230 million dollars in sales. 325k packs sold. Individual collectibles reselling for over $200k.The digital collectables, known as moments, sold by NBA Topshot may be the future of sports collectibles. Through the use of non fungible tokens (NFTs), Dapper Labs, in collaboration with the NBA, have created valid enough artificial scarcity for collectors to spend thousands of dollars on videos of NBA highlights. Known as “moments,” these crypto collectibles are essentially digital sports cards, and that experience is completed by the randomized “packs” they come in, ranging from $9 to $230, these packs are always sold out.

The sudden explosion in popularity for Topshot was not an accident. Popular social media influencers have been fueling a boom in using sports collectibles as investments over the past year, creating a sort of unregulated stock market for sports fanatics, where value is loosely tied to eBay prices and popular creators can boost the value of items they are trying to sell. The benefits of trading and investing in Topshot collectibles is an obvious one; you don’t have to worry about fake replicas, delivery, condition or paying a company to prove the authenticity of your collectible, which makes the trading easier and safer. As Dallas Mavericks owner Mark Cuban writes in his blog, “With digital goods, I still have the same sense of ownership as with a physical good, and again the value is still set by supply and demand, but I have none of the hassles beyond remembering my passwords and dealing with wallets. Both of which are getting easier and easier.”

The digital collectible appears to be the natural successor to the physical one; a direct upgrade, and a safer investment for those trying to make money off of resale. There are, however, major flaws with Topshot the collectible and Topshot the marketplace. When you buy a signed poster or a football jersey, you wear it or you hang it on the wall. When you hold a baseball in your hand that was hit over the fence, you are not just holding a baseball, you are holding a story, a legendary memory. A football card is fine for resale, but you can keep it if you love the art or you are collecting your favorite team. These items have real value to people; they are art, stories and conversations, all with their own draw and value. The reason the sports collectible resale market works is because not everybody who buys a collectible is looking for profits. Many people buy these collectibles because they have value, and that money the collectors spend is the profit margin for those reselling an item. The core problem with Topshot is that its leading characteristic is its digitality. You cannot wear a Topshot moment, you cannot hang it on the wall you cannot do anything but boot up your PC and look at it. It may be unique, but it isn’t tied to the moment it displays in any significant way. The value in Topshot is purley resale; everybody who buys from Topshot is looking to profit. 

Oxford defines a Ponzi scheme as “a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.” By definition, Topshot cannot be a Ponzi scheme, as they are open about their practices, and  are not committing fraud. The profits received by Topshot come in the form of pack sales, and not scamming investors. The resale market, however, functions similar to a messy sort of Ponzi scheme. People invest their money with the expectation that it will be turned into more money, but the only money being introduced to the market is investments from new people looking to make money. For every card selling for $200,000, there will eventually be a collective $200,000 lost by Topshot investors. The illusion painted by social media influencers is that Topshot is a “get rich quick scheme”, but this results in a Topshot audience that is only interested in the product for profit.

The NBA Topshot market is going to collapse. When enough people get frustrated that they aren’t making any money, and when the novelty of the trend has run its course, people will leave topshot all at once, as quickly as they came. Many people holding on to cards worth thousands of dollars waiting to resell will end up selling their collection of moments for thousands less than they bought them for, and it will be their money that paid for the huge winnings of lucky Topshot investors. The unfortunate reality of these “get rich quick” trends is that if you are making money while contributing to actual value, somebody else is losing their money.