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Good morning! Happy Monday everyone! First, let’s start the week with some cliche rockets, startup style: 🚀🚀🚀. Ah, this feels great, doesn’t it?
Our topic for today: NFTs
Last week we gave a general introduction into Non-Fungible Tokens (NFT’s) and explained the buzz around them. Today, we want to deep-dive into one specific NFT startup/marketplace to make this abstract topic more tangible.
Topic of the day
NFT marketplaces (again)
Before we jump into the story, let’s have a look at the weekly trade volume as well as the weekly users across NFT marketplaces over the past few weeks. The increase in traction is incredible with a sharp 14,066% surge in trade volume while weekly users are up 1,196% since the beginning of December.
For those who haven’t read last week’s episode on NFTs: NFTs are digital collectibles. Usually anything digital can be copied as often as you want. That’s not the case with NFTs.
Simplified: Built on blockchain technology, NFTs are unique digital assets that can be owned by one person only.
Startup of the Day
🏀 NBA Top Shot, Paris (France)
Image: The SportsRush
NBA Top Shot is the gig of Dapper Labs, the same company that built the first major NFT platform called CryptoKitties, where you could buy and sell virtual cats. Some of those virtual cats traded for up to $170,000. No kitting!!!
Built upon Dapper Labs’ own Blockchain, NBA Top Shot is now the National Basketball Leagues take on the world’s fixation with digital collectibles. Essentially, NBA Top Shot is an online-only marketplace where users can buy, sell and trade NBA highlights, which are owned by users through a NFT based on Ethereum.
The highlights usually are video snippets or gifs of a play like a LeBron James dunk or a Steph Curry 3-pointer.
Why it matters: One of these LeBron James highlights was recently traded for $208,000 on the platform (you can watch it here - damn what a great dunk!). This by itself shows, NBA Top Shot has successfully managed to create high demand for only limited supply of NBA digital collectibles. Remember: there is no way you can copy that NFT. Just recently, more than 200,000 users waited for hours to buy one of 10,631 highlight packs.
Our Take: Bringing collectibles and art online has been tried before, however never very successfully. The differences with NFTs are that they offer collectors the opportunity to own a truly unique piece of digital art, which is essential in order to create demand and the willingness to spend significant funds on the purchase.
The question remains whether the hype will fade or NFTs are here to stay. Looking at the snapshot for daily sales on the NBA Top Shot marketplace in February (see below), there is a large spike between Feb 19 - 24 with over $40M in sales on a single day, followed by a decreasing trend ever since.
From our own experience, getting into digital art is easy, you set up an account, connect your crypto wallet and are ready to purchase your first piece. However, whether you will be able to sell this piece of art again in the future remains unclear at best and surely depends on how well both the NFT and the digital art industry continue to evolve.
Buying NFTs today is a highly speculative and risky endeavor. However the core fundamentals of the industry are solid and we can imagine a future where digital art becomes equally important as classic art pieces.
Finally, and in all fairness, it’s important to mention, that there is growing resistance against the increasing use of electricity required to support the crypto platforms. We comment on that in one of the next newsletters. Stay tuned 😎.
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