CryptoKitties hit the mainstream headlines in late 2017 as the dApp that went viral and brought the Ethereum network to it's knees due to the amount of transactions that it was generating. The heady rush of a mooning cryptocurrency system with no real-world applications beyond speculation combined with the eternal linkage between cats and the internet led to the dApp growing exponentially in use, with many wondering if this was the "killer" application that would bring blockchain and cryptocurrencies mainstream.

CrytoKitties is currently one of the Marketplace based dApps on State of the Dapps (who can also be found on Steem as @stateofthedapps). Currently standing at #136 in the listing of dApp rankings across multiple blockchains (Profile here, CryptoKitties has fallen a long way in user interaction since the days of bring the Ethereum network to it's knees, but still boasts a user activity and volume that most other dApps would kill for.

What is CryptoKitties?

CryptoKitties is a humourous take on the ownership and trade of non-fungible tokens (NFTs) on the Ethereum blockchain. At it's heart, it is a game of cat ownership and the breeding of cats to pass on genetic traits to hopefully breed more valuable lineages. So, it is the online equivalent of what cat breeders do in real life!

However, these CryptoKitties are just so much more cute and less demanding than real life cats... and there is definitely no ethical problems with excess breeding and forced mating.... not to mention the idea of selectively breeding for "cute" traits at the cost of crippling the genetic heritage of real life cats.

Is this a joke?

Fungibility refers to the non-uniqueness or replaceability of a particular asset, for instance, one dollar is the same as any other dollar, there is no particular difference between the two in the sense of it's monetary useage. If an asset is non-fungible, this means that it is unique and that it can't be replaced by an asset of the same class. An example of this would be two paintings, they are uniquely different and one painting can not be readily swapped for the other in a transaction.

Unique digital assets (NFTs) are able to be issued by dApps on the Ethereum blockchain under the ERC-721 standard, meaning that each individually issued NFT is unique to the Ethereum wallet/address that holds it.

CryptoKitties offered a bright and colourful way of demonstrating the power of this non-fungible digital asset. Although the idea of owning and breeding unique digital cats on the internet was a hilarious idea, it did demonstrate the ability of NFTs to be adopted across more "serious" applications, such as as land ownership, gaming items, combating counterfeiting and digital rights management.

Your Litter

CryptoKitties requires you to have a Ethereum address and preferably some ETH in the wallet to allow you to pay for transactions on the network. So, the most common way to access the game and marketplace is to use Chrome or Brave coupled with the ubiquitous Metamask extension. Unfortunately this means that most users will be interacting with the game and marketplace via a computer rather than one of the mobile devices that are perhaps better suited to a casual game such as this. It is a pity that this is the case, as it really heavily restricts the audience and the times that you can play.

Owning Cryptokitties (either via purchase or breeding) will attach that NFT to your Ethereum address, making you the unique owner of that cute ball of catty goodness. From there, you are free to trade
or breed the cats as you wish until the ownership of that token passes to another. As all trades, breeding and cat-related changes are recorded on the Ethereum blockchain, you are able to view the public history of any breeder, trader or individual cat.

Each cat has a fairly unique piece of artwork which is the "physical" image of the cat. The artwork ranges from the more mundane through to the more bizarre whilst representing the character and traits that are indicated in the bio section of the cat Bio page.

To further "personalise" each individual cat, each cat has a little Biography page... with details on it's birthday, breeder, backstory and also a summary of traits which were inherited from it's sires (and also traits that it could potentially pass to it's children). These traits are the all important aspect of the CryptoKitties collectible game, rarer traits are more vaulable... whilst other holiday and event related traits are also interesting for dedicated collectors and breeders.

Just like real life, traits are passed down via breeding... and so it can be quite handy to quickly access the lineage of a particular cat to see if it has some chance of breeding valuable generations beneath it. Sometimes, traits will not manifest themselves so visibly and easily in a CryptoKitty (Hidden Traits), however, checking against extended family trees can give some clues.

Breeding between your own CryptoKitties is a great way to expand your litter... however, it is not completely cost-free... there are the usual Ethereum transaction costs and a breeding fee that goes to the developers. Now, these costs add up if you can't cover them by selling the occasional Kitty, however, it is pretty difficult to breed good lineage cats that will attract a decent price on the market.

Of course, just like a stud farm... you can also lease cats out for siring. In my particular case, I don't think I have cats that really have desirable traits... so that would be a bit of a waste of Ethereum transaction fees!

The Market

There is a marketplace of cats for sale... after all, this is the point of the entire breeding and collecting game! Cats are put up for auction or direct purchase, and ownership of the CryptoKitties are represented by the transfer of the ERC-721 token via the Ethereum blockchain.

All the CryptoKitties in your litter are available to be sold as you wish (or others can make offers directly for them). The marketplace listings are done in a Dutch Auction style, with the price starting high and decreasing over time until a buyer is found and the trade formalised on the Ethereum blockchain.

It is much easier to visualise this auction style with the price graph against time. It is possible to buy directly with ETH or with fiat (credit card). Once the price has reached it's lowest point, it remain there until the listing is cancelled by the owner.

Both direct purchases and marketplace auctions will attract a transaction fee for the Ethereum network. The developer fee is subtracted and the exchange is made pending network confirmation.

Strengths and Weaknesses

Strengths:

• Colourful and eye catching
• Great (sometimes groan-inducing) sense of humour.
• Quality education tool for introducing the concept of decentralised digital marketplaces and asset ownership.

Weaknesses:

• No mobile application, which restricts audiences to Browsers and Metamask.
• Ethereum Transaction fees (possibly fixed by transition to PoS, but possibly introducing other economic problems).
• Where is my Dark theme?

Conclusion

Of course, in hindsight, it would always be cats that would be the first viral application of a decentralised network. After all, it is always cats or pornography... be thankful that it was cats!

As a demonstration of the power of NFTs, CryptoKitties is a great fun educational resource. However, as a long term store of value, it really depends on the critical mass of adoption of people who are interested in breeding and trading CryptoKitties, something that is far from a given. Now that the viral interest has died down, the marketplace and long-term viability (and "worth" of a Kitty) of the venture is in a bit of doubt.

Unfortunately, the game is a little bit crippled by the current state of the Ethereum network. The transaction fees (and the competition for inclusion into blocks with other dApps on the Ethereum blockchain) that can sometimes spike out of control really can make this an expensive game to play. However, during times of low network usage (and low network fees), it is quite a interesting experiment and learning experience.

The coming upgrade to Ethereum 2.0 and a PoS model could rectify some of the current shortcomings of the collectible breeding game. However, it will also be relying heavily on a resurgence of interest to build out a real marketplace with liquidity and depth (in CryptoKitty interest!).

Useful Links

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