Maybe your news alerts are blowing up with something about NBA Top Shot. Or maybe the tenth time your husband said “yes” to “what do you want to do for dinner?” you looked over his shoulder to see he’s been glued to some little website called NBA Top Shot, which is apparently the place basketball fans can buy, sell and trade official, licensed digital cards. Digital basketball cards? Sounds like a big nerd fest.
So what’s the big deal? Why all the fuss over something involving a team sport? Well, NBA Top Shot is one example of a major trend in cryptocurrency: NFTs, or non-fungible tokens. Confused? Good, it’s confusing. You’re not alone. The Verge’s Mitchell Clark explains: “‘Non-fungible’ more or less means that it’s unique and can’t be replaced with something else. For example, a bitcoin is fungible—trade one for another bitcoin, and you’ll have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you’d have something completely different.” Their most significant purpose is their ability to affirm ownership over a digital asset.
For peace of mind, I needed to get to the crux of what this one specific NFT marketplace, NBA Top Shot, was since my husband seems, uh, absolutely addicted to it. And from what I’m witnessing, people aren’t just buying digital basketball cards because they love LeBron James—they’re prospecting, like frontiers people heading out West for the California Gold Rush. And they’re making real money. When drops are announced, tens of thousands of people get in line for a chance to buy a $9 pack they’re hoping includes a card they can turn around and sell for good profit—we’re talking hundreds, if not thousands, of dollars—in the Top Shot marketplace. And just like IRL basketball cards, the value of the cards can change based on athlete, team performance and off-the-field news as determined by the market.
These are not your dad’s baseball cards collecting dust in the basement. But the whole thing is still so…weird. So, I asked my good friend, economist Russ Bittmann, PhD. and self-proclaimed Top Shot crony, to help me understand WTF this monstrosity of everything I hate (aka, mostly sports) is. Here’s what he told me. (And these opinions are his own and don’t represent his employer’s. You get it.)
OK, Russ. Here's my understanding of NBA Top Shot. Please correct me:
They're digital basketball cards, aka memes, that, just like regular cards, are assigned value based on the market's supply and demand. Fine. But because Top Shot is getting so big, it means the rest of us who don't yet want to pay money for memes are at the economic whims of adults swapping GIFS of LeBron James dunking.
Exactly. “Digital basketball cards” is easier to say than NBA basketball non-fungible token. And we are already kind of at the economic whims of people consuming ridiculous things. In the early 2000s for some reason, we decided we really like quinoa and that has completely changed Peru’s economy.
How would you explain to your parents what Top Shot is?
It’s like owning a piece of art stored securely on the internet. The “storage facility” also has a perfect record of who owns, who has owned it, and whether it is “real” (i.e., not counterfeit). When I was a kid, I put Michael Jordan and Kobe Bryant posters on my wall. My Top Shot collection is like my bedroom with a bunch of posters on the wall. And this is the point in the conversation I would need to remind my parents that people actually like going on the computer and hanging out there. (My dad does not like the computer.) My Top Shot cards have some intrinsic value simply because they’re cool to look at and talk about, and owning them gives you status in a cool place on the internet. Like, what if Facebook was a place where my dad only saw people buying and selling books about Teddy Roosevelt and conversations among those people was solely about their favorite Teddy Roosevelt books?
How does something like Top Shot go from a collector's marketplace to what seems like a full-fledged economy?
I love this question. I think it’s the flippers. If the marketplace consists of people looking to open up the packs, look at them, and then put them on their internet shelf, then yeah, you could just go on YouTube and look at highlights and tell other commenters that Giannis’s dunk was sick last night (financial disclosure: I own a Giannis Antetokounmpo). When the flippers start, it helps those digital basketball cards get to the people that value them the most.
Will we be paying for our kids' college tuition with basketball memes?
If your husband gets good pulls from his packs, you are gosh darn right you are. Will a good amount of people be paying for their kids’ college tuition with basketball memes? Honestly, this is totally possible. NBA Top Shot is associated with Dapper, which talks to the blockchain, so you can convert your digital basketball cards into bitcoin. I think there will definitely be colleges accepting bitcoin as payment in 16 years when my kid goes to college to study [some ridiculous-sounding major related to digital basketball cards].
For what it’s worth, Janet Yellen actually doesn’t think so. She is not high on blockchain as a currency. She’s biased towards the USD, which, let’s remember, also does not really have any intrinsic value except for that people believe in it.
Is it stupid or is it brilliant?
Without a hint of sarcasm, it is brilliant. People like owning and collecting things. People love the NBA, and they love basketball cards. Right now, if you tried to go on the internet and buy a pack of basketball cards, you would pay at least $10. Then it would come in the mail, and the guy probably didn’t pack it well, so all the corners are bent. Then you open it and if you get any card that you like, you snap a photo of it and post it to Reddit and say, "look what I have!" And like three people upvote it. Also fantasy basketball is the worst, and this is a more fun way to waste money on the internet with your friends.