A first-of-its-kind collaboration between a major U.S. athletic league and a blockchain startup is quietly changing the sports collectibles game. Possibly for good.
Since its closed beta launch in May 2020, NBA Top Shot has brokered at least $10 million in sales of a decidedly old-school sports product: highlight clips.
NBA Top Shot markets these clips as “video trading cards.” But they’re far more sophisticated than both the SportsCenter-style highlight reels we all know and love and the actual trading cards readers of a certain age remember from their youths (or adulthoods, sure).
The magic happens behind the scenes. Every NBA Top Shot clip is authenticated by Flow, the proprietary blockchain solution developed by crypto standout Dapper Labs. This ensures that every step in the chain of ownership is documented and authenticated, just as every step in cryptocurrency chains of custody is verified by the underlying blockchain technology. Blockchain virtually guarantees that NBA Top Shot clips can’t be forged, duplicated, or otherwise tampered with. A scarce but unimpeachably authentic supply of top-quality NBA highlights is preserved for fans who’ll accept nothing less than the genuine article.
This, clearly, has vast potential to enhance value. And, so far, it’s living up to that potential. A report by Bloomberg casually notes that one of NBA Top Shot’s top-performing clips, a mesmerizing freeze by Memphis Grizzlies point guard Ja Morant that climaxes in a humiliating dunk over then-Phoenix Suns center Aron Baynes, lists for more than $43,000. (It certainly doesn’t hurt that the clip ends with footage of a deflated Baynes jogging back up the court as the full magnitude of what just occurred sinks in.)
Four other videos, and counting, list for more than $20,000 on the NBA Top Shot marketplace, according to Bloomberg. Two show more or less the same footage: a dunk by Lakers-era LeBron James over a hapless Sacramento Kings defender.
That points to another game-changing innovation: the potential for blockchain-aided verification processes to multiply value, not only enhance it. Thanks to Flow, which confirms prior ownership and authenticity for each clip, there’s no question that both James clips are genuine. And because both are unique — and, let’s be frank, totally awesome — it’s entirely reasonable to expect that two different fans with money to burn will want to claim them as their own.
The thesis seemed solid enough in the opening weeks of 2021, as the marketplace notched its best run to date. Clips worth about $1.3 million changed hands in the span of a single week last month, according to Bloomberg. Hot releases sell out within minutes, suggesting that a growing base of avid fans watches the platform closely for new material, and often sell for well above their initial market value on secondary markets.
It’s the law of scarcity in action. And it should be no surprise given the pedigree of the shop responsible for NBA Top Shot.
Before hooking up with the NBA, Dapper Labs was best known for developing the devilishly addictive CryptoKitties game, which in 2017 disrupted the ethereum blockchain and threw the market for the Bitcoin competitor into total chaos.
There’s no sign so far that NBA Top Shot will literally seize up the market for NBA collectibles, but it’s clear that the newcomer has the potential to be every bit as disruptive as past crypto-adjacent innovations.
The biggest question mark remaining is what happens if and when the long-awaited market correction arrives, says sports card appraisal expert and Hall of Fame coach David Houle. History tells us that the frenetic run-up in asset prices since the depths of the pandemic crash won’t last, and recent volatility in other blockchain-enhanced asset classes (namely, cryptocurrency) hints at what might happen if collectors suddenly feel the need to raise capital.
NBA Top Shot’s backers aren’t concerned. They believe the marketplace is a first mover in a space poised to grow exponentially in the years ahead. If NBA Top Shot isn’t quite the “Uber of blockchain,” it may well be the hook that brings non-techy types aboard.
“We thought this would be the killer app that would bring people to the blockchain,” Roham Gharegozlou, Dapper Labs’ Chief Executive Officer, told Bloomberg. “We just needed to find a partner at the scale of the NBA that would let us do a first of its kind product and one that would last 100 years if we do our job right.”
They found that partner. Now the world waits to see if they come down with the dunk.