Jonathan Bales, a sports bettor and daily fantasy sports player, made waves last month by dropping $35,000 (with the help of a few friends) on a digital video clip of NBA rookie Ja Morant viciously dunking a basketball during a Dec. 11, 2019 game against the Phoenix Suns.
Bales doesn’t own the rights to the clip. ESPN doesn’t have to pay him to use the clip on their broadcast. And there’s no tangible trading card to go along with the clip. So… why buy?
NBA TopShot is a relatively new entry into the NFT space. NFT stands for “non-fungible token,” a form of digital-only good that is altogether unique and unfalsifiable. Every token, or in this case, clip of a specific NBA play called a “moment,” has a unique serial number that helps to assign an exclusive value.
That’s a big reason why the No. 1 serial number card of a particular moment might sell for five, ten, or a 100 times the value of number 553, for example.
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TopShot moments are just one type of NFT that has cropped up around the blockchain, a decentralized way of tracking cryptocurrency transactions that any person can trace. If Jim were to buy a moment for $100, Joe buys it from him for $150, and Jack then buys it from Joe for $200, the full transaction history will be logged so that anyone can follow the path.
These tokens differ from traditional trading cards in that they can’t be faked or damaged, nor does it take weeks or months for the moment to be graded and shipped to you in the mail after an online auction. It’s completely digital.
Buyers have two ways to acquire moments: buying “packs,” like a traditional pack of trading cards, or perusing the open market where collectors list their moments for sale at will. Weeks ago, anyone could wander onto the site and purchase as many packs as they’d like- they only cost $9 (three moments in each pack).
Nowadays, pack drops might occur only once a week, and a queue of over 50,000 hungry collectors might join a random selection process in hopes of landing one of the packs about to drop. The supply is now having trouble keeping up with the demand. Good problem to have if you work at TopShot. Bad for would-be collectors.
NBA TopShot has an exclusive licensing agreement with the NBA, and they have player sponsors like Tyler Herro, a young star for the Miami Heat. His moments are featured on the homepage and he’s publicly promoted the brand.
Bales’ buy of Morant’s moment in mid-January was a record high for the Vancouver-based company. More and more expensive sales began to perk up. $75,000 here, $100,000 there. The highest-listed moment just one month after Bales’ buy? A Lebron James dunk in a game against the Sacramento Kings, on the market for a cool $250,000. And some day soon, someone will buy it.
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One key reason for the meteoric rise of TopShot has been its wide net of interest. Their product exists at the intersection of numerous entities: the NBA, consumers’ belief in cryptocurrency and the blockchain, art, collectibles, and sports memorabilia. And even if someone getting into TopShot is only interested in one of those aspects, the value continues to rise all the same.
The company has experienced unprecedented growth in recent weeks. The site launched in July 2019, and the website eclipsed $100 million in pack sales and marketplace volume on Feb. 18, but more than $70 million in sales occurred in the last month alone. That’s what’s called a bull market.
Rumblings about the UFC getting involved with the creators of TopShot have raised questions about whether the NFL or MLB might follow suit. Anyone interested in jumping into this space better jump quick.
Tyler Strong is the Business Editor for The Augusta Press. Reach him at tyler@theaugustapress.com
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