NFT Culture recently got together (virtually, unfortunately!) to have a informal heated conversation on what is next for the NFT scene. We decided after the conversation that there were so many good bits that we should share it with our readers.
Are we in a NFT crash or NFT Bubble?
We recently touched on this in John’s great article about NFTs and the Hype Cycle (March 2021 Edition). If you haven’t had a chance to take a peek at that article, definitely take a look, as it has a lot of good advice for understanding the general state of NFTs right now. In that article, we said there were two major indicators that we are looking at: mainstream news reporting, and the Beeple Christie’s auction. Since our article posted, we’ve seen some negative reporting in the Wall Street Journal, Bloomberg and CNBC. Not enough to turn on the alarm bells, but some eyebrow raising snippets. Additionally, the price action of some of Beeple’s works has been declining, an edition in his Bull Run open edition sold for under $100k earlier today, which we’ve considered the general floor for Beeple, and an important point of technical support. Bull Run later recovered a bit, but the fact that we are testing this symbolic low is concerning. Lastly, some google search terms that NFT Culture staff monitors has also been seeing some declines, although we consider this a tertiary indicator. We still are firm that we are keeping a close eye on the situation and don’t believe we are in a crash yet, but the indications are picking up.
What is up with Topps? Are they going to go all-in on NFTs or what?
If you are in the NFT scene, you almost certainly have heard of NBA’s Top Shot. The first question/statement a lot of people make is “I’m not a basketball fan, why isn’t X sport doing this?” The biggest missing player here for collectibles is the MLB, but other major players like soccer, NHL and less obviously Disney’s properties and Pokeman (Malachi recently wrote an article about that here: Pokémon+NFTs) have huge untapped markets. Enter Topps, the trading card company. Interestingly, Topps is already capturing a lot of digital collectible revenue, in the form of In-App purchasing. You can read more about this at the Topps website here: https://play.toppsapps.com/. Topps is dipping its toes in the NFT water on some of its more obscure assets, such as Garbage Pail Kids, via the Wax network (What the heck is Wax? See: https://on.wax.io/wax-io/. IMPORTANT NOTE: We are linking them as an FYI, but we don’t necessarily buy what they are selling, keep that in mind).
Our best guess here is that Topps is testing out the NFT waters with Wax and the low-value assets as a Proof-Of-Concept, and when the time comes to leverage their more valuable licenses they will do so on a mainstream NFT platform. One possible sticking point for Topps is that gas fees on ETH are really high, which greatly hampers your ability to sell cheaper packs of trading cards. Eth 2.0 cant come soon enough!
Sidebar: Who is Wax?
Wax was founded by the creators of OpSkins. OpSkins was a trading place for CounterStrike skins, one of the earliest and most prominent digital collectibles. OpSkins got in a tiff with Valve, and got shut down (see: https://esportsobserver.com/valve-shuts-down-opskin-bots/) in summer of 2018. OpSkins also had a very contentious ICO during the creation of Wax, and were involved in a legal dispute with two early investors in the ICO. NFT Culture won’t go on the record of our opinion of Wax. What we will say is that we take transparency and trust very seriously when evaluating the legitimacy of token systems and blockchain platforms.
Wow, it sure seems like Topps has a corner on licensing of assets!
We obviously can only speculate here, but as long as we are speculating, it sure seems like Topps managed to land a bunch of lengthy license deals while there was no real market for digital collectibles, so much so that Topps had to create its own walled ecosystem for tradeables, which is never an ideal approach. The assets they acquired rights to were probably next to given away as well, since the content owners likely assumed that they were just printing free money. This was definitely a big win for Topps, hopefully they break out of the aforementioned walled garden and don’t squander their good fortune.
Why doesn’t Disney just buy Topps?
Good question. From what we can tell, Topps has about $180M of annual revenue, so conceivably they could be purchased for less than a billion or so dollars. Disney, a company that loves its control of its assets, would surely love to cash in on the NFT market directly rather than through a partnership. Food for thought, maybe a future article!
So is all this good or bad for NFTs?
At the end of the day, spreading the concept of NFTs, whether via Topps X Wax collectibles or mainstream properties like Disney and Pokemon releasing new collectible items is a huge deal for NFTs. Art is a great (and large, >$60B worldwide) market, but it is relatively niche. For NFTs to really break out, the major players need to dive in. We are excited about any and every application of the technology.