NBA Top Shot: The First Mainstream NFTs?

Anyone familiar with the world of NFTs will have heard of Cryptokitties and their creator Dapper Labs (formerly Axiom Zen). While the game is still going strong among its core following, outside factors like the congestion on the Ethereum network prevented the cute cat collecting game from ever going mainstream in 2017 in a way it perhaps could have. The folks at Dapper Labs haven’t sat by sulking at the state of things however, and instead elected to take matters into their own hands. They have developed a completely new blockchain dedicated to gaming, entertainment and collectibles, called Flow, launching with a flagship product: NBA Top Shot. Will NBA Top Shot be the experience that takes NFT ownership to finally go full mainstream?

Who’s Behind NBA Top Shot?

With its surprise explosion in popularity in 2017, Cryptokitties opened the eye of many collectors and gamers alike at the possibilities of the blockchain technology. On the back of this success, Cryptokitties was spun off into its own company called Dapper Labs. They’ve received north of $50 million in funding over the years and have formed strong partnerships, both due to their previous successes but also because of their future plans with Flow attracting major partners such as Samsung, Google Ventures, Andreessen Horowitz, Union Square Ventures, Coinbase Ventures just to name a few.

The Flow blockchain is not only attracting big investors, but also some of the biggest brands in the world.

The NBA Top Shot game meanwhile has scored an official NBA license and was designed in partnership with the NBA and the NBA Players Association. Investors in the project include players like Andre Iguodala, Spencer Dinwiddie, Aaron Gordon, JaVale McGee, and Garrett Temple. This, folks, is as legit as they come in the world of crypto.

What Is NBA Top Shot?

NBA Top Shot offers an interesting opportunity: “for the first time ever, NBA fans can truly own a piece of the action — and trade with friends for real money in a new kind of hoops economy.” But you might be asking yourself how does this really work . Essentially, every new real-world NBA highlight is broken down into individual moments and turned into rare video collectibles with limited supply on the blockchain.

Packs that contain these highlights are sold in limited numbers, and extra layers of collectability are added in the form of rarity (changes the border of the video highlight box presenting the highlight/card itself each with different scarcities) and the random serial number which is the unique mint number within the overall edition size (for example being #1 out of a print of 50 would give it quite a big premium).

Even in digital form, there’s few things more satisfying than cracking open a pack. Securing one of the limited time and quantity packs gives an extra dose of adrenaline.

Game, Collectible, or Something Else?

So there are these NBA highlights you can buy from packs and collect – but what else can you really do with them? Currently, the main attraction for early adopters are the limited-time Challenges that are generated by the NBA Top Shot team. These are a type of quest where you are asked to own a specific set of cards by a certain deadline and are rewarded with an exclusive moment that’s only generated through these specific challenges.

Time-limited challenges with exclusive rewards appear from time to time to incentivize completionists to either purchase lots of packs or to use the marketplace to shore up gaps in their collection.

Another section which rewards you, at least socially, for filling out your collection is the “My Showcases” section. Here you can put together your favorite moments to create a chained highlight reel or simply show off some of your most prized collectibles. For example, one user has a showcase of all #1 serial number legendaries owned – something that would certainly cater to the hardcore collector / whale demographic of this experience. For those putting a bigger premium on utility, a mobile game that will let you use your moments is currently being worked on, though details on that are still scarce.

The marketplace does a great job displaying key information around a card’s market value such as the edition size (how many are in print) and the asking price of sellers for the different serial numbers they own.

Last but certainly not least is the “Marketplace” where you can buy and sell individual cards within the site itself. This provides a convenient way to engage with the secondary market, albeit trades incurring a 5% fee that goes to the team. Recently, there’s also been the addition of a “Latest Sales” section that gives you a glimpse of which moments are popular and what kind of prices they’re going for.

Investment Potential

Here at TokenFlipper, we’re huge NBA fans with an extensive history of collecting basketball cards as well as more traditional trading cards. NBA Top Shot, on its surface, ticks all the boxes especially with its high polish, execution and official license as far as matching our interests and expectations. The NBA is a huge global sport with over 1 billion fans spread all across the world and being an official ‘part-owner’ of your favorite players’ most spectacular plays has wide appeal. The age old hobby of collecting sports cards is currently experiencing a renaissance thanks to the promotion by the likes of social media guru Gary Veynercheck and that’s likely to have positive trickle down effects on the burgeoning new field (and logical evolution) that is NFTs and digital collectibles. Dapper Labs has done a great job at hiding the blockchain aspects to the average user whilst still maintaining the provable ownership blockchain element that underpins the whole experience. This combination has the makings of something that can explode into the mainstream and should thus handsomely reward early adopters. Initial indications from the closed beta paint an encouraging picture: 17,000 closed beta users purchased nearly 43,000 packs of NFTs driving more than $2 million in revenue.

Transaction data released from beta shows that whilst much of the immediate attention might be on big ticket legendary moments, the bulk of the trading activity happens at an affordable price point.

Having said all of that, the project is not without some legitimate concerns. Packs with legendary limited moments (usually limited from 49 to 70 copies in existence and which should be the crown jewels of this collecting experience) are really expensive (sold in $230 packs). The disturbing part in this is that the legendary moments within them are labeled as “Limited Edition” but nothing currently stops the team from printing the same highlight/play in another set. In fact, you can see that this has already transpired with the infamous Zion Williamson rejection against the Nuggets: it has been printed both in the Holo MMXX set (50 of them) and the Cosmic set (49 of them), thus diluting the collection of anyone who thought they were capturing an ultra rare piece of NBA history (and these are sold for thousands of dollars on the secondary market).

(Click to zoom) The two separate moments put side by side. As you can see, there’s not much to distinguish them besides the new set name simply being strapped on.

Putting the same moment in different sets, which are just arbitrary categorizations added for collectability sake, is certainly not enough to justify tarnishing that “Limited Edition” claim put on these cards. The lack of transparency around the schedule, frequency, and nature of set printing also leaves a lot to be desired – making it very difficult to accurately grasp the supply dynamics of the economy.  We believe true scarcity and transparent supply are the glues that make the digital collectible NFT magic work and the team’s either disregard or oversight in these matters is a considerable red flag one should consider before putting their hard earned money into this project.

A set is described as a “curated collection” but they’re quite confusing to wrap one’s head around, especially in relation to the different packs, drops, waves, and other terms that the game bombards you with.

Another aspect to consider if you truly believe in the crypto ethos of true ownership is that the moments themselves can’t really be carried outside of the NBA Top Shot website. The NBA is probably not comfortable with their highlights being displayed in any old location and while that might be a legitimate concern for them, it does open the question of what do you really own when you collect these moments and whether these can really be classified as an NFT in the traditional sense of the term.

How To Invest

There is nothing free in NBA Top Shop so the first thing you’ll have to do is top up your account with either crypto or credit card over at the Dapper account page, found in the NBA Top Shop page under “Wallet Balance”. Our initial inclination in these type of collectible opportunities is going for the rarest of items (legendary moments) but the lack of reprint protection as pointed above has made us tentative to follow this approach even if it probably still holds merit. Another popular angle is collecting legendary packs themselves (as opposed to rare and common packs which have much less built-in scarcity) without opening them and keeping them for re-sale at a later date, since the team has recently confirmed trading of packs on the marketplace will soon be enabled. With no announced date however, one might be forced into a longer ‘hodl’ than desired.

You can spend days scouring through the marketplace data to gain insights and make better investment decisions.

For more specific investment approaches, one needs to dip their toes in and really follow the game and community quite closely. Seeing which type of moments and which players are attracting the big bucks may evolve over time and certain trends might occur, such as relatively fringe players like Tyler Herro attracting a cult following and fetching bigger valuations than you might have expected based on their on-court output. Lower serial numbers and serial numbers matching players’ jersey number are at huge premiums but whether they are worth that markup will take more time and data to answer. If you’re really planning to go deep here, highly recommended sources include CryptoSlam and Intangible where there’s more data than you’ll know what to do with. As a collector, speculator, or flipper, this is exactly what you want to be geeking out over. The immediate liquidity at one’s disposal puts NBA Top Shop far ahead of any physical collecting as far as practicality goes and is a firm reminder as to why digital NFTs are the future of collectibles.

If you’d like to learn more about NBA Top Shot, check them out on their official channels: website, Twitter, Discord.

The author as of this writing holds no tokens relating to this project. None of this is financial advice and you should conduct your own research before making any decisions relating to the topics discussed in this article.