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Collectors pay big bucks for blockchain basketball action share

Professional sports leagues have made billions over the years selling licensed collectibles, taking a cut on everything from team jerseys and artwork to autographed soccer balls. In the United States, the National Basketball Association is taking the industry to a new level: selling flagship games to fans as digital tokens on the blockchain.

The company is called NBA Top Shot, a venture between the league, its player association and a mainstream blockchain company that claims to create licensed sports memorabilia for the digital age.

Top Shot’s popularity has skyrocketed in recent weeks, to the point that only one 12-second climax from a November 2019 LeBron James resold for more than $ 200,000. A similar clip can be viewed on YouTube free.

Simply put, Top Shot takes real NBA highlights, encrypts them into a digital asset known as the non-fungible token (NFT), and allows consumers to buy and sell them in an online marketplace licensed by the league itself. These transactions are recorded on the blockchain, which serves as the property register.

Each token, known in Top Shot jargon as a ‘moment’, is assigned a serial number and sold in limited edition ‘packs’, ranging from $ 9 to $ 230 depending on the moments they contain – similar to baseball or basketball card packs.

Collectors can buy and sell moments of each other in the secondary market, which has seen more than $ 300 million in sales since Top Shot’s public launch in October, $ 250 million in the past 30 days, according to NFT tracker

Players, team owners, and broadcasters have all contributed to the hype for Top Shot in recent weeks. Portland Trailblazers point guard CJ McCollum tweeted about going into the business, inviting fans to send him a direct message on social networks to chat. “I want to know more about these moments,” he wrote. “Especially my moments lol.”

Line graph of total daily sales volume, in millions of dollars showing the market for NBA Top Shot digital collectibles hit record sales in February after its public launch last October

The U.S. sports memorabilia market is already worth up to $ 5.4 billion a year, according to a 2018 estimate from Forbes. Angela Ruggiero, managing director of the Sports Innovation Lab, a research company that studies technology and fan behavior in sports, said digital tokens could expand the market to people who are not considered “traditional fans. , Generally defined as those who watch games on television. or buy tickets and jerseys.

Case in point: Robyn Batnick, a high school guidance counselor in Long Island, New York, said she was immediately fascinated by collecting Top Shot moments after her husband suggested it as an activity they could to do together.

“He told me, ‘I have a confession to make, I just spent $ 2,500 on a hologram,'” she said. Initially alarmed by the dollar value, she became intrigued once he showed her how the process works online.

Collectors must register on the Top Shot website at set times to await a “drop”, or release, of Moment Packs. Demand is so high that over 200,000 people joined the queue last Friday for a drop of just over 10,000 packs.

“I’m definitely not a sports fan,” said Batnick, 35. “The players and the movements? They don’t mean anything to me. I see it as a game, and I’m like, I want to play! “

Blockchain company Dapper Labs partnered with the NBA to develop Top Shot in 2019 following the success of its earlier venture in NFTs, CryptoKitties.

Column chart of monthly sales volume for major categories of NFT, in millions of dollars showing monumental growth in sales of non-fungible tokens

Dapper Labs co-founder Mik Naayem said his goal is to develop a product whose popularity could extend beyond the island cryptocurrency community. “We wondered if we could make something cute and appropriate on the blockchain, could we get ordinary people to engage?” he said.

The revenue from the sale of Top Shot packs is split between Dapper Labs, the NBA and the players’ association. The three groups also shared a 5 percent reduction in each aftermarket sale, according to two people familiar with the arrangement.

Treemap of the 40 best-selling crypto collectibles by sales of all time.  NBA Top Shot Oversold All Upcoming Top Selling Crypto Collectibles Combined

The league helps determine which highlights turn into moments, according to Adrienne O’Keeffe, associate vice president of global partnerships at the NBA. Current times are mostly limited to games in the 2019-20 and 2020-2021 seasons, but the league may release historical highlights – such as those of Michael Jordan – in the future.

Meanwhile, Naayem said Dapper Labs plans to eventually allow collectors to use their moments as tokens in a digital game, similar to Pokémon.

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Top Shot comes at a time when the market for collectible cards for traditional sports and collectible card games is booming. The “collectible cards” category on eBay increased by 142% last year, with 4 million more sales in the US alone compared to 2019. Sales of basketball cards, eBay’s second most popular card category after Pokémon, increased 373 percent .

To illustrate the meteoric rise of Top Shot, the Financial Times compared the price trajectories of a LeBron James collectible card and a LeBron James Top Shot moment.

Both menu, a 2003 Topps Chrome LeBron James # 111 in mint condition (PSA 10), and the moment, a 13-second clip of James to reply a 2001 Kobe Bryant dunk in homage to the late Lakers star, recently sold for around $ 34,000. For the card, it was more than double the price it got in October; the current value, meanwhile, has been more than 700-fold over the same period, from its October resale price of $ 46.

Line charts comparing the price trajectories of a LeBron James collectible card and a LeBron James Top Shot "moment" (a 13 second video highlight of a game).  The card and the moment recently sold for around $ 34,000, but the price of the moment has risen much more sharply in a shorter period, illustrating the meteoric rise of NBA Top Shot.

Robyn Batnick’s husband Michael, who works as a financial advisor and co-hosts a finance and culture podcast, said Top Shots was “about as speculative as an asset you could possibly own” and that the hype pushed him to make financial decisions against his rational judgment. “I spent $ 400 for Duncan Robinson for a while. He’s not even good. I want to hit myself on the head.

A 2003 Topps Chrome LeBron James Collectible Card # 111

A 2003 Topps Chrome LeBron James Collectible Card # 111 © Card Ladder

Nonetheless, it has so far achieved returns of between 20% and 50% on resales.

Batnick said he got interested in Top Shot in late January as the online collecting community offered an antidote to pandemic boredom.

“When the fall happens and you walk in line and you see your place, there is something in the community, it just erases the loneliness,” he said. “It’s not about the money, it’s the chemicals in your brain.”

Additional reporting by Eric Platt

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