An NFT (Non-fungible tokens) is a digital asset that represents real-world objects like art, music, in-game items, and videos. These tokens are based on Ethereum blockchain technology, cannot be replaced by any other value, and are unique in that sense. If we take as an example a real image from the market, NFT token can be considered digital works of art, such as graphics, images, photographs, music, parts in video games, whose value is expressed in Ethereum or Bitcoin cryptocurrency whose value is later translated into dollars.
NFT behaves like a cryptocurrency — it exists on a blockchain, it has value, it can be traded. On the other hand, it is visually striking enough to be better called NFTs creation or even simpler NFTs digital assets.
These tokens are characterized by uniqueness — just as a work of art can be unique. There are also partially unique tokens, but also those that are more but are limited in number. Among others, this is a feature that significantly affects the price. NFT is also indivisible, this token cannot be divided into halves, or into several parts, but acts exclusively in its entirety, unlike, for example, bitcoin.
How do NFTs work?
As the NFT principle is based on uploading digital materials to the Ethereum blockchain, this procedure leads to the codification of NFT, which later leads to the establishment of price, ownership, and transfer records, thus preventing digital forgery or file replication. Once shipped, NFT will exist permanently on the blockchain as long as the system itself is operational.
There are no two NFTs that are completely identical because each piece contains unique digital properties. Even if the artist publishes two works without clear physical differences, the metadata encoded in each NFT is different. However, what is important to say here is that within the NFT system and tokenization, it is necessary to fully protect intellectual property.
Apart from artists, celebrities also had their notable and significant share in NFT token trading. Namely, in 2019, the NBA league released Top Shots, more precisely short summaries of games in reels format, which generated 230 million dollars via blockchain. The clip of LeBron James and Zion Williamson alone had a value of 200,000 dollars. A well-known musician in the United States, 3LAU sold his first crypto-album through an auction in less than 24 hours for 11 million dollars. YouTuber Logan Paul also sold his NFT, more precisely his graphical version of Pokemon for $ 5 million.
NFTs are fundamentally altering many industries by creating a new paradigm for creative ownership directly between artists and their communities, detached from centralized companies.
When we talk about centralizing data, we refer to a centralized data infrastructure for collecting, processing, and storing data. A centralized system operates with a central authority in control of the data and functions of a platform. Centralized systems store user data and information from a central point. When you combine this type of centralization with an NFT marketplace, you introduce many major risks including the potential loss of NFTs you have created or collected, de-platforming, censoring, data tampering, and lack of NFT portability.
Despite NFTs being decentralized, most of the primary NFT marketplaces have centralized elements like any other website. When you buy an NFT, the token itself is stored on the blockchain, but because on-chain storage of large files is very expensive, the art or media that the token correlates to is usually stored off-chain. This is a problem for collectors who want to be sure that they still own their NFT even if the centralized company that minted it stops operating.
NFTs are typically held on the Ethereum blockchain, although other blockchains support them as well.
This is not the case with all platforms.
What is NBA Top Shot?
NBA Top Shot is a blockchain-based platform that allows fans to buy, sell, and trade numbered versions of specific, officially licensed video highlights of NBA players and moments, like a LeBron James dunk or a Vince Carter three-pointer.
The copyright owner of a digital file or asset has the exclusive legal right to create an NFT for the asset. For Top Shot, the owner of the copyright is the NBA. While some NFTs confer true ownership of the copyright of an NFT, allowing the purchaser to do whatever they want with it, the NBA sells Top Shot NFTs accompanied with various restrictions, including a restriction on the right to make copies for commercial exploitation. Although the NBA’s terms state that “you own the underlying NFT completely,” the NBA is only selling a license to the game highlight that is portrayed in the NFT and not the underlying copyright, which is retained by the NBA.1 These licenses prohibit any right to modify, alter or commercialize the NBA highlight. Had the NFTs contained the rights to the intellectual property itself, there would be no limitations and Top Shot purchasers would theoretically be able to, among other things, reproduce, distribute and exploit the digital highlight for profit.
NBA Top Shot is the brainchild of a company called Dapper Labs. After the success of their first major NFT project called CryptoKitties, the imaginative minds of Dapper Labs slowly built the NBA Top Shot platform to cater to the league’s massive market. The company came into an agreement with the NBA and the NBA Players Association which helped launch the blockchain-based project and made things official.
More than $780 million in collectibles has been bought and sold on the platform, with over 13 million transactions recorded.
How does the NFT platform, like NBA Top Shot, work?
The NBA cuts the highlights and then Dapper Labs decides how many of each highlight they are going to sell and number them. They place each highlight into digital packs, just like regular trading cards, and sell the packs on the official NBA Top Shot website for prices ranging from $9 to $230. The pack prices depend on the quality of highlight, the stardom level of the player, and the exclusiveness of the card. Once you purchase a pack, those highlights go into your encrypted, secure highlight wallet to be “showcased” or re-sold on the NBA Top Shot Marketplace.
- The NFT platform development like NBA Top Shot runs efficiently on the blockchain network protocol
- NFTs sold on this platform are enormous in numbers and have great attraction between millions of users
- There are various NFT packs available on this platform for users to buy for a specific price listed
- It can provide quick transfers for the NFT buyers with less traffic on the platform like NBA Top Shot
- Each collectible’s value depends on each player or team’s stardom and the quality it holds for its exclusiveness
- NFT purchased by the user will be encrypted and stored in the wallet securely for showcasing or re-selling it again in the marketplace
How to build a platform like NBA Top Shot?
As we said earlier, NBATop Shot runs on the Flow blockchain developed by Dapper Labs after it suffered poor performance using Ethereum with CryptoKitties back in 2017. Flow now has 2,000 developers building on the platform.
Since you know how NFT marketplaces work and what types of platforms are on the market, you can start launching own NFT platform. Also, consider features what has to be added to your NFT Marketplace.
Next, you need technology stacks like Blockchain platforms, storage platforms, NFT standards, frond end framework. Use ready-made software or turn to a software development company. The second option is more expensive but there will no be restrictions in functionality. You can hire blockchain developers who are well-versed in using the Flow blockchain network and take the next steps like contract deployment by sending instructions to the command-line interface (CLI) of Flow, creating an empty NFT collection post-deployment of the contract, and much more steps.
Get in touch with Empire Global. Our team of professionals will help you with all steps.