If your news timelines and notifications have been looking a little more like Campbell’s soup than English lately, the craze around Non-Fungible Tokens is probably to blame. NFTs are the new craze in digital art, collectibles, and memes, with many early adopters championing them as the future of how we prove ownership and exchange valuables in a digital age. But are they?
Who better to give a first-hand account of their initial interaction with NFTs than the guy who convinced his entire friend group to sign up for Google+ back in 2012? (I was on the anti-Facebook bandwagon before it was cool!) So come with me, and see how NBA Top Shot simultaneously caught my attention and ruined my belief in the idea of the word “value.”
Top Shot’s NBA Moments
As a developer, it’s professionally beneficial to keep an ear to the ground for new technologies that might improve my craft of building websites and writing code. Luckily for me, an interest in new and shiny toys has been in my blood since the year I got a Nintendo 64 for Christmas.
It’s this same interest that turned me on to cryptocurrencies a few years ago, allowing me to make approximately $50 buying Litecoin and Ethereum during some of its first spikes in price. I’ve checked in on cryptocurrencies periodically since then, more and more intrigued by their underlying blockchain technology as I’ve grown closer to a more technical career. (More on blockchain later in this post.) But as soon as someone told me—a lifelong Indiana Pacers fan—that the National Basketball Association has an officially licensed project built on blockchain, I didn’t stand a chance. I had to see what this was all about.
Behold, the first NFT NBA Top Shot Moment that I purchased.
Oh, I’m sorry. That is a YouTube video of the exact same play. Here’s what I actually “own”:
Look at that lovely behind-the-back, over-the-head assist from Malcolm Brogdon to Domantas Sabonis for the poster! And it belongs to me! Well, outside of YouTube it does.
And it’s one-of-a-kind! Sort of. My particular “Moment” is number 7,147 out of 15,000. The other 14,999 editions of this particular Domantas dunk are the exact same Moment. There’s no difference in the video clip or how it’s presented. That’s what makes the token non-fungible. If something is fungible, that means it can be replaced or exchanged as a whole or in part. My Top Shot Moment is non-fungible because the data that it contains, the video of the beautiful assist, cannot be changed or altered. The only difference is the serial number that is attached to it, and that serial number is important because it’s how the blockchain records that this specific Moment belongs to me.
Blockchain and Non-Fungible Tokens
The underlying blockchain technology of Top Shot is what allows buyers to digitally “sign” Moments. Every time one of these Moments is created (opened from a purchased “Pack” of Moments), or traded from one person to another, the blockchain makes a record of that transaction. The power of blockchain is that these records are shared among a decentralized network of computers, meaning that as much as I’d like to, it’s very difficult to hack into Top Shot and give myself a legendary LeBron James dunk from the 2020 NBA Finals (currently on sale for $90,000 by the way).
The ability to reliably prove ownership of something in a digital space is what gives blockchain technologies a lot of strength, which is why its most high-profile use case are Bitcoin, Ethereum, and the like. Having a verifiable, digital fingerprint can be extremely useful for currencies, but what we’re seeing with NFTs right now is a rush to realize the unique potential that blockchains can offer both as collectibles and digital currency. One of the desirable aspects of NFTs is the ability for artists and owners to earn a profit each time an NFT is sold beyond the initial sale. Because the unique thumbprints can be tracked along the open blockchain, artists can receive a small cut from the sale of their NFT even after it’s been bought and sold many times over.
This kind of continued revenue stream could be a game-changer for certain artists and industries. Imagine this: Taylor Swift might release a digital collector’s edition of her new album next year as an NFT—full of art, videos and exclusive music that can only be experienced with the ownership of an NFT ID number. In the year 2050, Eric Rees Jr. could see one of these albums for sale and look up that specific serial number, seeing that it was first purchased in 2021 and sold four different times to four different people in the ensuing years. If that wasn’t enough to prove it’s legitimacy, he could even take that ID number and place it into a database that Taylor’s team maintains to keep track of all the legitimate versions of the deluxe albums.
NFTs and Me
So where did my foray into NFTs and blockchain leave me? Confused about what “money” really is, and somehow, $600 richer.
After jumping through many frustrating hoops just for the chance to pay Top Shot $100 for a “Premium Pack,” I was lucky enough to score a particularly low serial number of a layup by OKC’s Darius Bazley. Because of this low serial number, and the fact that there were only 500 of this Moment ever released, I was able to sell it on Top Shot’s resale marketplace in just 10 minutes. The sale price? $700!
I can’t go on a shopping spree just yet because I don’t have any cash-in-hand from that sale. Top Shot had to place a delay on users trying to withdraw their money due to the overwhelming demand they’ve faced. That makes trading digital player cards for hundreds of dollars still feels a little unreal.
However, Top Shot assures me that the process of withdrawing money, while slow, is legitimate. It might just take six to weight weeks before I will see that money in my bank account.