A LeBron James highlight sold for $ 200,000. A Zion Williamson edition cost a little less. The National Basketball Association has officially set its sights on the future of the trading card market, and currently this game is sold out.
The NBA has teamed up with Dapper Labs of Canada, the makers of the CryptoKitties game, to create the version of a digital collectible. NBA Top Shot is a crypto collectible that consumers can purchase as a non-fungible token (NFT). Each collectible is tied to a blockchain – a digital ledger similar to the blockchains used for digital currencies like Bitcoin. This effectively gives each NFT a unique and non-hackable Certificate of Authenticity. Even if someone makes a perfect copy of the highlight video, it is instantly recognizable as a fake.
Current “packs” for the game are only $ 9.00 – and they sell out all the time.
Caty Tedman, director of marketing and team partnerships at Dapper Labs, says Top Shots has had sales of more than $ 230 million to date, although most of that comes from dealers who exchange the collectibles after their first sale. Dapper earns revenue from fees charged through peer-to-peer transactions and from releasing new NFT packets.
“I find it fascinating,” said Tom Richardson, professor of digital media in Columbia University’s sports management program.
“It’s a nice development and good to see that people are still making collectibles during this time,” added Lars Rensing, CEO of the blockchain service provider Protokol. “It’s a new step into the future.”
The game has also become a new source of income for the NBA. And again it’s sold out.
In the new trading card model
Top Shots emerged from a licensing agreement that the NBA and its players’ union signed with Dapper Labs in 2019. The NBA did not provide any official commentary on this story, but Richardson, who was once head of publication for the National Football League, says the league can generate 10% to 15% of the revenue of a company that uses its intellectual property.
The NBA licenses the reels to dapper laps, which digitizes the footage and leaves a limited amount available to create scarcity. Some NFTs offer highlights in different angles and digital graphics. One is currently listed for over $ 240,000.
Mark Cuban, owner of Dallas Mavericks, compared Top Shot to the old-school model of trading cards, where consumers can have fun trading and collecting rare items – just without the risk of damage or theft. “And value is still determined by the same laws of supply and demand,” he wrote in January.
“Let Mark Cuban do it in a good, sensible, and easy-to-understand way,” said Richardson, also SVP of strategy at Mercury Intermedia. “So if enough people wanted the same Zion Williamson highlight, this NFT, and bid on it, they got up to $ 100,000, that’s supply and demand. Someone thought it was worth $ 100,000.”
The bet for dealers is that in 2051 a LeBron James NFT could be worth what a 1952 Topps Mickey Mantle card is worth today – one of those rare cards that recently sold for $ 5.2 million. And just imagine what a rare Michael Jordan rookie highlight NFT would sell in 30 years.
“We think it could be a 100 year old product,” said Tedman of Dapper Labs. “When you think about what the rookie cards are going to be worth today in the future, especially those from this point of view of the product. Everyone who participates now is really stepping onto the ground floor.”
By using the blockchain, says Richardson, Dapper overcomes a major challenge with digital assets, namely the ease of copying them infinitely many times without friction.
“One of the things that defined the digital age is that we have moved from a world of scarcity to a world of abundance with all kinds of media resources and products,” he added. “But what the trading card business is about is a physical scarcity of cards. That’s why (Dapper) created these NFTs with the idea of scarcity combined with authenticity due to the way the blockchain works.”
With this asset, Dapper is positioning itself to benefit from a digitally controlled generation that values digital assets as much as physical ones.
“The new generation is more digital,” said Rensing. “I think it will stay because it’s a solution that will also attract new fans and digital natives.”
Mobile game is coming this year
Earlier this month, Dapper raised $ 250 million and is now valued at $ 2 billion, in part thanks to Top Shot’s sudden popularity, according to digital asset research and news agency The Block.
With the funds, Dapper Cotinin will expand its blockchain flow. Tedman, one of the developers at Top Shot, said they now have around 350,000 registered users, claiming that Flow could better handle the capacity of a high-quality marketplace, which was causing problems with its CryptoKitties product.
“With this, we can reach a scale that other blockchain projects have not yet reached,” said Tedman. She said that of the $ 230 million in sales to date, 95% of consumers in the market who buy, sell and trade.
She said the company released 5,000 new packs of highlights this week as a stress test for Flow, and 90,000 people lined up to buy. The packs sold out quickly.
“They come in, collect, assemble what they think are good collections, buy and sell,” said Tedman. “It’s almost like putting together trading cards with the stock market. That is a game in itself before we release the mobile game.”
This mobile game, slated to launch this year, will allow consumers to create NBA-like rosters by purchasing NFT Moments and then entering online tournaments – and potentially winning rarer NFTs that can add in value.
“It can be an opportunity to have fun with your interest and love for a sport – basketball in this case – combined with your interest in new technology and financial experiences like cryptocurrency and NFTs,” said Richardson.
Saum Noursalehi is the CEO of the software company tZERO, a company that symbolizes the assets of private or public companies and builds the platform on which the assets can be traded. He sees a bright future for sports leagues using NFT licensing agreements and suggests that this is a model of how blockchain technology can be used to track and trade other types of assets.
Blockchain technology “will change the way we trade value today, how we trade assets,” said Noursalehi.
Tedman added, “We’re just getting started. We have a lot of big plans that we can’t wait to put in front of people.”
Let the new games begin as the digital age continues to take shape. However, participation in Dapper’s NBA Top Shot competition is currently sold out.