Why are cryptocurrencies valuable
"Crazy": Even the 'CryptoKitties' developers cannot explain the hype surrounding the digital kittens
The Ethereum network has one phenomenon richer. A game called CryptoKitties was presented at a hackathon in October, and it quickly became the biggest hype on the blockchain. Some of the digital kitties have now mutated into real collectibles and are traded for over 90,000 euros. The crypto kittens are nothing more and nothing less than snippets of code on the Ethereum blockchain.
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The game works like this: every 15 minutes the CryptoKitties code automatically generates a new generation zero kitten. These so-called gen0 kittens are auctioned off to the highest bidder and can then be used for trading and "breeding". In order to pair two kittens, users have to pay a fee in Ether, the in-house cryptocurrency of the Ethereum network. Then the codes of the two cats are combined so that a new code snippet, i.e. a new kitten, is created. The code determines the appearance, the so-called cattributes, the cat and thus also its value. Thanks to the blockchain, everyone can understand what is happening and knows for sure that every kitten is unique.
The CryptoKitties are so popular with enthusiastic breeders that individual kittens are worth several thousand euros. But not everyone is enthusiastic about the game, after all, the cat traffic is now paralyzing the entire Ethereum network.
Behind the fluffy game is the Canadian company Axiom Zen, which makes good money with the hype. No exact sales figures are known, but if you consider that at the time of publication over 12.5 million euros had already been spent trading the kittens, the company earned 470,000 euros from these sales alone, because they receive for each Transaction 3.75 percent. In addition, they make money with the brand new kittens that are generated every 15 minutes.
To get a better insight into the rapidly growing cat empire, we spoke to Arthur Camara, who works as a software developer in the CryptoKitty team.
Motherboard: What would you say to people who call CryptoKitties a collector's hype, similar to thatBeanie babiesin the 90s?
Arthur Camara: I would explain to them that the CryptoKitties should bring people closer to the principle of the blockchain, because this technology will change the world. CryptoKitties is revolutionizing the industry by making the market accessible to people who previously had nothing to do with cryptocurrencies or the blockchain.
There are people whoover 90,000 eurosspend for CryptoKitties. Do you think the game has gone beyond your educational goal?
That was never our intention. We want CryptoKitties to sell for a dollar. We think these amounts are crazy, but we wanted to make the game accessible. We wanted the community to be able to determine for themselves which properties they consider valuable. Everyone should be able to buy the kitten that is most attractive to them. We're definitely surprised that the game went through the roof like this and we never expected people to sell their kittens for thousands of dollars. But for us the most important thing is that the game is fun and accessible to everyone.
Do you have the feeling that the hype has gone too far?
We had big goals, but we never thought we would achieve them so quickly. We thought that CryptoKitties could become very popular within six months, little did we know it would only take a week. It's great and crazy at the same time.
How long did your company work on the game before it was released?
Mack and Dieter came up with the idea for the game and have been working on the prototype for a while. At the ETH Waterloo hackathon, we presented a prototype of CryptoKitties with colorful T-shirts and balloons and it was well received. At the hackathon, the game had nothing in common with the CryptoKitties you see today. We held up and created the current version within a month.
How does your company make money with CryptoKitties?
Our contract on the blockchain creates a new gen0 kitten every 15 minutes, which is sold in an auction. This will go on for a year. That profit goes to Axiom Zen, so we make part of our profit.
How much did you earn from these sales alone?
I can't comment on that, but you can track the sales on kittysales.herokuapp.com. The site was created by a user and has nothing to do with our company.
We also get 3.75 percent for every transaction. So if someone sells a kitten to another user for 10 euros, we get 37.5 cents.
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How does Axiom Zen use the profits from CryptoKitties?
We are in the process of making a name for ourselves as a blockchain company. And suddenly our application is the most popular on the blockchain, used by thousands of people. I firmly believe that Ethereum has changed thanks to CryptoKitties. We have created a market that didn't exist before. We have thus opened up new opportunities for ourselves and other companies.
Today people are spending $ 100,000 on a crypto kitten, but maybe in two years no one will care and that kitten will suddenly be worth five dollars. Are you concerned about this possibility?
We never said that the first hundred cats are particularly valuable. But users think they are especially important for some reason, maybe it's their looks. The game is designed to spread the characteristics of the cats that breed the most. So if you breed a lot of green-eyed cats, this trait will soon be no longer rare. In a certain way, the users have it in their own hands how rare properties are and thus also determine the value of the kitties.
So you trade at your own risk?
I do not have an opinion on that. I find CryptoKitties to be an interesting and useful game that is a lot of fun. I have no idea if the value of the kitties will go up or down in the future. I'm much more interested in making the game fun for all of the people who land on our site. How prices develop is less important to me.
Where do you see CryptoKitties in a year?
I wish CryptoKitties to be a global brand in a year.
And I want the game to be accessible, even to people who don't understand the technology behind it.
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