Another part of the blockchain economy takes off February 24, 2021
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As interest in cryptocurrencies soars once again, keep an eye on non-fungible tokens. In the simplest terms, NFTs are collectibles that are inscribed on a permanent, tamper-proof blockchain, thereby weeding out potential counterfeits. They are also limited—a fact that has attracted the treasure hunters and completionists.
Late Wednesday, NBA Top Shot, a blockchain-based platform for buying and selling videos of player highlights like trading cards, soared past $219.6 million in total volume, becoming the most-transacted crypto collectible after going live some six months ago. One single moment of Lebron James making a dunk sold for $208,000—no small change.
As the New York Times succinctly explains in a recent story, while collectibles have long been a sizable economy with consumers happy to shell out money for baseball cards, Birkin Bags, or fine art, the trend has been harder to copy in the digital realm where goods are easily shared and stolen. Blockchain-based businesses hope to change that with non-fungible tokens.
Dapper Labs CEO Roham Gharegozlou, which partnered with the NBA to create the collectibles, told Fortune when announcing the partnership: “The community that will bring about a mainstream moment for blockchain is the NBA… It will be a new type of digital collection experience.”
Certainly it and NFTs in general are having that mainstream moment. Aside from just NBA Top Shot, auction house Christie’s said it would become the first major auction house to sell NFT-based artwork last week. Creators have also caught on to NFTs in the hopes of cutting out the middlemen by issuing their own tokens, with YouTuber Logan Paul raising millions through his sale.
It’s not the first time NFTs have come into the public eye. The developers of NBA Top Shot may sound familiar to you: Dapper Labs was also responsible for Crypto Kitties, a digital cat exchange that rose to prominence amid the crypto wave of 2017. The company is now reportedly raising $250 million in new funding at a $2 billion valuation, led by Coatue.
Part of this trend is likely a result of boredom: You’re stuck at home with little to do aside from going on the internet. So you trade—a lot. It might be on Robinhood if you’re conventional, or maybe, if you feel adventurous enough, you may even dabble in the trading of fractional shares of a Pablo Picasso or a Ferrari race car. Or, perhaps in this case, in crypto and non-fungible tokens.
Will trading in non-fungible tokens remain in the mainstream? Interest in crypto could slow again. But for now, I have no doubt many more projects around NFTs will pop up in coming months. There will be successes—and there will also be no shortage of scams.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
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