Economist Writing Every Day

Samford Business student Wes Crane writes: Remember when people used to buy and sell physical sports trading cards? Recently the NBA has partnered with Dapper Labs, a company that specializes in blockchain (the same technology used for Bitcoin and Ethereum), to create and sell a digital art form of non-fungible tokens, or “NFT”s, that contain video clips of highlight moments which can be traded online at https://nbatopshot.com.

Over the last couple of months alone, these non-fungible tokens have made groundbreaking footholds in the trading world. CNBC reported in February that the NFTs has generated $230 in sales.

Users of NBA Top Shot can buy digital packs, like sports cards, that play a short highlight reel of a player performing a well-known play in recent seasons. The organization has priced trading cards from a range of $16 all the way to $250,000 to attract all kinds of fans. The valuable blockchain technology is used to record the sole ownership of a particular trading card across the entire market, to provide the exclusive appeal of owning one of the NFTs.

The impressive numbers from early NBA Top Shot transactions have caused data analysts to take a closer look at how and why this phenomenon has come to be so attractive. The NFTs that are sold are all one-of-a-kind. By purchasing one of the digital cards, a user can exclusively have the only access to it in the world. Another attraction of using this platform, like anything on the blockchain, is that the history of the product is public and without any cost of shipping. Also, buyers and sellers of the product need not to worry about any counterfeits and can conveniently trade instantaneously, therefore bypassing any physical logistics of auctioneers and collections. Lastly, sellers can market their products to more buyers through convenient methods on the digital marketplace.

Joy Buchanan: I like Wes’s description of NBA NFT’s, which I had not been aware of before. Interestingly, I just found another CNBC article stating that old-fashioned physical baseball cards has ALSO enjoyed a resurgence. “Lockdown” due to Covid might have been the perfect incubation period for NFTs, because people are at home and interested in curating collections.

I remember when people thought Beanie Baby toys would go up in value, but it turned into just another tulip mania in the late ’90’s. Whether NFTs will fizzle or be treated in the future the way we treat original Renaissance art today, I do not know. Many of the cannon historical artists didn’t get recognized in their lifetimes. It’s possible that NFTs will be treasured in the far future, and yet not benefit the people who buy them today.