It all started with a post by a Money Minx member in a Facebook group that went something like this: I spent $100 on NBA Top Shot and now an evaluation site is telling me, my collection is worth over $50K, what do I do? Then I remembered the story of digital images called CryptoPunks being sold for thousands of dollars. And of course there is the infamous digital artist, Beeple who sold a digital image in auction for $69M!
I have a feeling that “my story” is not unique. This is likely how most people get introduced to NFTs. Since I’ve shared my story, I’ve gotten lots of requests for more details so I’m going to cover it all here. What is an NFT? What is NBA Top Shot? And should you invest in them? I’ll give examples from my own experience with NBA Top Shot – along with how to invest wisely in this new asset class.
I am going to skip the technical details in this post as you can find plenty of technical explanations on them elsewhere online.
Let’s start with a simple explanation for the purposes of this article. The general idea of NBA Top Shot represents the next generation of fandom. With it, fans can own moments of basketball’s greatest moments in history in digital form. In a more literal sense, think of an NFT as a digital item with its information stored in a blockchain (advanced database that cannot be easily overwritten) that you can buy/sell/trade/own. In this case, NBA Top Shot is licensed by the NBA and fans are all over it. When you own one of these officially licensed highlights, it’s similar to owning a trading card. Some are rare or have limited “printings” which increases value.
With all of the hype and requests coming from Money Minx users to add NFTs as an account type, I had to jump in and see for myself. I decided to start with NBA Top Shot as my first NFT. I bought two packs from NBA Top Shot and a “moment” (a video clip of a player during a season) from the marketplace on the same website. The difference is the packs are purchased from the franchise as a new item, while the moments purchased on the marketplace are from other investors/sellers. The total investment was $265.13 and it turned into $1,221 in account value over the span of a couple of weeks (unrealized gains).
Before you stop reading and jump on the NBA Top Shot site to buy your first moment, realize that buying from the marketplace is very different from buying pack drops. I still made a decent return on my market place purchase from $8 to $14 but it nowhere near the value I received from buying a drop. So let’s dive into the drop process.
What is NBA Top Shot?
NBA Top Shot is an NBA-licensed company selling digital NBA moments online. Moments are short video clip highlights of a great basketball play from a particular player. It’s a similar concept to owning basketball cards by Topps but these are online and much more interactive (you just can’t hold them or hide them under your mattress).
How do You Get an NBA Top Shot Pack?
You have to join an NBA Top Shot drop which takes place every few weeks or so on the NBA Top Shot website.
How do You Join an NBA Top Shot Pack Drop?
The best way to learn about NBA Top Shot drops is to follow them on twitter, join their Discord channel and sign up to their newsletter. You will get a notification at least 8 hours ahead of the next drop although usually it’s a day to two advance notice.
What are NBA Top Shot Packs?
An NBA Top Shot pack is a digital collection of moments that you pay for before knowing what moments you will be getting. Think of a moment as a baseball card and a pack as a pack of unopened baseball cards.
NBA Top Shot Packs
When you join a drop you will be in a virtual waiting room. The most important pieces of information here are 1) your number in line and 2) how many packs are left. Not everyone ahead of you will buy a pack, some may change their mind, they may not actually have the money, something else got in the way, etc.. however if you are number 134,234 in line and there are only 33,432 packs being distributed the odds are against you.
You can enter your email address and be notified when your turn in line is coming up or you can hang around and see how it goes. The good news is the entire drop process which could take a few hours is live with a host, guests and NBA moments footage. It’s really fun!
Once your place in line is up, you will automatically be redirected to a check out page. What ever you do, do not close your browser at this step and don’t try checking out again in another browser window. It may take a long time for this step to finish. It took just a couple minutes for my first pack purchase to complete but my second purchase took over 30 minutes. Just leave the window open and be patient.
Once the purchase is complete you will go through the reveal experience which lets you open each moment, one at a time and watch several angles of that moment in NBA History. At the end of it all, what you are left with is a series of moments in your profile from which you can create showcases and show them off. Here is a link to mine and a screenshot below.
Investing in NBA Top Shot
Now that we got the “what is NBA Top Shot” questions out of the way, let’s focus on why you are actually here. Is investing in NBA Top Shot moments a good investment strategy? Well, it’s new, so nobody really knows for sure but here is my take on it.
I absolutely believe that these moments have value. There are enough basketball fans around the world that will love to collect these moments. There are enough sports enthusiasts that enjoy collecting memorabilia and such. The team working on NBA Top Shot knows what they are doing and will keep the value in these moments going.
Some people argue that because these are digital moments, they can’t possibly have as much value as a tangible item like a trading card. But think of it this way, we’ve put value on digital “things” for years. What is the value of a blue checkmark on Twitter? What is the value of having a short Instagram handle? Why spend thousands on skins in Fortnite? Younger generations live online and I think this is a reflection of that reality.
Having a profile on NBA Top Shot with hard to find moments will always be worth something.
What Makes a Moment More Valuable than Another?
The real value in a moment is whatever someone else is willing to pay for it. To look up the value of a moment, you can always check the market place to see what the moment is being sold for.
There are a few aspects of a moment that makes it more value than others:
1. Moment rarity (common, rare, legendary, ultimate, genesis)
2. Moment quantity that will be issued
3. Featured player
There are also instances where the same moment but with a different serial number is worth more than the other. A lower serial number is considered more valuable. A serial number that matches the player’s jersey number is also considered more valuable.
The earlier the series, the more valuable. Right now we are on series 2. Series 1 moments are considered more valuable.
If a moment is needed to complete a challenge it will see a spike in price for the duration of the challenge. To complete a challenge, you must collect all required moments needed for that challenge before the timer runs out.
NBA Top Shot Marketplace Strategy
If you can’t be bothered with joining a live pack drop or you just can’t seem to have enough luck to catch one you can still invest in moments by buying them from the marketplace. Here there are a few strategies you can follow to buy good investments.
You might come across an eager seller that just wants to get their money back, so they will list a moment for a few bucks under the cheapest available price. If you spend enough time browsing the marketplace you are bound to find some of these deals. There isn’t a very efficient way of doing this (yet) but when you look at a moment in the marketplace and see that 1 serial is being sold at a discount of 10%+ of other serials for the same moment, that might be a good signal that the listing is undervalued.
In addition to rarities, each moment is also tagged with a category of LE or CC. LE stands for Limited Edition, meaning the count of these moments is set and will never be release again. CC stands for Circulating Count meaning they might release more of this moment in the future.
One strategy is to look for LE moments that are under $20 and buy them up. As the series is closed and NBA Top Shot moves on to the next series, the value of these limited editions will rise as they will never be published again.
For the 1%
So maybe buying moments at $20, only to resell in the future for $100 is not really worth your time unless we can add some zeros. For you, here is a marketplace strategy you can try (again not financial advice yada yada). Look for Series 1 LE cards of the top players and hold on to them for a few years.
NBA Top Shot Challenge
Challenges are another clever way NBA Top Shot made digital moment collecting fun and gamified. Each challenge lasts for a limited number of days. When the timer runs out, if you hold all of the moments in the challenge, you get a free moment.
Some challenges offer a common moment as a reward. Others offer moments that will never be sold in packs. They may distribute them in other ways but regardless, they are harder to get. This makes those moments even more valuable and harder to get.
At the time of this writing thee are 4 challenges currently active each with a different set of requirements.
The 2021 All-Star Game Challenge 1 requires 10 cards to be collected, currently valued at $9k. You would have to purchase each one of these cards in order to get the free moment which is a limited edition, never to be sold in a pack moment. The risk you face is not knowing if the moments needed will drop in value once the challenge is over and by how much. If the drop is less than what the reward moment is for, then you got yourself a good trade.
NBA Top Shot Risks
The risk that I see at the moment is the hype (maybe we can even go so far as to call it a frenzy). Will a digital moment be worth $30k in a few years, I am not sure. Will I put 10% of my net worth into NBA Top Shot? No. The best recommendation (not financial advice, don’t lawyer up, don’t sue me, do your own research, etc..) that I can give is to do the following:
- Buy a couple moments from the marketplace to get started with a small collection. Try to find moments that have just 1-2 moments being sold at a price that is much lower from the rest of the offers out there. This is a good way to find moments that may be undervalued.
- It’s a game of chance, but try to buy packs when they drop. This is the absolute best way to know that you will earn a return on your money as they are the best deal.
Being a startup, there is always the risk that NBA Top Shot shuts down. Then what happens to your moments? Considering the company is printing money at the moment, I don’t see this happening anytime soon however it is still a risk worth noting.
Another issue I am seeing with most of these NFT sites is that even though they may be holding on to items worth thousands and sometimes millions, they lack a few features of traditional financial sites. Tax reporting being one. Yes, you do have to pay taxes on your earnings but there are some thresholds (not tax advice, ask a real tax person). The second is the lack of being able to assign a beneficiary and a way to pass on your account if the worse happens.
As a side note, this is one of the many benefits of sharing a Money Minx account with your spouse and tracking your NFTs in there. There will at least be one place that shows that there is an account with value that belongs to your heirs.
How do You Make Money with NBA Top Shot?
Just like any other investment, the way you make money with NBA Top Shot is to sell a moment for more than you bought it for.
Can’t Someone Just Copy Your Digital Image / Moment?
This is the number 1 issue and hardest leap for everyone to take. Yes, technically anyone with very minor technical skills can make a copy of a digital image or video and have a perfect replica of the original. The only difference? The original has a record on a blockchain that proves it is the original and that you own it. Maybe think of it as owning the original masterpiece painting even thought here are reprints of it available. That is it.
But the true value is in that only you can display all of your moments (NFTs) on your profile. Only you will have a showcase linked to your username that you can share and show off your latest LeBron moment.
NBA Top Shot and many NFT marketplaces, as well as the entire industry, is still in its infancy. Who knows where else you will be able to showcase and share these NFTs that you are purchasing right now. Will they be worth more if they are somehow tied to your Social Media account? Or maybe you email account? We’ll see!
NBA Top Shot Fees
There are two sets of fees with NBA Top Shot. When you buy a pack or moment, there is a small transaction fee added to your purchase amount. I didn’t see the fee listed anywhere but it appears to range from 5% to 9%.
When you want to sell a moment in the marketplace, you will be charged a 5% fee.
For now, I plan on holding on to these moments. I am going to keep an eye on more pack drops and try to join when I can. My goal is to build an account value (not purchase price) of $10k. I think I can achieve that with a budget of $1k. I’ll keep you posted on my progress in the Money Minx Community.
Have you purchases any NFTs via NBA Top Shot or elsewhere? Visit the community, join the conversation and let us know.