In this episode, I discuss NBA NFTs. I discuss how they are released. How to make money with the cards, what gives the cards value, expenses, revenue reducers, revenue ideas, problems, growth, and my opinion. For the first time I discuss speculation, questions I still have after my research.
building an indie business in the center of venture capital. I am Alex Edmonds, people on the Internet. Call me supremerumham, and this is the building an indie business podcast, recorded in the indie business studio. Okay, so today I'm going to be talking about NBA NFTs. I'm going to go over how it works. The revenue sources for these NBA NF T's. What gives these cards value. expenses revenue reducers revenue ideas my opinion, growth of this industry and let's say I guess problems, and I'm adding a new section, speculation, which is questions that I still have after doing all this research. Okay, so let's get into it, how it works. So how it works is they do a drop. Right, so they say, Hey, we're doing a drop of 50,000 packs of cards, and a pack is three cards. And so people sign up, and then they join the queue, which is like the line, and then they're given a number. And as more people make their purchases. Your Number in line gets shorter and shorter. Right, so what do they do drops to create a scarcity and urgency, they say, we're, we're selling 50,000 packs, but then 100,000 people sign up. Right, so that way if someone misses their turn in the line. You, you still have your chance to buy car, I guess, what, what would happen. I guess so, yeah, that's how it works. So then, how do you make money from these cards, Alex. Well I'll tell you the revenue is by purchasing a card, right. You know you purchase a pack, which has three cards. Okay, so you purchase a pack. And those, those packs the cards in the pack are random, you might get a super rare 100 out of 200 LeBron James card that you can sell for $1,000 Right. Or you might get a card that you can sell for $4. Or you might get a card that you can sell for $50. So you purchase the packs, and then you can flip them. Right. Or you can buy individual cards, and maybe they go up in value. Maybe you purchase. Like the first LeBron James card of the season. and maybe people find more value in that card, later on in the season, and you're able to sell that card for more. Right. Okay. And then there are challenges. So, what a challenges, is they challenge you to buy plays like certain plays on and like a set of plays from a team or a game. And then once you have, if you meet the time limit for purchasing all those plays, they'll give you a card, and then you can, if that card has a lot of value. You can sell it for more than you paid for it. Right. Okay. And then they're sets, sets are like you're buying all these cards, maybe from a specific team, and they'll give you a card if you fill out a set, right. Okay, and then you flip that card for more than you paid for all that the entire set. Right. Okay, so now you know how the drops work. Um, how to make money from them. What what exactly gives these cards value. Okay. So the first thing that gives them value is their status. The three types of statuses that I've seen are legendary common and limited edition. So a common card will have like 4000 Other serial numbers, right, and a legendary might have 1000, and a limited edition might have 5000 So, the, the serial number determines what number of card you have in that series of cards. Right, so you might do a common card, that the serial number is 50. And there's 12,000 of these cards, so your card is kind of rare because it's high up on the serial number, but if you get 25,000 out of 40,000 that card has less value than the 25/25 card, right. So, yeah. Then there's the total amount. How do I explain this. So, like I said, if you have a, if you get a card that has only 100 cards, then that card has more value than a card that has 40,000 cards out there, right, the total amount. Right. So, yes, that is the value of the cards. Okay, so the expenses. The expenses are the purchase, you purchase the cards that's an expense, and then there's a fee on top of the purchase of the cards. Right. And then their platform fees so when you go to sell the card, they take 5% So yeah, revenue reducers withdrawal fees. So now you bought your card, you sold it. And now you have to pay it to withdraw your money, and the reason why they do a withdrawal fee is because the platform is new. And what's the other thing I'm looking forward to say, Oh yeah, there's different ways of withdrawing your money, you can do cryptocurrency, you can do a check. So yeah, you have to pay for that. All of it. revenue ideas. And this is something I put a lot of thought into. So, maybe you don't want to sell your card. Maybe you want to trade it with someone. So, there should be a platform where you can do that, maybe pay $1 for a trade instead of selling it, like, you'll want to trade a Kevin Durant card for LeBron James card. You can do that swap for $1 Right. Okay. And then I thought of something really interesting for this. You have all these NF T's that are like videos, so I thought it would be really interesting if someone created like a highlight reel video of all the NF T's that you have, so maybe you can put it on YouTube, and create revenue for your from your cards right, because I'm always thinking about how to make recurring revenue for anything that I've researched, right, like with art, it was renting out the art pieces to places. For example, and then the final revenue idea that I revenue idea that I had was to create some sort of interactive game with the cards like sort of fantasy, basketball, but with these cards like the players have stats, and you have them compete against the other player that add stats, or maybe the stats from that moment, compete against another stat, or another player stats from that moment as well, and they go head to head. something like that. Okay, my opinion. I know that the company that started all of this is really testing things out, but I think soccer would be more profitable. There's more players. There's more teams and there's more fans. So, that means more people, your market is bigger so you can make more money. The problem with this is that there's so many leagues right there's not just one league like the NBA or MLB, do you need to find the right Ollie, whether it's Premier, whether it's La Liga. And because there's so many leagues, you know, there's so many options. You don't know what's the right one because all these leagues, and the fans of them, they have different backgrounds, right, and it's hard to pinpoint where to start with soccer. Right. And then, so one thing I don't understand is, um, are people doing this for fun, or are they investing in it, because for let's go, let's go to growth. First, the top selling card was a LeBron James card, which was the 12th card of a series that had 59 cards, and someone bought it for $210,000. And the moment was from February, 2020, and someone bought it in 2021, and the top three selling cards on the platform are from this moment, right. So, that, that makes me wonder, are people doing this for fun or investing in that, depending on that answer I have more questions, because if it's for fun, then why pay $210,000 Because there's cheaper cards out there for the same moment. And then if it's for investing. Who do they think is going to pay $210,000 and $1 more. Right. Who will pay more for that card, because that's a lot of money with not knowing if this has, like, long term value. Right. And then I think the reason why they started with basketball is because basketball has a uniqueness to the style of play. And that makes digital cards for basketball more interesting than other sports, there's not much uniqueness in the offense. In baseball, they're all hitting. They're all swinging their bat. And you might not even be able to tell different players apart in that, that swing, right, where in basketball. Each player has their own style of play and they can have a unique moment like Kevin Durant hitting a big shot to tie up the game or Ben Simmons, not dunking the ball. In the playoffs, which blows my mind. But that's another thing. And this is another reason why I think soccer could be next. Because soccer is another sport, where players have their own unique style of play, and they can capture specific moments, and it'd be unique. Right. Okay. So problems. One problem I had with the platform is the randomness of packs. I'm spending this money, but I don't know if I'll get any value back. Right, that was tough. And then I get a card that is, that has 40,000. Other people with the same exact card. So, that gives people, many options in the resale market, so I don't truly know if I will be able to sell my card for more money. Right. And then, you know, not basketball isn't played 24 Seven there's an offseason. So what happens to my cards in the offseason and buying packs in the offseason, because the packs are created based on moments. Based on plays from recent moment like recently, right, it might be this week, this month, but that doesn't there's no new plays being created. In August, right. So, what happens to the cards. Right. And then they did this thing, like to get new people to show up to the platform they do new collectors only packs for the week. So there might be a month where the original collectors. They don't buy a pack. Right, so that's an issue for me. And then there's pricing the cards for sale. So, like I said there's 1000s of people with the same exact card, and they might have a different serial number, like I might have 5000 And the next seller has 6000 Should I price it similar to the 6000 Or should I price it a lot higher, like let's say the 6000 prices it for $50 Should I be pricing it for $70 $80 or $51. I don't know, there's no guide for that. Right, So that's one issue. Finally, speculation. So let's say I have a card from a player that you know he's not very popular in the 2020 season. But in 2021, he has a breakout season is my 2020 card going to become more popular. Am I going to be able to make a profit off that. Right, so that's one question I had. And then, let's say I keep my 2021 cards on. There's the 2022 season coming up. Well, the new season devalue my previous seasons cards. That's one question I had. That's another good that's a final question I had actually. So, that's all I have for this episode. Thank you for listening. Have a nice day. Bye.