NBA Top Shot: How the Virtual Sports Memorabilia Platform Works

A company called Bowman Gum produced the first NBA trading cards in 1948. Now, more than six decades later, virtual trading cards are taking off on NBA Top Shot.

The platform doesn't involve just trading one card for another or spending mere dollars on a collectible item. NBA Top Shot functions with the help of NFTs (non-fungible tokens)—a cryptocurrency that's taking the digital art world by storm.  

Instead of trading with dollars (a fungible, or tradable, currency), the most valuable NBA Top Shot purchases use NFTs on the blockchain to keep track of the collectible digitization. So far, the platform has incurred $460 million in sales over the course of 3 million transactions. That's huge, especially for a company that's still in open-beta mode. 

On NBA Top Shot, digital trading cards are called "moments."

The moments are given a designated rarity level:

• Common: More than 1,000 digital copies, available for purchase in Common Packs starting at $9 for nine moments
• Rare: 150–999 copies, available in Rare Packs starting at $22 for seven common moments and one rare moment
• Legendary: 25–99 copies, available in Legendary Packs starting at $230 for six common and three rare moments, plus one legendary moment 
• Platinum Ultimate: three copies, available through marketplace auction
• Genesis Ultimate: one copy, available through marketplace auction

As you can imagine, these auctions get pricey, which is how a moment of LeBron James dunking went for $200,000.

NBA Top Shot was created in part by a startup called Dapper Labs. The company worked in tandem with the NBA and the National Basketball Players Association to bring the platform to fruition. 

According to Forbes, Dapper Labs recently conducted a $305 million private funding round. The round was led primarily by Coatue—a venture firm focused on tech. However, a lot of big names in the NBA realm have also thrown a hand in, including Kevin Durant and Klay Thompson. Michael Jordan and Will Smith have invested as well.

Dapper Labs actually profits a full 5 percent from all of the trades conducted on NBA Top Shot, so the company has plenty to gain from the NFT platform's success. In fact, recent success and funding alike have propelled the startup into a unicorn (a startup with a valuation of at least $1 billion). Dapper Labs' current valuation sits at $2.6 billion. Eventually, Dapper Labs hopes to expand into other sports leagues. 

Not all NBA Top Shot purchases are done through NFTs. The platform uses dollar-value purchasing for its more common offerings and leaves the actually rare moments up for NFT auction.

NBA Top Shot doesn't have a monopoly on the market. There's also OpenSea, which has more than $80 million in sales and contributes digital sports memorabilia among other NFT-friendly moments. CryptoSlam is another one using the Ethereum blockchain as well.