NFTs Sparked a Digital Manufacturing Boom
As a 7-year-old boy, I was an avid collector of baseball cards.
My cards were neatly organized in plastic sleeves, and I checked their prices every month in Beckett’s monthly price guides.
It was my first foray into investing, even though I would have been better off buying Apple stock in 1984 than another Darryl Strawberry rookie card.
There are two main factors that determine the price of baseball cards: demand and scarcity.
Collectors want rookie cards of star players, and prices are higher in older years when there weren’t as many cards printed.
But in today’s online world, everything is moving from analog to digital.
Books are now downloadable onto a Kindle. Music went from records and CDs to MP3s.
The internet did away with scarcity because digital goods can be copied infinite times with the push of a button.
Herein lies the issue with digital collectibles: Why would anyone collect something with no scarcity value?
How can a digital baseball card have value if anyone can screenshot the card and make a copy?
Well, there’s now a blockchain-based solution for that.
You see, one of the key aspects of blockchain is that it keeps track of digital goods. These are called non-fungible tokens, or NFTs.
Any NFT can be verified — not by a centralized entity, but by a decentralized network of computers.
The blockchain guarantees scarcity, ownership and nearly perfect security.
And one blockchain-based platform has taken the sports collectible market by storm this year…
A New Marketplace for Basketball Fans
NBA Top Shot was started by crypto company Dapper Labs.
It’s a blockchain-based platform that allows collectors to purchase limited-series, officially licensed NBA highlights. These are short “moments” of dunks, 3-pointers and game-winning shots.
Collectors can buy these videos in packs, which typically cost $9 for a set of three. Hundreds of thousands of collectors wait in digital queues to purchase new packs when they’re released.
There’s even a marketplace that allows fans to sell their digital collectibles to other fans, with Top Shot keeping a small percentage of every trade.
This is a much more liquid market than physical cards, which require professional grading, listing on eBay and the cost of shipping.
With blockchain-based goods, their authenticity can be proven on the underlying blockchain. And they can be listed for sale or purchased with a few clicks.
This Is Only the Beginning for Digital Collectibles
According to Dapper Labs CEO Roham Gharegozlou, NBA Top Shot has notched over $700 million in sales in the past year, with most of those sales coming in the secondary market.
To put this in perspective, an issuer of physical cards doesn’t make any money in the aftermarket.
This was enough to push Dapper Labs to a $7.5 billion valuation in April.
While Dapper Labs made a huge splash with Top Shot, this is only the beginning for digital collectibles.
In the first quarter of this year, more than $2 billion was spent on NFTs. That’s an increase of 2,100% from the prior quarter!
What’s Next for NFTs
With NFTs, any digital influencer can now create and sell digital scarcity by using the blockchain. Moreover, these “creators” can determine what makes their tokens valuable.
For instance, motivational speaker Gary Vaynerchuk recently sold VeeFriends tokens, which give buyers access to his business and marketing conventions. And if any of his fans sell their tokens, he takes a cut of that sale.
So, we’re on the verge of a digital manufacturing boom, where anyone with an online audience now has a way to monetize those followers by providing them with a virtual currency that can be redeemed for specific use cases.
And then, the creator can take part in any transactions that happen with those tokens.
The best part: Users can hold all of these NFTs on a mobile phone. You won’t need shoeboxes full of cards to be a collector.
Editor, Strategic Fortunes
P.S. Cryptos are underneath the digital manufacturing boom. You can keep up with the latest developments in the crypto space by joining my Next Wave Crypto Fortunes service.