A promo graphic displaying an overview of NBA Top Shot graphics.
Via NBA Top Shot

NBA Top Shot: What It Is & How It Works

Matt Trombley, Nathan Baugh

If you follow sports, NBA Top Shot has likely taken over your Twitter feed.

Early in 2021, there were over 33,000 new visitors and $53.9M in sales in one week alone.

But that begs the question - what is it, how does it work, and is it here to stay?

First, for those unfamiliar with the business, NBA Top Shot is a joint venture between the NBA and Dapper Labs. It’s an online marketplace letting sports fans buy and sell highlights that Top Shot refers to as "Moments". The business is booming.

Why is the business booming, you might ask? Because a perfect storm has formed for its business model. Sports betting is everywhere. Crypto is hot. Collectible companies are raising venture capital money. Just take a look at this tweet from Joe Pompliano, author of the Huddle Up newsletter:

NBA Top Shot uses Non-Fungible Tokens (NFTs). Put simply, NFTs represent unique digital assets. In this case, that asset could be a CJ McCollum step back or a Ja Morant dunk. If NFTs are still a mystery, this is the best explanation we’ve found:

NFTs make the internet ownable — Mirror
Before tech, I was an artist manager in music. When I started the firm, I believed one thing about the music industry very firmly: ownership endows power. Typically, labels had ownership over the music, and thus, power over artists.

How are those Moments from Top Shot valued? It’s surprisingly straightforward. Look for:

1. The player - future hall-of-famers and young players with huge potential.

2. Scarcity - Moments with fewer editions.

3. The serial and series numbers - the closer to #1, the better.

When all three come together, the Moment may be worth over $200K like this one:

Of course, the other factor is the adoption rate of NBA Top Shot itself. Money flows in, outsiders take notice, perceived value rises - rinse and repeat. This network effect induces a positive feedback loop. @SahilBloom breaks that down here:

The crazy part? NBA Top Shot is still in Beta, and the NBA has barely marketed it. Right now, it’s growing via word-of-mouth and the daily grind of the @nba_topshot team. They’re putting on a masterclass in community building.

The NBA continues to lead the way. But this same concept can apply to other sports. Imagine owning a Naomi Osaka winner or a Kylian Mbappé hat-trick. In the near future, I think you’ll be able to. You may just have to trade in a few Bitcoin.

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