The purr-fect game or a ridiculous waste of money? Today examines the latest craze of collectable digital cats.
What are Crypto Kitties?
CryptoKitties is a new internet craze centred around everyone’s favourite online creature: cats. It involves collecting, trading and breeding virtual kittens using a blockchain network. But while some people are enjoying the trading game purely as a fun pastime, others are making serious money.
How do Crypto Kitties works?
The game is built on the Ethereum blockchain, which is a method of digital bookkeeping that chains together a continuously growing list of transactions in secure batches Of data known as blocks. ( Read our article How the Blockchain Work ) At the simplest level, players buy a kitten using a cryptocurrency called ‘Ether‘, in much the same way as you’d buy a physical toy using cash. The CryptoKitty then belongs to the purchaser. The fact that each cat is unique means many of them are becoming highly prized.
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Where does the gaming element come from?
There are two key parts to CryptoKitties. The first is that the kittens can be sold to
other collectors via a button on their profile that allows the virtual animals to be put up for sale. But the second – and most intriguing – aspect of this increasingly popular craze is that two CryptoKitties can be bred to produce another unique kitten. It is why the
developers AxionZen are describing their game as “breedable Beanie Babies”
So how do I get a CryptoKitty?
To play CryptoKitties, you have to install the MetaMask digital wallet (metamask.io), which is only available as an extension in the desktop versions of Chrome and Firefox. You then need to buy Ether (or ETH as it’s known) from an exchange such as Coinbase
(www.coinbase.com) and transfer it to MetaMask. Once that’s done, you simply visit the CryptoKitties website (www.cryptokitties.co) and create an account. CryptoKitties are available in the marketplace in exchange for Ether.
How much do they cost
Well, that’s the $64,000 question – literally, as we’ll see. At the time of writing, according to the Kitty Sales website (kittysales.co), the average midrange price was $23.29, but that hasn’t deterred fans from buying more than 61,555 unique kittens.
Prices are set by users and drop over 24 hours until the auction ends or the kittens are snapped up. At the same time, new CryptoKitties are released every 15 minutes and their prices are determined by the average price of the last five kittens sold plus an extra 50%.
Wow! So they’re not cheap?
Not at all. Again, the Kitty Sales website shows the top price paid foraCryptoKitty (as of 8 December) as an eye-watering $113,749, which translates to 253 Ether (or £84,485).
Total sales of all CryptoKitties so far amount to about £10m, which is quite an achievement when you consider that the game only officially came into being on
28 November 2017.
What if someone steals a kitten?
Ah, that’s the good thing about CryptoKitties’ use of blockchain. The technology is tamper-proof, which means that kittens cannot be captured, destroyed or replicated. The blockchain securely tracks each kitten’s ownership so when you buy a kitten, the transaction is added to the blockchain and creates a permanent online receipt.
If you buy a CryptoKitten, then you own it and look after it forever (although in all honesty, they don’t need much looking after: they don’t eat, defecate or show any emotion). There’s no chance that the kittens can be deleted if the company decides to shut down.
What happens when the kittens breed, though?
Well, this is the interesting bit, although it needs some background explanation.
When the game launched, it did so with 100 Founder Kitties that are referred to as Gen-Zero. More of these Gen-Zero kittens are released every 15 minutes but there isalimit to how many can be created. Indeed CryptoKitties is limiting them to 50,000. They will finish
generating by November 2018, which ensures a level of scarcity.
So how have more than 50,000 kittens been bought?
That’s where breeding comes in. As you’d expect, you need two CrypoKitties to do
this and because they are gender-fluid, you don’t need to worry about putting a Dame and Sire together – each CryptoKitty can play either role.
Once you’ve selected which is going to be the mum and which the dad, you just wait for
virtual nature to take its course. After a short while, two Gen-Zero kittens will spawn a Gen-One offspring while a GenOne and Gen-Five kitty, for example, would produceaGen-Six. This goes on and on, producing ever more kitties.
So there’s lots more cash to be made, then?
To a degree. CryptoKitties with lower generation numbers are worth more than those with higher ones, and the trick is to get lucky and breed a kitten with rare traits. But since each creature has a unique 256-bit genome and there are four billion possible genetic variations, this isn’t as straightforward as it sounds.
The traits of a CryptoKitty – such as facial features, colour, whiskers, markings and cooldown time – are decided by an algorithm that the developer is keeping close to its chest.
Which ones should I look for?
The most highly prized are called Oldlace but there are only five of those in existence right now according to CryptoKittyDex (cryptokittydex.com/cattributes). Wolfgrey kitties are also rare and valuable: there are just 31 of those. If you end up with Totesbasic, though, you’re going to be less fortunate since there are 68,486 of them – and counting.
It sounds complicated. Is it really worth it?
It does, on the face of it, sound as if the world has finally lost its mind, but some people are making serious money out of CryptoKitties. They are so popular that the game now accounts for more than 15% of network traffic on Ethereum (which has consequently raised the price of joining the game).
Rival games such as CryptoPets (www.cryptopets.co) have already appeared online, so this could go either way: people may get fed up with the whole thing very quickly or they may hop from one trend to another to make a quick buck.
Surely the developer must be making money?
It sure is. AxionZen takes a 3.75% fee of all auction and siring transactions via its
website. Given the soaring price of the CryptoKitties, it’s bound to be amassing
a pretty penny.
Are CryptoKitties like Bitcoin?
CryptoKitties are NOT a cryptocurrency. They’re more like a crypto collectible. The real-world analogy for a cryptocurrency is dollars or pounds; a crypto collectible’s real-world analogy is closer to assets like baseball cards or fine art.
As dictated by the smart contract, any CryptoKitty you own belongs to you. Like any product or property you can own, the market price is determined by demand, scarcity, and your asking price.
BREEDABLE BEANIE BABIES
Although CryptoKitties’ developer describes its game as “breedable Beanie Babies”, it would do well to heed the lessons of this once phenomenally popular toy range. Huge in the 1990s, Beanie Babies at one time accounted for 10% of eBay’s sales and made a lot of people a lot of money.
This was helped by the makers creating scarcity in the market by retiring certain Babies on a whim, thus driving up the prices. But eventually, the novelty wore off – when retirements were announced in January 1999, prices remained stable and a flurry of new releases failed to generate interest. By 2000, the Beanie Babies bubble had burst. Still, as we explain above, CryptKitties’ developer currently earns commission on every purchase, so it probably isn’t panicking just yet.