While the price of collectibles surged during the pandemic and into 2021, sellers and buyers have had to notice that some card prices just aren’t fetching the same prices they commanded earlier in 2021. That may just be some rationality in the market, or it could be too much supply as collectors and investors wanted to lock in profits. But what role do non-fungible tokens (NFTs) have in the years ahead for sports collectors and investors alike.

The sector covering collectibles has undeniably matured into an alternative asset class. While this has always included sports memorabilia and cards, the alternative asset class now includes non-fungible tokens. The market for NFTs is new, it is still relatively untapped, and there may even be more of a debate about the real value than many cryptocurrencies.

Scarcity is one key driver for collectibles, and the “non-fungible” aspect of NFTs is supposed to bring with it something unique or limited. This is a knife that can cut both ways when it comes to valuing collectibles.

While news of a Beeple NFT art sale for $69 million might sound like a bubble, that high-dollar purchase may have had more of a purpose of showing the world that digitalization of anything is possible rather than a true valuation for that one piece. Still, individual sales of CryptoKitties, CryptoPunks and and Meebits have been mind-blowing. The site Nonfungible.com lists its 7-day volume and at the time of this article that was $122.59 million for Meebits and $25.5 million for CryptoPunks.

The Topps Company may be larger than all of these digitalization efforts combined in the coming years. Topps will soon be public again after announcing a Special Purpose Acquisition Company (SPAC) merger with Mudrick Capital Acquisition. The deal was set to make for a combined valuation of $1.3 billion upon a private placement and closing of the merger. The news of the merger did not just include cards, but also a digitalization of NFTs and the public shell acquirer has already seen its stock rise more than 60% since the deal was announced to a valuation of $650 million without considering the warrants and the private placement.

The draw to the non-fungible has to point to the scarcity, but there is also the disruption aspect of it. Some collectors and investors will scratch their heads that a unique digitalization can be worth more than a physical asset. Sport teams and leagues are now cashing in on NFTs, as are the players. Topps launched its first baseball NFT collectibles in April in a move that was said to be “ushering in a new era of baseball card collecting” in a partnership with the MLB and the Players association.

The uniqueness of the NFT market uses blockchain to prove unique ownership of digital content. Where this comes up for debate is a slam dunk or a key hit or touchdown. What happens as these players go on to repeat these processes of digitalization hundreds or thousands of times more in their careers? Will the “almost the same” scoring event in a year be worth more or less than the prior one? And will the 98th be worth more than the 96th?

How can a unique digital asset be worth more than a tangible item that was used during that moment? it is a question that remains open for debate.

The National Basketball Association (NBA) has sold limited-edition “Top Shots” as digitally packaged video highlight clips which are effectively NFT-authenticated. Some of the videos used for the packs are common, and some are considered to be rare.

NBA future Hall of Famer LeBron James had an NFT of him dunking the ball which reportedly sold for $387,000 in April of 2021. What happens to the value of that if and when LeBron continues to make dunks and other shots in the year or years ahead? Again, it remains to be seen. There is the notion that it was the “first” and deserves a perpetual premium, but it could also suffer from a watered-down effect as more supply hits the market.

The NBA alone has countless millions of dollars at stake here, and the move will almost certainly be replicated by other leagues and athletes. CryptoSlam, which is classified as an aggregator of NFT collectible data using the Ethereum, WAX, and FLOW blockchains, received a strategic investment billionaire Dallas Mavericks owner Mark Cuban in April 2015.

The NBA Top Shot website counted in May 2021 that it had over 340,000 NBA fans that have joined the site and that there were more than 10 million Top Shot Moments. The drop for 2:00 PM for Monday, May 10, 2021 was listed as “rare” and included 6 moments for a price of $149 in this pack. Just like a regular pack of cards, this opening could be worthless in the future or it could rise and rise due to demand. That verdict is just not known yet.

Elsewhere in NFTs, Yao Ming’s Yao Family Wines out in the Napa Valley winery region recently released an exclusive wine called “THE CHOP.” To make the launch unique, the wine was paired with a limited edition NFT digital collectible along with the wine auction.

Here is what should matter to the collectibles industry — NFTs are now competing against cards and other physical samples of collectibles. At least one reason to own a digital asset rather than a physical asset may depend on whether the person involved in buying it is a collector or an investor. An investor might not care what the asset is other than a profit-maker, but for a collector to get excited about owning a unique video clip or a unique digital image they were probably already (or wanted to be) a sports memorabilia collector.

It seems that in either case of collector versus investor, this is competing for what would have otherwise likely been spent elsewhere.

The website DappRadar.com at the time of this publishing showed that the NBA TopShot NFT count using FLOW had some $12.23 million of trailing 7-day volume and $72.82 million in 30-day activity.

While the NBA and MLB are capitalizing on NFTs, National Football League star quarterback sensation Patrick Mahomes has also gotten in on selling signed digital artwork under NFTs. The website Sportico.com reported that the debut Mahomes collection sold for $3.7 million, besting a $1.75 million digital haul from Buccaneers tight end Rob Gronkowski a week earlier.

Can someone even begin to make the case that hundreds of thousands or millions of dollars chasing a newer asset within collectibles will not pose competition to its predecessor? It would be a great argument to hear.

As a reminder, there are no guarantees that any buyer will make a profit on any risk-asset they buy. That holds true for buying shares of stock in Apple, Amazon and Microsoft and it remains true in cryptocurrency. It is also true when it comes to collectibles.