A few weeks ago I stumbled upon a youtube video where a guy opened a pack of Pokemon cards that contained what he claimed to be a card worth $10,000.
What?! People still trade Pokemon cards? I remember collecting those when I was 9 or 10 years old. If I can find them, are they worth anything?! Are my old baseball cards (or beanie babies) worth anything? Will someone buy my playing cards?
Enter NBA Top Shot. A collaboration between the NBA, the NBA Player’s Association, and Dapper Labs that may forever change the memorabalia and collectibles market, NBA Top Shot allows people to purchase sports “moments” (think slam dunk highlights) that are considered digital assets. Below is a 13-second Top Shot clip of Joel Embiid.
Since it’s launch, TopShot has gained +50,000 users, done almost $300 million in sales, and daily sales are now well over $5m, according to cryptoslam.io. ESPN recently noted a 13-second Zion Williamson clip that sold for $100,000. The buyer, a self-proclaimed, “early adopter”, says he’s hoping the video will eventually jump in value. “It could go 10x, 100x or go to zero.” A Lebron James clip sold on February 22 for $208,000. Mark Cuban has also invested in Moments created by players on his NBA team, the Dallas Mavericks, and said he’d pay $1 million for this game winner made by Luka Doncic, but in NBA Top Shot licensed form.
Not every Moment is worth millions or even thousands. Upon a new release, purchasing a pack can cost between $9 and $99 and will include three Moments. Every NBA Top Shop drop thus far has sold out – there are no new packs currently available. This exclusivivity/scarcity factor is why some owners are able to make a quick profit, and Moments are often valued based on their rarity.
Buying a pack is only the first step. The peer-to-peer market within NBA Top Shot is actually where larger trades happen, and people can trade Moments with each other, 24/7, similar to an Ebay auction. I just checked the value of the most recent p2p transactions for single Top Shot Moments, and they range from $15 to $900.
NBA Top Shot Uses Blockchain Technology – What does that Mean?
Blockchain is a public record of transactions, such as the one used by Bitcoin. A digitized record of accounts is useful when it has multiple parties (in this case, Buyers, Sellers, the NBA, the NBA Players’ Association, and Dapper Labs) that each must verify not only some part of each transaction, but also some part of every transaction prior to that. This creates a synchronized, trustable and transparent database, or “ledger”. Details recorded in the ledger will generally include a history of ownership and are traceable and trustable due to the encryption and verification involved by each relevant party. This is the first time the NBA has entered a licensing deal backed by blockchain technology, and in some way, this is a new form of intellectual property ownership.
What Gives Them Value?
The owner of the Top Shot Moment does not own the copyright to the video itself. After purchasing a clip, it can still be broadcast on national television or even YouTube, where I could watch it for free! So what gives it value? Value is a tricky question when dealing with a security with no cash flows, because, well, what gives anything value? The value people place on it.
Whether this is just another sign of the everything bubble or this is blockchain technology disrupting the collectibles market forever, one thing is certain, this technology unlocks a secondary marketplace for the NBA and NBA players in a period of decreasing viewership and television ratings. Top Shot creator Dapper Labs takes a 5% transaction fee on sales in the marketplace, and the NBA and its players union get a cut of the peer-to-peer sales.
NBA Top Shots, Mark Cuban and his Dallas Mavs, Elon Musk and his Tesla, and a growing number of businesses would love to acquire your bitcoin, as they now all accept payments in cryptocurrency. While I currently have no plans to sell or spend my Bitcoin, maybe, just maybe I’ll consider “investing” in a NBA Top Shot Moment. It’s just a cooler, cleaner version of an old-fashion playing card.