Digital Collectibles: CryptoKitties

You’ve probably heard of cryptocurrencies, but CryptoKitties are crypto-collectibles. They’re like digital beanie babies or baseball cards. It sounds silly, but the concept of CryptoKitties is testing a profound idea.

Can a digital good be rare?

Every fifteen minutes, Axiom Zen releases a new CryptoKitty that only one person can buy. They’ll do that until November 2018 when they’re capping these generation zero kitties at 50,000. There are, however, more kitties than that because unlike baseball cards you can (Cryptographically) read them.

“The game is that there are billions of different possible combinations of traits, and so you can decide which combination of traits is interesting to you and you can go out and find a cat that has that combination and buy it. Or you can try and find a combination that no one has created before, and through our breeding mechanics you can come up with new combinations of traits or if you’re lucky, even new traits entirely.”, says Dieter Shirley, CryptoKitties’ product development head.

Layne Lafrance and Dieter Shirley helped found CryptoKitties in November 2017. They have managed to convince a loyal group of users to spend more than $23 million (30,000 ETH), buying and breeding these digital cats.

In just a few months, a whole community of third-party sites and services formed around crypto kitties.

“We are finding new ways to play with these kitties outside of the main game. So, we’re starting with contests. Derpface is, possibly one of my favorite kitties because he just so unbelievably ugly.”, says Jodiferous, CryptoKitties 411 manager.

The traits that made Derpface the ugliest CryptoKitty are baked into his code. The genes in their code define their physical appearance on twelve features, based on a template by a human designer. They call those features ‘Cattributes’. Like us, these cats can also carry traits in their code that only show up in their offspring. However, the genetic algorithms that drive CryptoKitty reproduction are kept a secret.

In other words, popular CryptoKitties earn high prices the way collectibles always have- scarcity. And what’s so interesting about this is that digital scarcity is brand new.

“Before the computers came along, if you owned a thing- only you could have that thing and no one else could have that thing unless you gave that thing to the other person, in which case you would no longer have it.”, Shirley says.

But that completely changes when goods become digital and accessible online.

Shirley adds, “Every time you give somebody data on the internet, it’s a copy. I think the (sort of) reckoning we had in the 90s and early 2000s was ‘how do we live in a world where everything can be copied infinitely’ and ‘what’s going to happen to the music industry, what’s going to happen to the news and entertainment industry’, and we’ve seen that all play out.”

However, CryptoKitties can be scarce because of the technology that they’re built on. They’re using a blockchain– specifically the Ethereum blockchain. So, you have to buy them with Ether.

“When a kitty is born, there’s something very special about knowing that it belongs to me, and no one else and no one can take it.”, says Layne Lafrance.

The truth, however, is that it’s not ALL yours. You own the code for that cat, but not the actual image.

According to Blockchain lawyer, Greg McMullen, “In the case of CryptoKitties, they have sections in their terms and services. They own all of the images and graphic elements, and they have rights to use them however they want. You actually have no rights to use them in any way.”

That’s not so different from a baseball card.

“If you have a baseball card and it has a players name on it with the picture of the player on it, you own the physical object but you don’t own the copyright. Owning the physical object doesn’t give you the right to print up other cards but it does give you the right to trade your card to someone else or to sell it to a collector.”, McMullen adds.

In the case of CryptoKitties?

“So if they decide they want to change the artwork, or if they sell the company to someone who wants to pull out the artwork online and use it only in their new CryptoKitties movie series; they could do that and you’d be left with just a string of letters and numbers on the blockchain with no art attached to it at all. So (I think) that’s a fundamental difference between real-world collectibles- where you have the object and they can’t take that away from you- and a digital collectible.”, McMullen concludes.

Dieter Shirley goes on to say, “We really really wanted to put the art on the blockchain because our users- most of them conceptually know that what they own is some numbers is a blockchain. But, what you think you own, what you think of as your cat is the picture of the cute little guy with the funny eyes. Unfortunately, the decentralized systems are just not mature enough to support art in a robust way.”

CryptoKitties are cute and complicated, and they show that we still have a long way to go until we can really keep a digital collectible- like we can, a baseball card.

Check out the whole video on the Vox Youtube channel:


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