CryptoKitties are digital collectibles. In December 2017, some Kitties were sold at a price tag of US$ 100,000 and more.
I’m a 90s kid. That means I grew up without a mobile phone.
When the school bell rang for break time, the playground economy was on. We traded Pokemon stickers, soccer cards, basically anything that was trendy.
That time is long gone. It’s 2018 now and the world is becoming digital. So let’s forget about soccer cards and talk about CryptoKitties, the modern equivalent of the 90s’ Tamagotchi. It is a blockchain-based video game that allows players to purchase, collect, breed and sell various types of virtual cats.
Digital cat images for US$ 100,000
The idea is rather simple. CryptoKitties are not a cryptocurrency – even though the name might suggest it – but non-fungible tokens, each representing a unique cat image.
Developer Axiom Zen launched the project in October 2017, releasing a new CryptoKitty every 15 minutes.
The maximum number of CryptoKitties released is limited to 50,000. On the 30th of November 2018, the last Kitty just got released. However, as users can breed new Kitties, the actual number has already exceeded 50,000.
Each Kitty has a unique code, that defines its genetic algorithm. Color, size, shape, all the different “cattributes” are captured in the code.
The price of each Kitty is determined by the market, ranging from a few dollars up to thousands of dollars. Popular Kitties are pricier. In December 2017, a Kitty was sold for a price tag of more than US$ 100,000.
The hype is over
If you think CryptoKitties are a silly idea, beware that the transaction volume has exceeded US$ 25 million. Not so bad for a digitalized image of a somewhat weird-looking cat.
During its peek time, around December 2017, the game was so popular that it drastically slowed down the Ethereum network on which it is built. There were 10-20 times more pending transactions as usual, which resulted in transactions being stuck and taking much longer to confirm than usual.
That said, the initial hype is over. Whereas the median Kitty price stood at US$ 41 in December 2018, it is now at around US$ 5. The transaction volume has fallen more than ten-fold from 1.3 million in December to 115,000 in May.
Despite the fact that Andreessen Horowitz and Union Square Ventures decided to give the company US$ 12 million in March, CryptoKitties are in danger of becoming a short-lived novelty.
CryptoKitties are digital collectibles
Besides the fun side, there are some remarkable points to be learned from CryptoKitties.
First, CryptoKitties are not about cats. Essentially, they are digital, blockchain-based collectibles. Using the Ethereum blockchain, owners can proof they alone control a unique crypto asset.
The Kitties come with one fundamental difference to real-world collectibles: Users only own the code.
In the real world, if you own a soccer card displaying Christian Ronaldo, you will own the right to the card. You could sell the card, or destroy it, but you could not reproduce it or use Ronaldo’s image for other purposes. However, the card itself is yours, and no one can legally take it away from you.
CryptoKitties owners only own a piece of code. That means, if Axiom Zen gets sold, and the new owners will decide to delete the Kittie images and use them for a TV series instead, they could do that.
Another issue CryptoKitties have exposed quite impressively is the limited scalability of the Ethereum blockchain. That might be addressed in time, but the CryptoKitties might have raised some red flags for other developers who are building Ethereum-based blockchain apps.
Anyway, the Kitties are fun and some traders have made good money with it. That shows, a good idea can come from anywhere and can go a long way. Let’s see what comes next. Maybe digitalized religion? Oh wait, that’s been done already. Read more here.