As an animal lover, I adore watching videos of cats on my smartphone. Heck, it's one of the reasons why I use Instagram religiously. Nothing warms my heart more after a long, tiresome day than to see a fluffy Scottish fold twirl its little paws around a string of wool.
The internet loves cats — there's no denying it. Just look at the number of cat internet memes out there; browse through Instagram and you are bound to find many celebrity cats with millions of followers (I follow more than 10 cat accounts myself, including "Nala Cat" and "Hosico").
So it's no surprise that an internet company has decided to mesh the magnetic charm of kittens to a technology that until the last couple of years was still fairly esoteric — blockchain.
Called CryptoKitties, the crypto venture, spawned out of five-year-old Canada-based innovation studio Axiom Zen
, is a game that allows users to collect and breed virtual kittens. Each kitten has a unique set of characteristics and they are all stored securely on the blockchain.
The kittens are stored on a non-fungible (meaning not interchangeable) token called the ERC-721 token, a new standard of Ethereum token that it claims it has pioneered. Most people know about ERC-20, which is the most common Ethereum token standard, and is typically used in smart contracts or Initial Coin Offerings (ICOs).
ERC-20 tokens work well for cryptocurrency and ICO projects because each token holds the same value and attributes. For example, if a company conducts an ICO, they would usually issue ERC-20 tokens to investors, who would purchase them using a cryptocurrency, say Ether or Bitcoin. The investors then profit if the price of that company's ERC-20 token goes up.
But trading CryptoKitties is very different from most crypto projects because each virtual kitten, or to be more specific, CryptoKitties token, is valued differently and has its own unique metadata. So for example, a particular CryptoKitties token might cost one Ether, but for another CryptoKitties token, it might cost three Ether. And thus, there is a need for a non-fungible token.
The simple way to think of CryptoKitties is that it is blockchain version of a baseball trading game (except kittens are way cuter than baseball players).
How CryptoKitties plays is very simple: You collect virtual kittens, breed them to get new kittens, then maybe sell them to other collectors.
Sadly, these critters are not even animated; they are just static images. The game's founder, Benny Giang, says that there are plans to animate the kittens in the future or even embed AR functions.
Regardless, because collecting cute virtual kitties is a fun, and also lucrative, activity, adoption of the game has spread faster than a wild bush fire. There are over 250,000 users on the platform, currently. Together, they have generated over US$40 million buying and selling CryptoKitties on the platform's marketplace.
At one point, the volume of transactions on CryptoKitties was so high it actually crippled the Ethereum network
(it took up 25 per cent of the network). The team had to pay US$50,000 in gas prices — Ethereum transaction fees — to unclog the network and allow new CryptoKitties to be 'born'.
"Since we are on the Ethereum blockchain, scaling will need to be done at the protocol level and on the app level. We’ve already created a team of 6 from the core CryptoKitties team to explore scaling solutions. We’re building out mechanisms to help improve the user experience and have spent more time considering new feature builds," says Giang.
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CryptoKitties is also limited to the iOS system at this stage. Giang says that while "Android has mass market appeal. However, we have to balance it with our scaling solutions. Too much too soon will result in a poor user experience."
Collecting CryptoKitties is serious business: the company claims between 4 to 7 CryptoKitties have been sold for over US$100,000.
The most valuable CryptoKitties are the Gen 0 types There are the ones that the platform will release into gene pool (in 15-minute intervals) and will have the largest set of unique attributes (for example, new eye colours or spots). Only 50,000 of these will be available, out of the 4 billion CryptoKitties that can be breed on the platform.
Though it was originally targetted at US and Canadian audiences, CryptoKitties is also a big hit in Asia. "Our third biggest player base is in Asia. The gaming market is huge and we think their adoption of crypto games will be fast and significant," Giang explains.
Because of this, CryptoKitties will begin officially launching in developed Asian markets such as China, Taiwan, Hong Kong, Singapore very soon, he says. And there will be localised kittens for each market.
"We have a huge global brand and it makes sense for us to localize and allow players in Asia to adopt kittens."
"We will have specially themed kittens such as a Chinese New Year kitten and an exclusive kitty #888 [a lucky number in Chinese]. We will also be doing a giveaway with Cobo with the first limited edition year of the dog kitty."
And despite its grand ambitions to scale and expand internationally, Giang dismisses any plans to raise external funding, such as via an ICO.
"We’ve publicly announced that we are not doing an ICO. In fact, we are one of the first decentralized apps with a viable and profitable business model built on top of a blockchain. We see this will be a trend with larger companies now coming into this space. The objective isn’t a cash grab but the true adoption of blockchain," he says.
CryptoKitties may not be the most useful application of blockchain, but by appealing to the lay consumer, Axiom Zen is raising the public profile of the technology — and that, of course, has naturally lead to companies copying its product
Now, the battle is on to see which developer can develop the cutest and most playable blockchain-based virtual pet collecting game.
Image Credit: CryptoKitties