I’ve made a lot of bad financial decisions in my life. As a child, I spent over $50 on a water gun that I probably used twice. In the early aughts, I bought an iPod instead of dirt cheap Apple stock. In my late 20s, I dropped my life savings into a startup with a moonshot of turning a profit. The same sum invested in bitcoin in that era would have made me a mega-millionaire. But it wasn’t until I was staring at a $45 digital cat, a glorified piece of clipart with lilac fur and buckteeth, earnestly weighing its merits as an “investment” in my “portfolio,” that I knew: My bad financial decisions had only just begun.
I’m trying CryptoKitties, a runaway internet phenomenon that combines blockchain technology (think bitcoin) with collectible keepsakes (think Beanie Babies). You don’t need to grasp the fundamental technologies at play to understand the collector appeal of CryptoKitties. Every single cat is unique, a genetically determined combination of traits that have led some kitties to be sold for as much as $110,000. Each CryptoKitty can be bought and sold and bred to make more kitties. And while they’re powered by neat technology, ultimately, each CryptoKitty is just a picture of a cat that you, or anyone, can load up at will. You don’t even need to own it to see it.
At this point, you probably fall into one of two camps: You either still have no idea WTF CryptoKitties are (in which case, keep reading), or you’re kicking yourself for missing the CryptoKitty “cryptocollectible” launch and cashing in quick (in which case, keep reading).
Two months since their release, CryptoKitties have been the single most successful application built upon the ethereum network –one of the hottest bitcoin alternatives in the world that’s capable of running its own apps, currently sitting with an $86 billion market cap. It may be the most successful application built upon blockchain cryptocurrencies altogether.
While bitcoin is more or less a digital dollar that can operate without a bank, platforms like ethereum are more complicated. Its currency, ether, is essentially a smart contract between two people, managed and executed by decentralized servers. Ethereum’s proponents imagine a world where all of these smart contracts enable complex apps, like a YouTube distributed across millions of servers rather than simply Google’s, or a social network where you own your identity rather than Facebook. The CryptoKitties app, which allows you to breed cats using ether, is something of an early proof of concept of this future.
After CryptoKitties launched in November 2017, its Canadian parent company Axiom Zen received hundreds of thousands of signups in just two and a half weeks, and had made at least $12 million in revenue from selling and breeding cats within the month (by selling cats and charging 3.75% on all other CryptoKitty transactions). Ethereum “basically moved from about one billion transactions per day to four to five billion per day, within, say, a two to three-week span,” says ethereum co-creator Joe Lubin. “Needless to say, [we] didn’t sleep very much.”
In this regard, CryptoKitties serve as an excellent primer to the wild world enabled by cryptocurrencies. But they also demonstrate just how far the UX of cryptocurrencies and blockchain will need to evolve to be truly adopted by the mainstream public.
Ether. I need ether.
WTF is ether?
I’m browsing through rows of cats for sale. There are cats with stripes. And cats with mustaches. Cats with gleaming, sweet eyes and cats that throw shade. There are cats tangled up in Christmas lights, and cats in Dracula costumes. Cats with chicken legs, and cats that fly in UFOs with green alien faces.
Each cat also has a number representing its cost in ether. There’s no easy translation to real-world cash equivalents, so I find myself tabbing over to a spare window to calculate the true cost of these cats. They range wildly, from .009 ether (about $8) to listings for 1,000 or more (which would translate to $900,000 by current rates).
Yet the cats are calling. I go from outright confusion to a sudden sense of urgency. Within minutes I realize that I need the totes adorbs, anime-inspired “otaku” eyes. A mustache known as a “Dali” was a must. Can I afford a sailor suit? No way, right? What about “elk” antlers?
I find a cat that I like. It’s 0.11 ether. At the time, that converted to $77–for a lilac cat with a blue belly. Expensive for sure, and yet, it spoke to me. So much cuteness! I had to have it! But I had to have ether, first. And I had to have a place to put that ether, too.
So I install a digital wallet, known as MetaMask, which I can use to buy the cat. Then I load the wallet with ether by buying some on Coinbase, a third-party platform that sells cryptocurrencies. (I preemptively dread having to one day explain this convoluted UX to my parents, should ethereum take off with the mainstream masses.) It’s worth noting that in a world of backwater cryptocurrency sites, Coinbase does stand out in its simplicity. All I need to do is type in how much ether I want to buy, or how much cash I want to spend, and it will sell it to me via credit card or bank transfer.
I type in $77 and pull the trigger, and that’s when I realize my mistake. While my $77 is spent, I don’t have the ether. It will take a week to arrive, which Coinbase blames on the slowness of the banking system. Had I paid with a credit card rather than my bank account–though credit seemed like the less responsible choice, in the speculative market of cryptocurrencies–I’d have my ether instantly.
A lot can happen in a week. My precious cat sells to someone else. But on the other hand, ether tanks and then rallies, turning my original investment into something more like $65 and then $90. Of course, the value of that ether is meaningless to CyrptoKitties. They are sold in ether anyway. An 0.11 ether cat is going to stay an 0.11 ether cat, regardless of trade value, much like the fluctuation of dollars and euros don’t directly impact the price of a Quarter Pounder abroad.
It’s worth noting that when you buy a CryptoKitty, you’re not actually buying a cat at all. Technically, you’re buying a “nonfungible token” on the ethereum network. You see, while most ethereum tokens are worth exactly the same just like dollar bills, the team at Axion Zen had developed another kind of token, one in which every single dollar bill you might acquire could have its own unique signature and could be worth different amounts. As an end user, though, you never really see this token, unless you look closely at your receipts. What you see is the CryptoKitty cat manifested from said token, much like the facade of a house covers up the wiring and the plumbing that makes it livable.
“One ether is the same as another. You can trade and they don’t have different values,” says Axion Zen developer Dieter Shirley. “But with cats it’s different, each one is unique, and your cat might be valued more than my cat because it has a different trait and looks cooler.”
Based upon the information on the token, each CryptoKitty has 256 bits of genetic code with its own genotypes. These genotypes work like they do in humans, determining eye color and hair. The core CryptoKitty is really just a modular drawing that can have several features swapped in and out seamlessly, picking from, say, 10 versions of eyes, and 10 versions of mouths, and 10 versions of fur color. These traits create exponential variety. And to make them even more collectible, not all genotypes that a kitty has may be expressed. They need to breed with other kitties–which happens when you either put up your cat to sire, or arrange two of your cats to hook up– to reveal their uniqueness to the world.
“The main idea was, since the product itself has this prospect of spread and connectivity to a broad audience, we wanted the cats to represent that, and have a spectrum of emotions and personalities–not to be very specific to a niche audience,” says Guile Gaspar, art director at CryptoKitties. “The first one we were really happy with was a weird one with weird eyes and a tooth coming out of the mouth. That was unique in terms of art style and personality. Once we figured out the art style, we started exploring different mouths and eyes to expand the personalities.”
It didn’t take long for Redditors to deconstruct the way cats came together, to essentially crack the very genetic code powering CryptoKitties. Likewise, it didn’t take long for them to pounce on unique traits. When fans learned that a certain cat had hair inspired by Dieter Shirley’s own locks, there was a gold rush on that trait.
While I had no idea which traits were valuable and which were not, that didn’t stop me from my own, intense, CryptoKitty speculation. With ether finally in my wallet, I began a frenzy of finger-counting, decimal-laden math, opening several tabs to check just how many of the various cats I could afford. In the process, I inadvertently bought two of the same color. Dangit. I also learned that the cost of the cat wasn’t really the cost of the cat–I had to pay transaction charges, too, to the server farms helping power the ether network.
None of this is particularly transparent. While CryptoKitties is an addictive, browsable site, the transactions themselves exist in your ether side wallet, with each transaction birthing a pile of numbers, some to eight or more decimal places, that left me craving the clarity of PayPal, Amazon, or Venmo. To be honest, I didn’t have the wherewithal to truly track how much I was spending beyond the sticker price of the cat.
Ultimately, this left me in a bit of a bind. I amassed my cat collection–a sort of feline boy band of diverse, and hopefully seductive, traits. But I didn’t have the $8 left in ether necessary to breed them–a process in which you hire an ethereum server via a smart contract to take your two cat tokens, and from their 256-bit genetic code, create a new token-kitten (in a process that, confusingly, CryptoKitties doesn’t really profit from beyond a tiny transaction fee because the ethereum network handles it).
Unable to breed my cats, I was posed with a difficult decision. Should I buy more ether? Or, maybe, should I put some of my cats on the market to “sire” children? That’s right, faced with the daunting prospect of putting some of my own money into the game, I opted to do something I’m not too proud of. I became a cat pimp. I pimped my cats. I judged them in their little feline lineup and determined just how much ether someone should be willing to pay to breed with them.
With my prices set, all I can do is wait. Frantically. I keep refreshing my litter tab. WHY IS NO ONE BANGING MY CATS? I got the one in a sailor costume and everything! I notice the cat’s algorithmically generated description for the first time:
“I’m a Foreign Film Director by day, and I like swiping right by night. I put cinammon [sp] on everything. Like, everything: hot dogs, hamburgers—everything! Our friendship will be vegan, prickly, and full of ice cream.”
A foreign film director in a sailor suit for $7. How could anyone resist?
In a final act of desperation, I head to Reddit’s CryptoKitties thread, and find a community of people both as brazen, and confused, as myself. With so many cats able to make babies, the total number of CryptoKitties is growing quickly–one user speculates a fivefold increase in the last week. CryptoKitties are breeding like CryptoBunnies, which means the market is now flooded with cat pimps such as myself. Supply is high, demand is low. And I’ve got $90 in clipart here that surely would have been better spent on almost any random stock I could hit blindfolded with a dart.
Too late to easily cut a profit, I’m worse than some failed crypto speculator. I’ve become the CryptoKitties equivalent of the guy buying Beanie Babies in 2008.
To be fair, the CryptoKitties team makes no promises about making you rich. They insist that their invention is not a replacement for cash. It’s a collectible, not currency. And ultimately, they consider themselves crypto-enthusiasts, who just want to educate the public as to what this new blockchain technology can do, aside from buying you some weed anonymously online.
“We exceeded our wildest expectations of how immediately popular this became…but if 80% of our user base just disappeared tomorrow, we were always planning to build this thing out for the foreseeable future. If we only had a few thousand people playing right now, that’d still be the plan,” says Bryce Bladon, Axiom Zen’s director of communications. “We kind of expect it to normalize in the near future, if we’re being 100% honest. The brand, the design, all of that is trying to resonate with what people care about. I know cats seem like a silly vessel for that…but we tried to do our project differently than a lot of crypto projects. We tried to make it accessible.”
In this sense, CryptoKitties as an idea, as a graphic visualizer of blockchain itself, is an incredible success. It’s also a reminder: That for all the hype around cryptocurrencies, it’s not any cryptocurrency itself that is inherently all that valuable. It’s the word that cryptocurrencies can create that its zealots are so excited about–even if that means a world filled with rapidly breeding digital cats.