NFTs go viral: Digital collectibles, also known as non-fungible tokens (NFTs), are suddenly the talk of the tech world. They’ve been around for a few years, but gained steam in recent weeks. Music star Grimes just sold about $6 million worth of digital art earlier this week. The NBA’s new Top Shot trading cards have generated $230 million in sales over the past month.
How it works: NFTs use blockchain technology — similar to bitcoin — that tracks ownership of unique digital assets such as art, sports highlights, songs, and more. People can own verified, limited edition digital assets and buy, sell, or trade them on marketplaces. NFTs tap into the same interests and habits of traditional collectors, but in a modern version. It’s based on the idea of digital scarcity — a new take on trading and collecting baseball or Pokémon cards, for example.
Big moment for Dapper Labs: The Vancouver, B.C. startup is partnering with the NBA to run the infrastructure for Top Shot via Flow, its blockchain product that also powers the popular CryptoKitties digital collectibles.
“We always knew that there would be interest in NBA Top Shot, but just five months since our public beta launch, NBA Top Shot has exceeded our expectations — emerging as the fastest growing marketplace in history,” said Caty Tedman, head of partnerships and marketing for Dapper Labs.
Dapper gets a cut of each Top Shot transaction and the NBA earns royalty payments, CNBC noted.
Tedman said Dapper Labs is in talks with major brands across sports, entertainment, and gaming to create similar products. “This is just the beginning,” she said.
The 4-year-old company, which employs under 100 people, is reportedly set to raise a $250 million round at a $2 billion valuation. Total funding to date is $80 million. Investors include Andreessen Horowitz; Warner Music Group; Union Square Ventures; Version One; and others. Dapper is led by Roham Gharegozlou, the former CEO at Axiom Zen.
What’s next: Here’s a prediction from Chris Dixon, general partner at Andreessen Horowitz:
“NFTs are still early, and will evolve. Their utility will increase as digital experiences are built around them, including marketplaces, social networks, showcases, games, and virtual worlds. It’s also likely that other consumer-facing crypto products emerge that pair with NFTs. Modern video games like Fortnite contain sophisticated economies that mix fungible tokens like V-Bucks with NFTs/virtual goods like skins. Someday every internet community might have its own micro-economy, including NFTs and fungible tokens that users can use, own, and collect.”