Ethereum touts itself as an unstoppable “world computer” that will upend industries and revolutionize finance. But, for the moment, one of its most popular applications is a game called CryptoKitties that lets players buy, sell, and breed cartoon kittens. CryptoKitties launched on Nov. 28 and has proved so popular that it’s currently responsible for nearly 4% of all transactions on the ethereum network, behind just one other application, a token trading platform, according to data provider ETH Gas Station.
The object of the game is to acquire cartoon kittens, which each have a specific set of attributes (or “cattributes” in the game’s parlance). Players can then try to generate kittens with rare attributes by “breeding” them with other cats in their stable. Players can acquire or sell cats on a marketplace supplied by the game.
That takes care of the “kitty” part of the game. The “crypto” part comes in because each cartoon feline is a unique object on the ethereum blockchain. That means it’s as immutable and real as a bitcoin, or a unit of ether—the cryptocurrency used on the ethereum network. This means that players will still own their kittens even if the makers of the CryptoKitty game vanish tomorrow, which is not the case with digital assets contained in online games that generally rely on a centralized entity to maintain those assets. As such, they have the chance to become collectables that can fetch seemingly exorbitant prices, like with virtual video game skins.
There already appears to be a thriving market for crypto kitties. One cat has changed hands for close to $5,000, according to Crypto Kitty Sales, a third-party data site for the game. Over $66,000 has been spent on kitty-based transactions so far, with 1,165 players and 16,877 kitties bred or released. Check out the top five most valuable kitties below (“Chairman Meow” is a special kind of crypto kitty known as a “fancy cat” that the game’s designers included):
CryptoKitties is significant because it has a chance of attracting players beyond the limited circle of cryptocurrency enthusiasts. As Ryan Hoover, the founder of product recommendation platform Product Hunt, noted, the game is like Pokémon on a blockchain, which bodes well for ethereum evangelists hoping for some of Pokémon Go’s viral popularity.
CryptoKitties also offers a cuddly slant on the “initial coin offering” craze. The mechanics and goals of the two are similar, but in the case of CryptoKitties, offers genuine utility to the user upfront. For instance, most ICOs promise to build whatever technology they are pitching with a white paper (basically a lugubrious PDF). Investors send cryptocurrency to the ICO issuer and then wait for the tech to be built. In the meantime, the ICO may issue a token and allow investors to trade it, which gives rise to speculative prices around an unbuilt piece of technology.
With CryptoKitties, the software is already functional. But people have to buy kitties—which are sort of like tokens—in order to participate. They can buy kitties from the developers themselves, or on the secondary market. In the latter case, the developers take a 3.75% cut. The CryptoKitties game, then, amounts to a sort of token sale, except the tokens are the kitties. The trading of kitties also generates the vaunted virtuous cycle that all ICOs promise: the more users pile into the system, the more valuable those tokens will be. This appears to be happening with CryptoKitties.
CryptoKitties may not have the grand ambitions of other cryptocurrency projects, but by devising a mechanism that’s fun and approachable, it may come closest to achieving those ambitions.