NBA Top Shot has risen in popularity over the past few months, becoming the most bizarre new trend in sports collectibles.
Top Shot is a website that sells clips of NBA highlights. Each highlight is a nonfungible token, or NFT, which means that each one is an NBA-minted copy of a highlight, protected by blockchain encryption.
Now, you don’t have to understand all the complexities involved here—I certainly don’t. You just need to know that these clips are unique assets that can be bought and sold. They’re basically like digital baseball cards.
However, this doesn’t mean that when you buy a highlight off of Top Shot that you’re getting some special highlight that isn’t available anywhere else. In fact, it’s the opposite. All of the highlights available for sale on Top Shot are also available for free on YouTube, where you can do the exact same things with them without paying a cent.
And these Top Shot highlights don’t always come cheap. Of course, you can buy a “base set”—a pack of assorted highlights—for about $9, and there are plenty of highlights available on the resale market for similar prices. However, there are also a whole lot of highlights that go for thousands of dollars—the most a highlight has ever sold for is $208,000.
Now, you might be thinking that there must be some difference between the highlights that go for $9 and the ones that go for $208,000, and, technically speaking, there is. The more expensive highlights are rarer than the cheaper ones.
Highlights come in three different tiers: “common,” “rare,” and “legendary.” Highlights in the common tier have ten thousand or more copies available. Highlights on the rare tier have somewhere between 150 and 4,999 available. Highlights on the legendary tier have somewhere between 25 and 499.
These highlights don’t differ in quality, they simply differ in rarity. And to make this even more confusing, the same highlight can appear on different tiers, and cost a different price on those two tiers. Again, this is the same highlight being sold in the same place for two different prices because Top Shot has placed them on two different tiers.
All of this begs the question of why on earth people are spending any amount of money on these highlights. Although these are collectibles that can be bought and sold just like any other, they’re not valuable in the same way.
Take baseball cards, for example. With baseball cards, you can’t just go out and find the same card for free. In order to collect them, you have to spend money. In that way, they have economic value because there is a limited supply of them.
Top Shot doesn’t have that; it doesn’t control the supply of its product. Instead, the value of the highlights is purely speculative—customers pay for a highlight based on what they think they can get someone else to pay them for it, so that they can turn a profit.
Of course, this is a factor in the popularity of almost any collectible, from baseball cards to comic books, but it’s never the only factor—and that’s what makes Top Shot such a strange collectible.
Top Shot exists solely as a vehicle for people to try and make money. Effectively, it’s just gambling disguised as NBA highlights. And there’s nothing inherently wrong with that—gambling is legal in plenty of places, and as long as it doesn’t become an addiction, it’s fine.
But anyone buying and selling highlights on Top Shot should be aware that they are gambling and taking a risk in buying a highlight. Right now, that risk is pretty low. Top Shot is incredibly popular, and highlights are selling at a high rate, so you should be able to get a pretty good return if you don’t try to go for outrageous prices.
That said, you would do well to avoid spending massive amounts on these highlights, thinking that you’ll be able to sell them for thousands and thousands of dollars. Although Top Shot is booming right now, there will, at some point, be an end to that boom. Because these highlights derive their value from people believing they can resell them for more money, once people stop believing that, their value disappears.
At the end of the day, NBA Top Shot is just another way for the NBA to make money. I have no doubt that its creators know that the market for these highlights will eventually collapse, but that doesn’t matter to them. With every highlight sold, they’re making money, and at the end, when the only people left on the website are the ones trying to sell the highlights they spent thousands of dollars on, the NBA won’t be hurt whatsoever. They’ll have made their money already and moved on to their next marketing scheme.