NFT: A NEW ART MEDIUM OR PASSING FAD? PART 3

By Alessandro Di Benedetto

A FEW EXAMPLES IN THE SPORTS WORLD

Maybe a few examples from the world of sports will help you understand the essence of this NFT momentum.

Let’s start with the mother of all sports NFTs: NBA Top Shot. The NBA partnered with Canadian-based Dapper Labs, makers of the CryptoKitties game mentioned in part two, to make its version of a collectible digital asset. NBA Top Shot is a crypto-collectible that consumers can purchase as an NFT. Top Shots emerged from a licensing agreement made in 2019 between the NBA and its players’ union and Dapper Labs.

The NBA licenses the reels to Dapper Laps, which digitizes the footage, making a limited amount in order to create scarcity. Some NFTs feature highlights in different angles and digital artwork. One is currently listed for over US$ 240,000. Dallas Mavericks owner and crypto activist Mark Cuban compared Top Shot to the old-school model of trading cards, where consumers can have fun trading and collecting scarce items – only with no risk of damage or theft. “And the value is still set by the same laws of supply and demand,” he wrote.

A LeBron James “Cosmic” Dunk NFT sold at U$S 208,000. The bet for traders is that in 2051, that same NFT could be worth what a 1952 Topps Mickey Mantle card is worth today – one of those rare cards recently sold for US$ 5.2 million. And just imagine what a rare Michael Jordan rookie highlight NFT would sell for in 30 years.

Let’s take another example: have you ever dreamed of owning a racehorse? If you’ve ever sat watching the Kentucky Derby thinking, “that would be a cool world to live in,” you now have the opportunity and tools to live that dream in the digital world, and quite possibly produce a profit while doing so.

Zed Run is a blockchain-based game that uses NFTs to represent a horse. Each horse has its own unique characteristics, meaning you could end up with a champion stallion, or perhaps a horse better equipped to be a stud. Just as in real life, building a successful horse and stable will take time, investment, and careful attention to the details. Trading digital horses, racing them to win prize money, and breeding them to birth new ones is all possible in this weird utopia. The game is taking off—there are now over 15,000 stable owners, with some horses selling for an eye-watering US$ 125,000.

Unlike the vast majority of NFTs, a digital horse constitutes what Zed Run’s creators call a “breathing NFT”, in a way that it can breed, it has a bloodline, a life of its own. It races, it has genes it passes on, and it lives on an algorithm managed by an artificial intelligence, so no two horses are the same.

The race system is well packaged: they take place around the clock and are streamed on both Zed Run’s Twitch channel and the company’s website. Zed Run also operates a Discord server, where people can follow race results, trade tips and share third-party tools for analyzing data. Users livestream their own races and repackage clips for YouTube and Twitch, helping the promotion of the platform, but also the horse sellers and buyers.

Oh, another important point: there is real prize money when your horse wins a race. That places this type of NFT in another category, as the NFT allows you to make money without selling the property of the NFT itself.

COPYRIGHT AND AN UNCLEAR FUTURE

One of the biggest critics of NFTs is that the line with the intellectual property rights is not clear at all. Just because an NFT is created representing an underlying work of art or other creation, it does not mean that the creator or any later owner of the NFT will own the underlying intellectual property rights, for example the copyright.

An example often used is the NFT of superstar player LeBron James’s slam-dunk video, released as part of a series of limited-edition digital collector’s cards of NBA highlight clips that can be bought and sold on the previously cited ‘NBA Top Shot’ marketplace. The card depicting the dunk may sell for a large amount of money, but the NBA still owns copyright in the original video, and any reproduction of that video is still subject to licensing terms from the NBA. If you are lucky and wealthy enough to acquire one of these rare NBA NFTs, you are still not permitted to alter the video moment captured in your NFT, or sell any merchandise relating to your NFT, without the NBA’s prior consent.

Source: Myself (don’t you dare try to NFT it…)

Let’s take another example where the line is blurrier because a clear definition has not yet been made. I want to make an NFT out of a cool meme that I created. This meme is based on one of the most “memed” super-heroes of all times: Batman. Happy with my result – see below, what an artist – I mint it on the Ethereum blockchain and try to sell it. But here comes the DC Comics legal cavalry, sending me a nice letter that says, “Please note that the offering for sale of any digital images featuring DC’s intellectual property with or without NFTs, whether rendered for DC’s publications or rendered outside the scope of one’s contractual engagement with DC, is not permitted”. This sets a legal precedent where Marvel and DC Comics told freelancers that intellectual property (IP) and characters owned by DC Comics were off-limits in the creation of non-fungible token (NFT) asset sales.

It’s still unclear how NFTs and intellectual property laws converge, and that might be an interesting subject to tackle when it comes to assessing the future of these assets.

Can this NFT craze sustain its momentum over the long term? In March, Christie’s sold a collage by the digital artist Mike Winklemann, better known as Beeple, for 42,329 Ether, an equivalent of US$ 69.3 million at the time, as an NFT. That mainstream art auction houses are incorporating them into an evolving market might be a sign to the affirmative. Will my Batman meme be worth US$ 50 million dollars in 15 years? It’s a long shot, but stay tuned for the follow-up article in 2036!

NFT: A NEW ART MEDIUM OR PASSING FAD? PART 3