A Rick and Morty episode clip. A hairy, blue and purple figure dancing suavely to a Steve Aoki beat. The viral “Charlie Bit my Finger” video posted to Youtube in 2007. These are few of the bevy of videos that have recently been sold as non fungible tokens—unique assets stored as units of data within digital ledgers also known as NFTs. Ownership typically sells for thousands, sometimes millions, of dollars.

The latest class of media to enter the NFT scene? Basketball highlights. 

A combined venture by Canadian Dapper Labs (founder of the Cryptokitties game) and the National Basketball Association (NBA), NBA Top Shot, which are digitally-licensed NBA collectables, has done $460 million in sales on the secondary market in five months—and they’re still in open beta.

The Process, Explained

Top Shot sells moments and highlights from NBA players—whether that be layups, crossovers, dunks or game winners. To further understand TopShot’s business impetus, one could look at it as a physical card marketplace turned digital.

A physical marketplace will feature various amounts of card packs, ranging from $5 to $50, depending on the rarity of cards inside the packs. Each pack has a serial number, and each card is unique.

Typically, if serious collectors were to “pull” extremely rare cards— a 1986 Fleer Michael Jordan rookie card worth $75,000, for instance— they would preserve it and go through a process called “grading.” Grading allows collectors to send these cards to a grading company, mainly Professional Sports Authenticators (PSA), Beckett Grading Services (BGS) and Sportscard Guaranty (SGC), and receive an “objective” value on its condition. Each card is rated on a scale from one to ten, ten being the highest and most coveted.

With NBA Top Shot, however, preservation and grading are non-factors—because it’s digitally created on the Flow blockchain (the equivalent of a serial number), each moment marketed is one of a kind.

Why “Own” a Moment?

Just like how many print out pictures of fine art and hang it on their bedroom wall, basketball highlights are available free on YouTube—no need to “own” the original thing if it’s freely accessible.

But it’s the feeling “owning” the digital watermark of a play, however, that brings consumers to the Top Shot platform.

Mark Cuban, a billionaire and owner of the Dallas Mavericks, said that virtually owning these moments takes away the hassles of physical ownership.

“With collectibles, it’s just things that people collect and find value in and find uniqueness in,” Cuban told CNBC. “And what makes it even more collectible is the algorithmic scarcity.”

The Future of TopShot

Indeed, the current NFTs displayed on the market are projected to be the beginning of a grand influx of highly-sought digital collectibles. The NFT market quadrupled to $250 million in 2020, and in this year alone, the combined market cap for major NFT projects shot up by 1,785%. Top Shot has already established a partnership with the WNBA, alongside currently expanding to other leagues—namely the UFC.

The platform boasts a growing user base and a squad of A-list investors. Their recent round amounted to $305 million, with help from more than 30 pro athletes, VCs and notable celebrities, including the likes of Will Smith and Michael Jordan.

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