise funds.
2) Investor wishes to invest in a Broadway show using Bitcoin, or Ether, or Ripple, Litecoin or whatever digital cryptocurrency they have. Maybe they even want to invest with digital art, like an art NFT. For ease of discussion, we can assume the production settles on the idea that it will accept Bitcoin investors.
3) The production may need to set up a Bitcoin wallet on an exchange website, like CoinBase.com.
4) Say the production is accepting units of $25,000 each, with a total capitalization of $10,000,000. Now we have to figure out how to convert Bitcoin to USD. This is not a new concept in the theater-world though. US investors often invest in shows in the West End. Typically, the investor pays in USD what the then-current exchange rate is. The transfer is then made, but there is often an overage or underage because the investment is made at the moment of transfer. At that point, the producer may return the few dollar difference back to the investor, or could use the overage, if any, as additional investment. So instead of an investment of $25,000, the investor would get credit for say a $25,105 investment.
5) When the investor pays for the investment using Bitcoin via an exchange, it seems akin to an overseas investment with the instability of the market. However, here there is another step. The producer than has to cash out the investment into USD. Ideally, prior to the initial investment, the investor and producer communicate that the exchange will take place but the total might change for the positive and negative. They would have to work out the terms of either direction - If the investment comes up short, can the investor wire the difference in USD? If the investment comes in over because the Bitcoin price went up, can the investor get a greater investment interest in the production, or should the producer wire back the funds in USD to the investor?
To summarize, the idea is that an investor can pay for a Broadway investment in Bitcoin. The production would then cash out the investment to convert it to USD.
Bitcoin and Broadway
There is already talk in the Broadway community about using blockchain to reduce ticket fraud. Blockchain could help prove there is only one owner to the ticket and help eliminate duplicates. One day, perhaps you'll even be able to buy snacks and drinks at the concession stand using cryptocurrency. Until then, investing in Broadway with Bitcoin or Ethereum or other cryptocurrency may be the first big step for shows to open the door to crypto-investors.
Jason Turchin is an attorney, producer and entrepreneur who wishes he invested in Bitcoin when his internet law professor told the class in 2001 that cryptocurrency would be the future of online currency. If you are an accredited investor who ever wondered what it is like to invest in a Broadway show, feel free to reach out for more information on our experience!
NOTE: This article is not and should not be construed as advice or guidance. It is for discussion purposes only.