The Indicator from Planet Money - The $200k NBA NFT

A non-fungible token (NFT) for a LeBron James dunk recently sold for over $200,000 on NBA Top Shot. Anyone can watch the clip online, so why is the NFT worth so much money?

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everyone station Cardiff here. This is the indicator from Planet Money Holden renaker is a huge fan of the NBA National Basketball Association. His favorite team is the Portland Trail Blazers in a fan ever since I was born growing up in Portland and going to games my whole life collector's item entirely online. These short video clips of basketball players making spectacular plays each clip just a few seconds long has video clips are called moments in Holden who is a civil engineer in Durango Colorado now owns about 75 moments and their prices Stacy if you'll excuse me have been jumping out of the gym. I put $11,000 into it, which is pretty crazy Buffet right now, and I estimate my account collection worth is probably

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$55,000 right now that you don't think that after having your money go up by six times you ever stop and think this can't be this is too good to be true. No, I mean, yeah, definitely obviously that's that's pretty incredible, especially when it's you know, 11,000 to me. That's not nothing in my life. You know, like that's you can buy a decent used car for $11,000, you know? Yeah. I know I have a 5S $3,000 Honda Civic so I can buy a few of those here is what is fascinating about all this video clip on NBA Top Shot and ownership of the clip anywhere outside of the Top Shot website, for example, hold and paid $1,900 for a video clip of his favorite player, Damian Lillard dunking the basketball and Stacy and I are watching that exact same clip on YouTube literally right now right this second.

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And also that video clip can we watch for free by anyone on NBA Top Shot itself? So why are the hundreds of thousands of collectors on NBA Top Shot willing to spend so much money on these Cliffs we explain the sudden and extraordinary popularity of the market for a new kind of digital good nft. But they are the psychology behind only and the risks of trading them.

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This message comes from NPR sponsor Microsoft teams helping priority bicycles transform the way they work when the fans on the kit. They started doing virtual visits on teams. Now people worldwide can come into their showroom Morad microsoft.com teams. This message comes from NPR sponsor the Capital One Venture Card with Venture. You weren't unlimited double miles per dollar on every purchase every day. What's in your wallet? When holding Rent-A-Car spent $1,900 for that video clip of Damian Lillard dunking what he actually bought with something called a non fungible token or in NM in Ft is a digital certificate a digital barcode, which certifies that Holden doesn't fact own that specific video clip on NBA Top Shot and there is a limited number of entities for each video clip for Jebel the Damian Lillard clip has 299 nfts these digital ownership certificates. So if I wanted to

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By that video clip I would have to buy Holden's nft. If he was willing to sell it to me or by one of the other 298 nfts for that clip to know about an mft is that it cannot be duplicated. Each entity can only ever have one owner at a time. And on NBA Top Shot the website were holding buys and sells these basketball and if tease everyone can see exactly who owns each and ft and how much they pay for it. It's all public because NBA Top Shot runs on a blockchain which is kind of like a public spreadsheet is holding can proudly say to his friends. Hey, that's my nft. Everyone can watch the video clip. But I'm one of the few people who owns it. I think it's a psychology that I you know, even wrap my head around sometimes but it's just you own something that is limited in a way but it's I don't know what's an authenticated verifiable little piece of the NBA that you own is a fan.

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It's a different way of thinking about traditional objects that people own meet Jesse Schwartz in investor and collector who lives in Los Angeles record-setter for NBA Top Shot with the highest purchase of all time so far $208,000 for a cosmic LeBron James moment 208,000 in the NFC that Jesse bought for that LeBron James moment a video clip of LeBron James viciously dunking is referred to as a cosmic moment on NBA Top Shot precisely because it is so rare only 49 and if tees exist and we'll ever exist for that dunk other moments have way more entities there more, and therefore they are much cheaper and those are the end of teas that most people across NBA Top Shot or buying and selling tiered system works. Some video clips have a lot of entities you can buy and others only a few.

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That is how NBA Top Shot is design. It is in Marketplace that runs on scarcity NBA Top Shot introduces new moments into the site in packs. So you can buy a pack of three moments from Top Shot or 7 moments without knowing what you're going to get inside. Then you open the pack solid line, of course and you see if you got a video clip that's valuable that maybe you can sell my baseball cards. Do you like hoping for the Babe Ruth rookie card or something like that right to demand from collectors to buy these moments has overwhelmed the supply of new moments. And so the prices have shot up. We spoke with Katie 10-minute Dapper Labs the company that runs NBA Top Shot. We think it's sustainable and we don't think prices are out of control. We just think that they reached more maturity faster than we expected. And so some of the moments that are meant to be most common are actually really scared because we grew so fast.

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Able to kind of scale up with content delivery at the same time. But our goal is to get packs in people's hands. Our goal is always to have different tiers of scarcity in order to have different tiers of pricing which will make the product more accessible Labs controls. The scarcity of these moments is also why people are skeptical about the very high price for the moment's right now like Charlie Lee the founder of Litecoin a digital currency. Yes, and if to use themselves or here to stay and NBA Top Shot is not going to sink into the hardwood floor basketball think with Charlie finds it unlikely that people keep spending such high amounts for a single nft because soon there are going to be new entity markets for other sports besides basketball and for all kinds of other things today and be a few years in the NFL.

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MLB it in the shower doing dumb and thousands of artists are creating millions of entities for their artwork and every musician releases and if these for the albums and songs, I did the man is there today for someone paying $100,000 for Indian ft to a short video clip on NBA Top Shot, right? But I don't think that's going to persist Lebron dunk guy. He's not too worried about this is any plans to hold on to that LeBron James and if he for the long-term and partly says he's comforted by the involvement in NBA Top Shot of the NBA self the National Basketball Association Along with the basketball players union. They both get a cut of each sale on NBA Top Shot as part of the arrangement with Dapper labs. And because the end we're putting our stamp of approval on this. This is an official NBA product. They're using the players that using the teams. I think this attracts NBA fans as well as and a few fans.

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Is a global brand he's hoping that there still lots of people throughout the world that someday might join Top Shot and invest so they even is the number of entities goes up and up the number of investors in collectors bringing their money to NBA Top Shot might also keep climbing which would obviously keep up the value of his entities, even though this is a new kind of Market its prices are determined by the old economic principle is Right contest between supply and demand and those high prices right now show the demand for mfts is in the lead, but it's early still just a couple of minutes into the first quarter Stacey Dash cam has only just started by the way. If you want to hear more about other markets tomorrow show is all about an artist who made millions of dollars in a single weekend selling NF keys for his digital art that was produced by Emma Pious Lee and fact check Buy Samsung. Who's

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Play Jolie Myers, and the indicator is a production of NPR.
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