Buying Virtual Cats Might Be the Future of Investing

By Aja McClanahan on 26 December 2017 0 comments

The latest trend in virtual goods is taking shape in the form of digital felines called . Launched November 28, 2017 as one of the world's first blockchain-based games, these virtual cats are already selling at outrageous prices. As of this writing, CryptoKitties are currently selling for an average price of about $84 per cat, though some are selling for tens of thousands of dollars.

The only way you can purchase, sell, or "breed" CryptoKitties is with a smart contract-based token (ERC-721) based on Ethereum blockchain technology. Blockchain is the distributed ledger technology behind many cryptocurrencies, including Bitcoin. And Ethereum is a type of cryptocurrency after the likes of Bitcoin, but with some additional features to facilitate "smart" money movement between users. (See also: What Is Cryptocurrency, Anyway?)

If you're in the market for some CryptoKitties, you've got to exchange whatever currency you have access to (say dollars or euros) to Ethereum currency, which is known as ether. At the time of this writing, one ether equals about $824.

What exactly are CryptoKitties?

CryptoKitties are digital cats that exist on a computer network. They each have different characteristics known as "cattributes," which are the result of digital genomes. With over 4 billion potential genetic combinations, the possibilities for your kitty are seemingly endless. Some cattributes, like wingtips or blood-red are more appealing and more valuable than others — which is what makes this an actual marketplace.

CryptoKitties have been likened to the Beanie Babies craze of the 90s, or trading baseball or Pokemon cards. If you've ever collected or sold these types of goods, you know that values can be very arbitrary or based on rarity. In this case, rarity is somewhat determined by the digital genome set by the developers of the game.

Why would I buy CryptoKitties?

Right now, CryptoKitties, seem to have no inherent value, aside from what the community assigns them. In other words, people are buying, selling, and breeding these cats only because they believe they will have more value in the future. When you sell or breed digital kittens, you get paid in ether, which converts to real money.

Aside from making money, CryptoKitties is fun to play. You don't know what the cattributes of your offspring will be until they appear, so there's a gaming aspect to this phenomenon in addition to being a way to earn money.

What does the CryptoKitties craze mean?

As mentioned above, there seems to be no inherent value to CryptoKitties. However, the created by the game's developer, venture studio Axiom Zen, explains the game's intent is largely to make blockchain technology, a concept many consumers find confusing, accessible to everyone.

The paper sums up the true purpose of CryptoKitties in this way: "By normalizing the practical application of smart contracts and cryptocurrency transactions, we will empower everyday consumers with a basic fluency in distributed ledger technology."

Who knew digital cats could introduce the average Joe (or Jenny) to the future of technology?

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