People are currently spending an absurd amount of money collecting virtual cats in CryptoKitties, a new craze running on the Ethereum blockchain which has taken the crypto world by storm.
Since its launch, around $US1.3 million has been transacted through CryptoKitties. Going by independent site Kitty Sales, many kittens sell for around 50 ETH, with the original kitten going for a whopping 246 ETH. While price fluctuates, the cheapest kitty is around .03 ETH.
Built by design studio AxiomZen as one of the world’s first crypto games, it’s actually an interesting introduction to how cryptocurrencies work. Unlike other digital collectable games, such as Neopets, CryptoKitties has a lot more in common with physical media like the Pokémon Trading Card Game. For instance, as this takes place on the blockchain, it’s permanent. When you buy one of these completely unique kitties, it’s 100% yours and nobody can take it away. You’re free to buy and sell it and holding onto it could improve its value.
It basically works just like a cryptocurrency does, with all of its inflated worth being determined by the market’s interest in it. It is a little bit weird that Ethereum, a cryptocurrency with little tangible use has found itself useful in buying virtual cats that definitely have no use.
Currently, around 15% of all Ethereum network traffic is dedicated to CryptoKitties. Interestingly, this growth in network traffic use has shown that Ethereum may not be able to scale properly. Currently, it’s taking longer than expected to generate a new kitty, and the price of creation has gone up to help make it reliable. If one viral game can slow down the network, what happens when blockchain technology expands beyond the sectors that are interested in it and into the everyday lives of the world?
But back to cats.
If you’re curious as to how CryptoKitties works, there’s an extensive FAQ over on the game’s site. A quick rundown shows that it’s an excellent money-making scheme for AxiomZen.
Money in the Kitties
The game was started with 100 “Founder Kitties” and every 15 minutes a new “Gen 0” cat is generated that sells for the average price of the last five sold, plus 50%. Over 24, the sale price of this Gen 0 cat declines until someone buys it. Anyone can also sell their own kitten via auction, with a fixed starting price which declines until someone buys it or its fixed ending price is reached.
You can also breed kitties to get new cats. This works by either offering up your kitty for “sire”, as the game calls it, and someone can pay to breed with it. You’ll bag the ether and they’ll snag the offspring. You can also pay to breed with other desirable kitties if you want the offspring.
Interestingly, there’s no hard-coded rarity scale in CryptoKitties. Each kitten’s 256-bit genome determines its aesthetic traits and breeding cooldown time, but no one trait is valued more than another. This means that the network of players are determining what traits they believe to be worth more than others. It’s a fascinating social observation on human behaviour as we’ve currently seen that kittens on gold backgrounds are worth more than those on coloured ones.
If you’re wondering how AxiomZen made this into a cash cow, it’s because it keeps all the ether made on the initial 100 kitties and the Gen 0 ones too. It also takes a 3.75% fee on all auctions and breeding transactions. Basically, it’s the middle layer for interactions with the CryptoKitties network, although if you can interact directly with the smart contract (and not via the CrypotKitties website) you won’t have to pay the fee. Essentially, it’s a convenience fee for those that aren’t au fait enough with the Ethereum network.
Still, if you’re a cat lover and want to own some expensive kitties, this is definitely one way to go about it. It’s a lot cheaper than buying a real one, but with some Gen 0 cats going for a tens of thousands of pounds, you’re spending more than most of the world’s most expensive cats.
In fact, only a top-end Bengal, Savannah and Ashera cat can come close to the cost of a desirable CryptoKitty.