Nonfungible tokens (NFTs) have grown a lot in popularity since the release of CryptoKitties in 2017, with the sector expected to move over $800 billion in the next two years.
Some of the most well-known use cases for NFTs are picture-for-proof projects such as the Bored Ape Yacht Club and play-to-earn gaming projects. NFTs have also attracted attention from the sports industry, with professional sports leagues setting up their own platforms for fans to engage with their favorite teams or players, but that will be discussed later in this story.
NFTs are unique and non-interchangeable pieces of code stored on the blockchain. These strings of alpha-numerical code can be linked to assets such as artwork or digital and physical goods. NFTs are created through a process known as minting, and creators can set a limit on the number of NFTs they want to mint, creating scarcity.
Scarcity is a phenomenon that has always applied to physical assets due to them being physically built with finite resources. However, scarcity has never existed with digital goods since they can be easily replicated. NFTs have changed this, and we are now seeing a growing collectibles market in the digital world.
How are NFTs used for fan engagement?
When it comes to sports, fans feel so strongly about their favorite player or teams that they interact with them in every way possible. Engagement ranges from watching or attending live games, buying merchandise or attending signing events. Fans want to get closer to their favorite teams and players, which presents sports teams and leagues with opportunities to generate additional revenue.
Sports leagues, in particular, have noticed the value of fan engagement and have gone on to create platforms where fans can buy, own and trade digital keepsakes. One well-known example is the National Basketball League’s NBA Top Shots NFT marketplace, where fans can buy, sell and trade basketball video clips. Video clips on the platform are known as NBA Top Shot moments, and each one shows a different highlight from a basketball match. The marketplace launched in 2020 as a joint venture between the NBA and Dapper Labs, the creators of CryptoKitties. It generated over $230 million in sales within a year of its launch.
Some video clips are sold in packs, similar to physical trading cards like Pokèmon and Yu-Gi-Oh. There is also an element of gamification with different rarity tiers, ranging from “common” to “legendary,” a standard system in…
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