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How NFTs and Blockchain Secure Digital Sports Collectibles

Today, there are new opportunities to own a bit of sports history. It is now possible to even own a digital collectible of your favorite athlete making a play during a game.  NFTs (non-fungible tokens) are being used to provide digital provenance that affords unique ownership of sports most memorable moments.  NFTs rely on blockchain technology to insure that each token is unique and cannot be duplicated or double spent.  At its basic level, an NFT is data stored in a file that is used to transfer information on a blockchain network.  There are currently several different blockchains that support NFTs and the underlying digital collectible could be stored off-chain by including a pointer to the digital collectible (i.e. URL address), or the digital collectible could be stored in-chain, which would take more blockchain data.  Just like a paper certificate of authenticity, an NFT is a way of certifying genuineness and unique ownership of a digital collectible.  In this manner, the NFT adds value to the digital collectible, just as the provenance attached to Babe Ruth’s 1920 Yankees jersey that sold for a record $5.64 million ensures its authenticity and adds to its value.

One prominent example of a digital collectible is a “Moment” sold under the NBA Top Shot platform. Moments include a video clip of the player making a play such as a shot, dunk, steal or block, along with key player stats that are stored in a proprietary file format.  Moments can be purchased in “Packs” directly from NBA Top Shot, and thereafter sold or traded individually, much like traditional basketball or baseball cards. Unlike traditional baseball cards, however, Moments are entirely digital and are stored in software wallets.  NBA Top Shot is officially licensed by the NBA, and its owners are planning to release similar digital collectibles featuring UFC fighters.  MLB has recently partnered with Topps to bring digital collectibles to baseball, and it appears that the NFL is actively pursuing partnerships for football digital collectibles.  It looks like fans of all major sports will soon have the ability to buy, collect, sell, and trade digital collectibles secured by NFTs.

As with any collectible, a digital collectible has a market value of only what the next owner is willing to pay for it.  By having partnerships with the official sporting leagues, competition between competing digital collectible platforms is minimized.  By securing the digital collectible with an NFT, copying and counterfeiting are a very low risk.  Each of these considerations have helped create thriving digital marketplaces where sports fans can now connect with their favorite players outside of the game.  It remains to be seen how the popularity of digital sports collectibles will change with time, but right now the market continues to grow with no peak in sight.

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Andrew D. Skale is an IP attorney and commercial litigator at Mintz. He litigates patent, trademark, and copyright disputes, and prosecutes patents and trademarks before the US Patent and Trademark Office. Andrew counsels clients in diverse sectors, including technology and consumer products.