Here’s a virtual cat just in time for Christmas giving, and this cat won’t chew on the Christmas tree lights…
Editor’s Note: You “mint” coins, not virtual cats. Nonetheless, until the distracted masses understand basic concepts like that, it’s no wonder why silver is the cheapest asset on the planet. Stack accordingly…
CryptoKitties, if you’re mercifully unaware, are digital collectibles that people buy and sell on the Ethereum blockchain for cryptocurrency. The game, which launched at the end of October, has become immensely popular in the last week or so and rare kitties are going for well over $100,000 USD.
It’s rather controversial since CryptoKitties are essentially digital Beanie Babies (pro: provably unique, con: don’t physically exist), that can cost a lot of money. CryptoKitties are really just bits of code on the blockchain, and two bits of code can be combined (or “bred”) to create a new and unique bit of code, which creates a new kitty. This code gives them defining visual characteristics, which may make them more or less valuable. Then, people buy and sell their cats. The game is so popular that the resulting traffic has been blamed for slowing down the entire Ethereum network recently.
What you may not know, though, is that CryptoKitties aren’t a random lark by some fun-loving coders. The game is a product of Vancouver-based company Axiom Zen, and the company makes money on it. How much, exactly, is hard to say, but with more than $8 million USD spent on kitties so far according to one third-party site, the company has made at least $300,000 from the 3.75 percent cut it takes on every CryptoKitty trade alone. That’s not counting what the company makes from selling brand new kitties, which are minted every 15 minutes.
To get a sense of what CryptoKitties’ wild ride has been like from the inside, and if the team is worried about a CryptoKitty market crash, I called up Arthur Camara, an Axiom Zen software engineer on the CryptoKitty team in Vancouver.
Motherboard: What do you say to people who accuse CryptoKitties of being digital Beanie Babies, with all the negative implications there?
Arthur Camara: I would say CryptoKitties’ goal is to educate and raise awareness about the blockchain, a technology that’s going to change the world. CryptoKitties is revolutionizing the industry by opening a market for people who have never been involved with crypto before.
But with people paying more than $100,000 USD for CryptoKitties, do you think it’s outstripped your educational goal?
That was never our [intention]. We want CryptoKitties to be selling for a dollar. It’s crazy when we see these numbers, but we wanted to make it approachable and we wanted to create groups that can define what’s important to them and buy the cat with traits desirable to them for an affordable price. We’re definitely surprised that CryptoKitties exploded this way, and we didn’t expect to see people re-selling their kitties for thousands of dollars, but we’re working on making the product fun and accessible.
Is there any sense that this has gone too far?
We had big goals, but we never expected them to come this fast. We had a six-month plan when we thought CryptoKitties would be really big, but we never thought it would take a week. It’s been amazing and crazy at the same time.
How long was your company working on this before release?
The original people who came up with this were Mack and Deiter, and they were working on a prototype for a little while. We wanted to test and launch this in an amazing way, so Benny and I jumped into the project and we came to ETH Waterloo [a hackathon where the game was first unveiled] with a very rough prototype of CryptoKitties, and colourful T-shirts and balloons, and we made a big impact. That version was ugly and didn’t totally work. At that hackathon, we didn’t have anything that you see today. So, we worked extremely fast. All of this was built in the past month.
How does your company make money with CryptoKitties?
Our contract releases gen0 kitties every 15 minutes, and launches them for sale in an auction, and it will do that for a year. That money goes to Axiom Zen, so that’s how we make some of the money in the game.
How much have you made just from selling kitties?
I can’t comment on that, but you can follow sales at kittysales.herokuapp.com, which is something one of our users created and doesn’t have anything to do with us.
How is Axiom Zen using the profits from CryptoKitties?
We’re establishing ourselves right now as a very important blockchain company. All of a sudden we have the number one blockchain application bringing in thousands of users. I honestly believe there is an Ethereum before and after CryptoKitties. We created a market that wasn’t there before, so we created an opportunity for other businesses and we can explore that.
If someone spent $100,000 on a CryptoKitty, but nobody cares about CryptoKitties in two years and that cat is then worth $5… Do you worry about that?
Look, we haven’t said kitties 1-100 are rare. That’s people’s perspective of scarcity. People just think they’re more important for some reason, maybe it’s how they look. The way the game works is that the kitties that breed the most will make those traits more popular. So if you breed a lot of kitties with green eyes, that’s going to be less scarce. People control that scarcity in a way, and create that value themselves. It’s the users creating that idea of scarcity with the genes and with their kitties.
Is it ‘buyer beware?’
I don’t have an opinion on it. I think kitties are valuable, interesting, and fun to play. If they’re going to value or devalue in the future, I honestly don’t know. I’m more interested in making the whole game playable and enjoyable for the majority of people that come to our site. I don’t care that much or speculate about value.
Where do you want CryptoKitties to be in a year?
One year from now I want CryptoKitties to be a global brand. I want them to be accessible. Even if [people] don’t really understand the technology, they can play it.
CORRECTION: An earlier version of this article quoted Camara as saying “exploit,” when he in fact said “explore.” This has been corrected and Motherboard regrets the transcription