2021 is less than six months old and it is fair to conclude that non-fungible tokens (NFTs) are leaving a permanent imprint on the sporting world.
Since the onset of the global pandemic early last year, the sports memorabilia industry has experienced a sizeable boom, best evidenced through the resurgence of trading cards.
Earlier this year, a rare LeBron James basketball trading card sold for a record AUD$6.7 million and those numbers could soon be eclipsed following the entrance of NFTs in the sporting marketplace.
For those unfamiliar with the concept, NFTs are a blockchain-enabled technology that provides unique and irreplaceable ownership of digital content.
In some ways, they triangulate the human urge for ownership, the power of nostalgia and the world of technology.
This new class of proprietary rights taps into age old concepts – but does so in a novel way that is bound to unlock untold value in the years ahead.
These unique cryptographic tokens can be anything digital such as drawings, videos, music, social media posts and sports highlights with their individual scarcity equaling value.
The presence of unique identification codes and metadata distinguishes each NFT from the other, and unlike cryptocurrencies, they cannot be traded or exchanged at equivalency.
The advantage of tokenising real-world tangible assets allows NFTs to be bought, sold and traded more efficiently while reducing the probability and scope of fraud.
Additionally, as highlighted by Investopedia, such tokens can be used to ‘remove intermediaries, simplify transactions and create new markets’ for artists and organisations who hold the propriety rights over NFTs.
These digital assets have taken the art market by storm and in March of this year, auction house Christie’s sold an NFT of a work by the American digital artist known as Beeple for AUD$90 million.
Unsurprisingly, one of the sporting world’s most innovative and progressive leagues in the NBA has been at the forefront of NFTs entrance into sports content and memorabilia.
After partnering with Canadian-based company Dapper Labs, the NBA launched Top Shot in mid-2020 – a marketplace where fans can own some of basketball’s greatest moments as officially licensed digital collectables.
Consumers can keep all of their purchased and collected ‘Moments’ in a secure ‘wallet’ with the platform protected by encrypted blockchain technology, much like cryptocurrencies like Bitcoin.
Returning to LeBron James, a Top Shot featuring the Los Angeles Lakers superstar dunking on an opponent recently sold tfor AUD$265,000.
When individuals buy a Moment on Top Shot, a small fee of the purchase price is distributed to the NBA, the NBA’s Player’s Association and Dapper Labs as the creator of the tokenised product.
Last week, digital currencies news publications CoinDesk reported that NBA Top Shot notched over USD$700 million in total sales in less than a year with over a million users purchasing an NFT on the platform in that time.
Other prominent sports leagues such as the English Premier League and the NFL are exploring the digital collectables market as a means of raising new revenues streams for its athletes and investors, while also offsetting some of the financial losses arising out of the pandemic.
With global trends indicating that NFTs are here to stay, it is only a matter of time before Australian sporting organisations and leagues take advantage of the benefits associated with this new and exciting digital asset class.