JEREMY LEVINE WAS just checking his phone quickly before heading out to spend a January Sunday morning skiing in Lake Tahoe. Instead, within minutes, he was spending $100,000 to buy a 13-second Zion Williamson highlight.
The play, Williamson soaring and swatting a Malik Beasley shot into the stands -- his first career block -- from a game on Jan. 24, 2020, is available to watch for free.
But Levine didn't buy to watch it per se, though it is a particularly impressive display of Williamson's elite leaping ability. He bought it because he's hoping this encapsulated video clip, which he doesn't own the exclusive rights to, will eventually jump in value from six figures to seven.
"This could go 10x, 100x or go to zero," said Levine, who has launched and sold several daily fantasy sports companies over the past decade. "I'm an early adopter and I'm excitable."
Levine's excitement is over a new digital collectible called NBA Top Shot. Digital as in not tangible, a slice of data that exists only on the internet. But it's 2021, and this concept isn't just accepted by a wide range of collectors but also speculators and investors, many of whom identified this new kind of asset as the next big thing.
The NBA and its players are in on the action.
After being launched late last year, Top Shot has gained traction with more than 50,000 users having bought in and spent more than $65 million in the process, according to crypto tracker CryptoSlam. It's generating explosive valuations and flowing returns back to the league, the players association and Dapper Labs, the Vancouver-based company that created Top Shot.
The technology unlocks the elusive holy grail for sports leagues: the ability to cash in on the secondary market.
It's the first time the NBA has entered into a licensing deal backed by blockchain technology, a fast-growing internet ledger that is attracting billions in investments in everything from cryptocurrencies like Bitcoin to virtual paintings. It's a play to get a foothold in this emerging market, something league officials started exploring as far back as 2017, knowing other pro sports leagues are bound to be competitors in the space.
"Blockchain is unique. It can deliver value to intellectual property owners downstream," said Adrienne O'Keeffe, NBA associate vice president for licensing. "We do believe blockchain technology has staying power and a lot of promise for our business."
"We've known we're on to something special for a while now. We bet everything on the NBA. It's something so new and perfect for the times." Dapper Labs CEO Roham Gharegozlou
In the basic sense, Top Shot is like a trading card. Its users buy, sell and trade video clips of players called "Moments." They can be bought in packs and opened (starting at $9) just like traditional trading cards where the contents are a surprise. Or they can be bought individually in a wide range of specialty collections aimed to create exclusivity. The collectibles are then stored in virtual wallets.
There have been early adopters within the NBA player and owner ranks already. Atlanta Hawks guard Bogdan Bogdanovic bought a Moment featuring himself and got No. 8 in the set, which is his jersey number. In limited series, the serial numbers corresponding to players' jersey numbers tend to have the most value (the Williamson Moment Levine bought for $100,000 was No. 1, Williamson's number). Dallas Mavericks owner Mark Cuban has bought some Moments, including some of his players in action.
"To so many the idea that a CryptoAsset could be a store of value is crazy. To them, there is no 'there,' there. There is no intrinsic value. To them it is a digital representation of nothing, that crazy people are paying good money for. That is not the case," Cuban wrote on his blog.
"Some people might complain that I can get the same video on the internet anywhere anytime and watch it. Well guess what, I can get the same picture on any traditional, physical card on the internet and print it out, and that doesn't change the value of the card."
👑TOP COLLECTOR ALERT👑
— NBA Top Shot (@nba_topshot) February 4, 2021
User flamboyant_mangosteens7204 acquired this Legendary Moment of LeBron James' vicious poster for $99,999 😤 This Moment was an exclusive reward as part of the Holo MMXX Challenge 2. Only 3️⃣2️⃣ exist‼️
Congrats on the pickup for your collection 🔥 pic.twitter.com/pCQbqsNql8
Sports cards are experiencing an unprecedented boom during the pandemic. Recently, the famous 1952 Topps Mickey Mantle rookie card set a record when it sold for $5.2 million. But that sale didn't send any royalties back to Major League Baseball, its players' union or Mantle's estate.
In the case of Top Shot, the secondary market for the Moments largely takes place in Dapper Labs' controlled marketplace, where fees are collected on every deal. This enables the NBA and its partner to act as not only the Picasso but also the Sotheby's in future resales.
"The blockchain creates new business models for creators," said Dapper Labs CEO Roham Gharegozlou. "It's a nice experience for customers; they get complete transparency on the market."
These are some of the reasons several NBA players invested in Dapper Labs as the deal with the NBA came together. Garrett Temple and Andre Iguodala, who have been members of the player's association board, put money into the company.
LIKE ANY INVESTMENT, especially one that spikes like Top Shot has, there is the reality that it could collapse. Dapper Labs' first major project was called CryptoKitties, a game launched in 2017 that involved virtual cats. Like Top Shot, it became very popular and values of the digital collectibles exploded -- one digital cat selling for more than $170,000 -- only for the items to plummet in value after the fad passed, bearing some resemblance to the Beanie Babies craze of the 1990s.
Levine, who has set the record for highest price paid for a Moment four different times, including the Williamson purchase, admits this is highly speculative and there is the risk the bottom falls out. It is not a security or a blue-chip stock.
There is the possibility that NBA fans, like those who might've invested in other collectibles over the years that tanked, could get financially hurt if this movement fizzles.
"It seems like a silly concept overall, but I guess so are sports cards," said one influencer/sports card collector whom Dapper Labs recruited last year by offering free product in return for spreading social media awareness.
"I have a group chat with about 10 other guys and we're all very confused [about the values]."
The speed at which the Moments have increased in value have left social media and message boards questioning the legitimacy of the purchases, or whether the big buyers have connections to the company. Or because a person could have multiple usernames that they use to sell to themselves to juice the value. It has been roundly denied by several of the purchasers who have made their buys public, including Levine.
"Are people tampering? That's my same question with the sports card market," said Steve Poland, who runs Mighty Minted, a website that tracks the Top Shot market.
"When I was growing up in Kenmore, New York, there were three card shops and I had collected all these Ken Griffey Jr. cards that I thought were rare. [Then] eBay happens and suddenly it's more than my little silo. I found out the world has millions of these Ken Griffey cards. It felt like I'd been had."
Said Levine: "There are more than 1,300 Zion rookie cards out there. How do you know which are going to be popular or valuable? I know there are only 50 of these Moments in existence and I know it's Series 1 and there won't be any more made."
There have been other experimentations into blockchain memorabilia sales. Major League Baseball released a product in 2018 called MLB Crypto, but sales were tepid and it was rebranded last year. Panini, the official sports card of the NBA, has a digital card product, but it is linked to a tangible card and also hasn't had the explosion of interest like Top Shot.
These concerns don't seem to be slowing demand. Many Top Shot packs sell out in minutes with thousands of users stuck in line waiting to buy. Desired Moments start getting traded on the secondary market almost immediately. Levine is just one of a number of investors who have made purchases in the six-figure range. Some traders have already made more than $1 million in profits buying and selling.
Even with the inherent risk in what is clearly speculative buying, the NBA firmly believes this popularity will continue.
"We do believe in this tech and product and believe this is a long-term partnership," O'Keeffe said.
The venture capital market seems to agree. According to a report in The Block, a website that tracks digital assets, Dapper Labs is soon to close a $250 million funding round that will value the company at $2 billion and enable it to chase deals with other sports leagues.
"We've known we're on to something special for a while now," Gharegozlou said. "We bet everything on the NBA. It's something so new and perfect for the times."
THOSE WHO BELIEVE in the future of Top Shot and what are sure to be other competitors in the space have their reasons. Many of them revolve around the risks, uncertainties and complexities of the sports card world and how this solves many of them.
They preach that Top Shot removes friction because there isn't a subjective third party that judges the quality of the cards, and there isn't any physical transfer that risks damage, loss or theft.
With blockchain technology, users can see all the transactions for each Moment. The buying and selling is instant, the product is verified authentic and there's a guaranteed scarcity. The users know exactly how many Moments have been created, what wallets they are in and their last sell prices.
There are plans for growth, as Dapper Labs is preparing a rollout of games to be played with the Top Shot Moments. The first is called "Hardcourt" where fans can pit teams they create against one another.
The company has also already started talks with retired NBA players to secure rights to historic highlights. There has already been one series of these created, called Run It Back, released. The idea of classic Michael Jordan Moments, like "The Shot," for example, being released in limited supply could set records.
"We have a vast archive of content we can tap and a lot of our history that people will want to own," O'Keeffe said.
Those who have examined the blockchain closely have noticed that Dapper Labs has created some 1-of-1 moments -- the digital creation of all Moments is listed the moment they are made even if not put on sale immediately -- and there has been the promise of high-value products that will go to auction later.
All of it only furthers the excitement and the belief, correctly or not, that seven-figure sales could be on the horizon for this brand new category of collectibles. With the NBA and players, active and retired, getting a taste of the cash flow.
"This has everything the sports card world has, but better and faster," Poland said. "This is the future."