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Top Shot: the NBA’s crypto collectibles taking the world by storm
Source: ESPN
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  • The National Basketball Association joined in the crypto frenzy six months ago with a unique twist that has already generated over $250 million in sales
  • NBA Top Shot is a blockchain-based digital equivalent of a collectible sports card, through which fans can collect short video highlights of NBA moments
  • While the actual clips can be viewed for free on YouTube at any time, Top Shot's blockchain tech makes each clip encrypted, impossible to hack and impossible to duplicate
  • Fans are paying top-dollar for the rarest clips, with a short video of a memorable LeBron James dunk selling for US$208,000 (around A$260,000) this week
  • In fact, Top Shot has generated over US$205 million (around A$258 million) since it was first launched, with 65 per cent of this processed in the past week
  • While many would-be investors struggle to understand the share market and risks associated with crypto, a brand like NBA may seem much more welcoming
  • Time will tell if the NBA will set a trend for a new age of mainstream collectibles or if the hype around the highlight clips will die down

America's National Basketball Association joined in the crypto frenzy six months ago with a unique twist that has already generated over $250 million in sales.

NBA Top Shot is a crypto equivalent of a sports card, game ball, or signed jersey, and it appears the unique collectables are taking the basketball fandom by storm.

Essentially, Top Shot lets users buy and sell video highlights known as "Moments", showcasing the NBA's best slam dunks, blocks, three-pointers and more.

Make no mistake, these short clips could be viewed for free on YouTube or other video services at any time, causing some confusion about why people would pay money for them.

But the Top Shot Moments are based on blockchain — the same type of technology that powers cryptocurrencies like Bitcoin and Etherium.

While the intricacies of how blockchain works are difficult to understand, the key takeaway is this: like Bitcoin, each Top Shot Moment is encrypted, impossible to hack, and impossible to duplicate.

This means that when people buy these digital Moments "packs" — much like a pack of trading cards — they can open rare highlights that only few people in the world could ever own, just like a physical collectible.

Some highlights are released in batches of thousands, while for the rare Moments clips, less than 100 exist in the world.

In the rarest cases, as few as three duplicate clips of a single highlight exist, meaning that LeBron James dunk you opened could be highly sought-after by an avid fan.

Digital highlight packs released by NBA Top Shot range from US$9 to US$230 (around A$11 to A$290) per pack, depending on if buyers opt for a Common, Rare, of Legendary pack, but they only drop in limited batches — meaning if buyers aren't quick enough to clinch the sale they'll miss out.

Collectors can then sell and trade their highlights between each other in a peer-to-peer marketplace, so the price of each individual clip is determined by how much someone is willing to pay for it.

And it seems people are willing to pay massive sums of cash for unique highlights.

Million-dollar moments

While it's been around for half a year, Top Shot has exploded in 2021 along with the rest of the crypto world, having generated over US$205 million (around A$258 million) since it was first launched.

Of this total, almost 65 per cent has been processed in the past week, according to a Forbes report.

So far, the most paid for a single Top Shot Moment was a whopping US$208,000 (around A$260,000) for a four-second clip of a memorable LeBron James dunk from just off the free-throw line.

Meanwhile, a clip of Boston Celtics centre Tacko Fall blocking a lay-up from Washington Wizards point guard Russell Westbrook is asking up to US$250,000 (roughly A$315,000).

Is this the future of collectibles?

Blockchain-based collectibles are certainly not a brand new idea, with collectibles like CryptoPunks and CryptoKitties having been around since 2017. But NBA Top Shot is the first mainstream brand to have found such success in this field.

Yet, at this stage it's not certain if the Top Shot frenzy is related to the market mayhem 2021 has brought about so far, or if its success will be long-lived.

Over the past two months, retail investors caused panic among hedge funds when they sent shares in GameStop from US$17 (around A$21) each to over US$400 (around A$500) each.

At the same time, Tesla owner Elon Musk has spruiked "meme" cryptocurrency DogeCoin from less than a cent to almost 10 cents. Bitcoin has smashed several records and currently trades for over $63,000 per bitcoin.

But while many would-be investors struggle to understand the share market and get scared by the risks associated with crypto, a brand like NBA may seem much more welcoming — hence the sudden buy-up of Top Shot highlights.

Time will tell if the NBA will set a trend for a new age of mainstream collectibles or if the hype around the highlight clips will die down.

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