NBA Top Shot: Dunks, Plays, and Billions
Many say Tierra del Fuego (Spanish: Land of the Fire, English: Fireland) is the end of the world. This archipelago off the southernmost tip of the South American continent is ethereal to behold. Dramatic snowy mountains, glaciers as old as time, and wind-sculpted trees dot the island’s sprawling terrain.
It was here in 1834 that a young naturalist named Charles Darwin met a group of Fuegian hunter-gatherers. He presented one of the men a large nail (a gift most valued) and immediately received two fish dangling from a spear tip in turn.
Mick Leahy — the larger-than-life Australian explorer and gold prospector — encountered something similar in 1933 with the New Guinea highlanders. When he presented them with cowrie shells, they gave him bananas.
The problem with barter
But had this cowrie-shell-for-banana barter gone on, money would have never happened. Because barter is weighed down by incredible inefficiencies inherent to it, the most pressing of which is the double incidence of wants.
Consider an apple grower on the prowl for some fish. Say he meets a fisherman and offers apples for his fish. But if the fisherman isn’t looking for apples at that moment, the trade won’t happen. Apples don’t always fetch you fish. Fish don’t always mean apples.
All things bright and beautiful
This is why the early humans developed a fondness for collectibles. Animal teeth, flint, and cowrie shells were the top picks. The interesting detail here is these collectibles worked as stores of value — making them some kind of proto-money.
As Nick Szabo argues in this brilliant essay on the origins of money, it is perhaps our use of collectibles as stores of value that gave us Sapiens an edge over our cruder Neanderthal cousins.
For the first time in the history of apes, value acquired could be stored and transferred — sometimes between generations. Antagonistic tribes came together to trade. Niches were discovered, skills were taught and learnt, and specialization rewarded.
The grammar of money was born.
But what does this have to do with NFTs and the NBA? The story begins in the third quarter of a regular season game last February between the LA Lakers and the Houston Rockets — a turning point in NFT history.
LeBron’s historic reverse windmill dunk
When LeBron James collected the ball and bounded down the court to slam it down the basket with a reverse windmill dunk, the Staples Center went into raptures. It took only moments after the match for the clip to go viral.
Before long, however, fans were pointing out a detail in the dunk most had initially missed: its striking similarity to the showstopper dunk NBA legend Kobe Bryant slammed down the very same basket in 2002.
James later confessed that the shot was his homage to Bryant — who had tragically passed away along with his daughter in a helicopter accident two weeks ago.
24-year Snapchat entrepreneur Jack Settleman (creator of Snapback Sports) was so moved by this that he opened Top Shot and bought an NFT for the clip of James’ reverse windmill dunk for $47,000.
Around the Top Shot world in 180 seconds
Developed by Vancouver’s Dapper Labs — the makers of CryptoKitties — Top Shot’s Moments are virtual sports cards that you can own and sell. They package the highlight clip along with 3D animation and player stats.
Top Shot decides the exact Moment to package as a clip in a flurry of emails and Slack messages with the NBA and the Players Association. Once confirmed, they make copies of the clip and mint NFTs for them — opening the record on the blockchain.
No two Moments are ever the same — even if 100 of them exist. And unlike CryptoKitties, Top Shot uses Flow — Dapper Labs’ own blockchain — instead of Ethereum. Flow is a sandbox controlled by Dapper Labs. This gives users the freedom to trade without worrying about scams.
To tell copies of the same play apart, each Moment has a serial number attached to it. Lower the serial number, higher its value. Or even better, if the serial number matches the player’s Jersey (like Settleman’s card matching James’ 23 jersey), then you have yourself a winner.
Why do people love it
With over 1 million users, 150,000–250,000 daily trades, and over $700 million in sales, Top Shot and Dapper Labs boast eye watering figures for a crypto product. This probably is the best chance NFTs have of going mainstream.
Consider LeBron James’ dunk over the Sacramento Kings’ Nemanja Bjelica February this year. He leapt over the forward’s head and slammed the ball down the basket. The Moment of this legendary play became the most expensive NFT ever sold on Top Shot when 31-year old Jesse Schwarz bought it for $208,000.
Scarcity makes value for NFTs. As Schwarz explained, “To invest and set that record with the $208,000 purchase on LeBron just was an awesome Moment as a fan but obviously as an investor, too.”
His Moment was one of only 49 copies of that play. And if Big Tech economics has taught us anything, it’s that early movers reap way more than what they sow. Schwarz is an early mover here and expects his significant investment to only multiply with time.
Libruary, another collector, bought a copy of the James’ tribute dunk to Kobe just like Settleman. He paid $35 for it. Today, he owns the ninth most valuable collection on Top Shot worth $9.2 million.
Top Shot and Dapper have taken the NBA and made it fertile ground for speculative investors — who are true children of the pandemic. Betwixt the hallowed winds of meme stocks and crypto mania, Top Shot and the NBA might just have pulled it off.
But this beggars the question.
What exactly do you own?
Not the footage — it still belongs to the NBA. No copyright. No merchandise rights. No edits allowed.
So what you own is the Moment — or at least a copy of it. Which brings us back to cowrie-shells-for-bananas barter. Collectibles on Top Shot are stores of value or some kind of proto-money. The value of each is decided by the collective value everybody places on it.
Overnight, it could all go to zero. Or overnight, you could lose count of the number of zeroes. Such is the game and the wicked balance between which it swings — explaining Top Shot’s market cap of $1.9 billion for all its Moments — more than the median value of an NBA franchise.
Fans love to claim ownership of their favorite team. It’s an essential part of the sporting experience. Top Shot just took that feeling and monetized it. It placed a value on that feeling of ownership and increased the investment, emotional and financial, a fan makes on his team.
Top Shot is also better than digital art for studying NFTs. Because of how strong its community is, there is a consensus on the value each card holds — opening up the market for buying, selling, and crucially, reselling.
Ever since the dawn of the smartphone era, Mutual Mobile has grappled with the latest in technology to create value and open up unprecedented channels of revenue for our clients. Nothing excites us more than solving tomorrow’s problem today.
And with NFTs, we believe we are seeing the tip of the iceberg’s tip right now. Almost the entirety of its potential is unexplored today. For instance, financial companies alone can save around $12 billion every year by adopting blockchains. Making a planned move to this tech could be the silver bullet your business needed all along.
So if you’re looking to add non-fungible value to your business — hit us up here. Our team would love to hear from you and bounce ideas off together. Perhaps the next big thing is just one conversation between you and us away?
