CryptoKitties lets you exchange a made-up thing called Ethereum for fake cats. Naturally it’s the next big thing in the super convoluted world of cryptocurrencies, where people spend a lot of time cooking up fancy new names for pyramid schemes. Like people who hoarded Beanie Babies back in the day, digital collectors are gathering and breeding fictional cats in hopes that they will eventually be able to turn their furry $5 investments into hundred thousand dollar payouts.
Imagine a stock market where people traded Pokemon instead of commodities or shares. CryptoKitties are pictures of cartoon cats that only exist on the internet, where they’re currently being bought and sold for anywhere from $10 to over $10,000. Created by the tech company Axiom Zen and released into the wild on in late November, they’re like Bitcoins but cuter, plus you can breed them.
In effect they’re a blockchain game. A blockchain is a fancy name for a set of digital records that can be maintained securely and publicly across a bunch of different computers without the need for a central authority to keep them organized. Blockchains are how cryptocurrencies can stay accurate without being managed by banks. While Axiom Zen produced the code that controls how the CryptoKitties look and multiply out in the wild, they function as tokens that continue on independently of their creators. They’re tied to the minor cryptocurrency Etherum, whose value has jumped significantly since the trend started.
CryptoKitties account for an outsized portion of all Ethereum transactions at the moment, which has led to a ton of outside speculators trying to get in on the action. People can use a Chrome extension like MetaMask to open an Ethereum account and manage it directly in their browser, buy some of the cryptocurrency, and then head over to CryptoKitties.com to pick out their first one. Right now you can nab some Gen 19 or 20 scrubs for about $20 or so. By the weekend you might have a litter of new cats with the whole batch being worth several times what you paid if the current bubble continues.
The investment bubble around CryptoKitties is just one element. The ‘game’ aspect involves breeding kittens. You can either have two of your kittens “sire” a third or pay another user to mate with theirs if you’re in the hunt for specific characteristics. The kittens then have a cooldown that restricts how fast they can make new ones helping to limit inflation. When the new kitten is born it comes with its own unique characteristics as well as a label designating which generation of kitten it is (starting back with the original set Axiom Zen made, gen 0).
Gen labeling is important because it denotes status and value. Literally none of these kittens are worth anything beyond what people decide they want to pay for them, but in the absence of an external value system imposed by the market, people have begun to create their own. So earlier gen kittens are generally more sought after and also believed to have a faster cooldown for breeding.
The kittens all have stats as well, in addition to their physical characteristics. No one really knows what the relationship between the two is at this point, or even how they relate to breed times. Because of the money and excitement though, the community around CryptoKitties has already begun trying to reverse engineer the “genomes” of individual kittens to try to figure out how different traits are passed down through each generation. People on Cryptokittydex.com are comparing and contrasting the 256-bit numbers that encode each kitten to crowdsource unlocking these secrets.
The randomness factor of breeding creates some weird-looking kittens. There are rainbow-colored ones with googly eyes falling out of their eye sockets and kittens shaped like ducks. When you’re not breeding your kittens or simply staring at them, some people post them on the marketplace with ridiculous names for ridiculous prices. “Most Expensive Most Useless” is a Gen 19 categorized as “slow” that’s currently going for over $100,000,000 (the logistics of even buying that much Ethereum aren’t feasible at this point). But other players just like to bask in the perceived awesomeness of their kittens. This person made a painting of theirs.
A friend of a friend I spoke with earned a couple hundred dollars between last Friday and now just by purchasing a few cats back when they were cheap and letting them breed a few new ones. Other people have made much more. One site that tracks major sales of the kittens has them totaled at over $6.7 million so far, up from just over $1.0 million earlier in the week, with some of the most sought after (and not priced as a joke) ones asking for $10,000 or more.
As Quartz notes, Kitten number 23 is a particularly extreme example. It first went on the market on December 2 for around $4,000. On December 4 it was resold for north of $32,000. Yesterday someone snatched it up for nearly double and is now attempting to flip it for tens of thousands of dollars more. Throughout all of these transactions people pay a 3.75% fee to Axiom Zen and some extra Ethereum to get the transaction processed sooner rather than later (time is clearly of the essence in this marketplace). The rest of the cryptocurrency left over can be cashed out for real US dollars.
This is the part where I remind you that Ethereum is a made-up currency which people are buying in order to trade for made-up kittens. While the kittens will theoretically live forever on people’s hard drives, no matter what happens to Ethereum, they could easily tank in value in the next few weeks with ripple effects throughout the rest of the Ethereum blockchain.
Ever since Bitcoin currency originally grew from being valued at fractions of a penny to over $1,000 per unit, speculators have been searching for the next big cryptocurrency that might take off. That’s part of why there’s currently such a frenzy around CryptoKitties. Also because people apparently love emoji, especially when you attach stats to those emoji and let them reproduce.