Crypto Kitties: Worth Investing Or Just A Fad?

CryptoKitties is a blockchain-based game that allows players to acquire, breed, and sell virtual cats. Each CryptoKitty is unique and owned by the player, with distinct genes that determine its appearance and characteristics. The game gained popularity in December 2017 and has maintained its position as one of the most addictive games globally. With some CryptoKitties selling for over $100,000, it is natural to question whether they are a good investment. However, it is important to remember that the CryptoKitty market is highly volatile, and the value of these virtual assets can fluctuate significantly. While some players have made substantial profits, others compare investing in CryptoKitties to investing in Beanie Babies, suggesting that it is more of a speculative gamble than a guaranteed investment.

CryptoKitties are unique virtual cats that you can buy, sell and breed

To get started, you'll need to buy a CryptoKitty in the Marketplace within the game. You'll need to use Ethereum to pay for your CryptoKitties. The starting price for a CryptoKitty at auction is set at the average price of the past five sales, plus 50%. New "Gen 0" cats are released every 15 minutes in the game.

Once you have a CryptoKitty, the real fun begins in the form of breeding. If you have two CryptoKitties, simply choose one to be the sire and the other to be the dame. If you only have one, you'll need to find a sire in the marketplace. Each breeding session includes a transaction fee and a birthing fee. Currently, the breeding fee is set at 0.008 Ether (approximately $4.69).

While CryptoKitties can be a fun and addictive game, it's important to remember that it's also a business for some people. The highest-selling cat as of June 2018 was Genesis, the first CryptoKitty ever created, which sold for 246.9255 ether or about $117,712. Some CryptoKitties have even gone for more than $100,000.

However, it's not easy to make money from CryptoKitties. It requires time, effort and a good understanding of the market. As one successful player, Todd, puts it, "As if crypto weren't speculative enough, this is extremely risky." He also cautions that it's hard to get going unless you acquire one of the more valuable cats.

If you're thinking of investing in CryptoKitties, it's important to do your research and only spend what you can afford to lose.

To buy a CryptoKitty, you need to use Ethereum

CryptoKitties is a blockchain-based game that allows you to buy, breed, and sell virtual cats. Each CryptoKitty is unique and 100% owned by you. While CryptoKitties is not a cryptocurrency, it does operate on the Ethereum blockchain. So, to buy a CryptoKitty, you need to use Ethereum.

• Buy some Ethereum (ETH): You will need to purchase ETH, which is the cryptocurrency used on the Ethereum blockchain. You can use a platform like Coinbase to buy ETH with your debit/credit card or bank account.
• Install a MetaMask wallet: MetaMask is a digital wallet that is compatible with the CryptoKitties platform. It will allow you to store, send, and receive ETH, as well as interact with decentralised applications (dApps). You can install MetaMask as a browser extension or a mobile app.
• Transfer ETH to your MetaMask wallet: Once you have set up your MetaMask wallet, transfer your ETH from Coinbase or another exchange to your MetaMask wallet.
• Create a CryptoKitties account: Visit the CryptoKitties website and create an account using your email address and a chosen nickname. You will also need to agree to the terms and conditions.
• Browse the CryptoKitties Marketplace: In the CryptoKitties platform, click on the "Marketplace" tab to browse the available CryptoKitties for sale. You can filter your search by age, generation number, or value. Each CryptoKitty will have a unique price depending on its rarity and characteristics.
• Choose your CryptoKitty: Select the CryptoKitty you want to purchase by clicking on its picture. Review the details and price of the CryptoKitty to ensure you are happy with your choice.
• Buy your CryptoKitty: Click on the "Buy Now" button to initiate the purchase. Confirm the amount you want to pay and complete the transaction. A MetaMask popup will appear, showing you the transaction details and any associated fees. Click "Confirm" to finalise the purchase.
• Receive your CryptoKitty: Once the transaction is processed on the Ethereum blockchain (which may take a few minutes), the CryptoKitty token will be sent to your MetaMask wallet. Congratulations! You are now the proud owner of a unique virtual cat.

Remember that the CryptoKitties platform charges transaction fees, known as "GAS," for each interaction, including buying, selling, and breeding CryptoKitties. These fees are paid to miners who help verify transactions on the Ethereum blockchain. The GAS fees fluctuate based on network congestion, so keep an eye on the current fees before making any transactions.

CryptoKitties are generated by code and bred by spending Ether tokens on smart contracts

CryptoKitties are unique virtual cats that are generated by code and bred by spending Ether tokens on smart contracts. Each CryptoKitty has a unique 256-bit genome code, which is carried down to all its descendant kitties via the use of a Genetic Algorithm (GA). This algorithm mimics biological genetics, with each kitty possessing genes that determine its appearance, such as stripes, colour, fur patterns, and facial expressions.

The breeding process in CryptoKitties involves selecting two parent kitties and using their unique codes to create a new child genome, just like in real-life genetics. This process is called "siring" in the game, and it results in a new kitty with a combination of traits from both parents. The game also includes a “resting period” or "cooldown" after breeding, during which the same cats cannot be bred again immediately.

To facilitate the breeding process, players need to spend Ether tokens on smart contracts. These smart contracts are a key feature of the Ethereum blockchain, which is the platform on which CryptoKitties operates. Smart contracts are essentially self-executing contracts that store information and perform calculations. In the context of CryptoKitties, these contracts enable players to purchase, breed, and sell their virtual cats.

The breeding process in CryptoKitties comes with certain costs. There is a breeding fee, currently set at 0.008 Ether (approximately $4.69), as well as a transaction fee, which can vary. Additionally, if players choose to breed their CryptoKitty with another player's sire, they will need to pay a siring fee to the owner of that CryptoKitty. These fees are an important consideration when playing the game and trying to make a profit.

CryptoKitties can be an expensive investment

The starting price for a CryptoKitty at auction is set at the average price of the past five CryptoKitty sales, plus 50%. New "Gen 0" cats are released every 15 minutes, and the creators receive a 3.75% transaction fee on these sales. The game has also been plagued by network slowdowns, little game progression, and automated bots that snipe deals.

The CryptoKitty "Genesis" sold for 246.9255 ether, which is approximately $117,712. While some people have made a lot of money, it is important to remember that CryptoKitties are highly speculative, and the market is volatile. One player, Todd, spent 30 ether on the game and made a hypothetical net gain of $42,321.15, not considering transaction fees. However, he also notes that it is hard to get going unless you acquire one of the more valuable cats, and that CryptoKitties are not the most practical way to hold ether.

If you are considering investing in CryptoKitties, it is important to do your research and only spend what you are comfortable losing. The global crypto space is highly volatile, and the value of cats can fluctuate greatly. Additionally, gas prices are important to consider, as on high gas price days, the fees could cripple your potential spend. It is recommended to not spend over 5-10 gas per transaction, depending on your budget.

While CryptoKitties can be an expensive investment, some people have found success and made a lot of money. However, it is important to remember that it is a highly speculative and risky venture.

CryptoKitties is a game built on blockchain

In the game, players must purchase Ether cryptocurrency to join and spend it on breeding and trade actions. CryptoKitties can be bred with others to create new breeds and pass on specific attributes, with each cat possessing a unique 256-bit genome and DNA. While there is no specific goal in the game, players can aim to grow their collection and even make money by selling their CryptoKitties to other players.

The game gained significant popularity in December 2017, leading to a high number of transactions on the Ethereum network and causing some delays. This popularity also highlighted a potential issue of blockchain-based games crowding out other businesses on the same platform, as CryptoKitties accounted for about 25% of network traffic on Ethereum at one point.

As an investment, CryptoKitties can be a risky but potentially lucrative endeavour. The value of each CryptoKitty can appreciate or depreciate based on the market, and some have sold for over $100,000. However, it is important to note that the game requires players to spend their own money on buying and breeding cats, and there are no guarantees of making a profit. Additionally, the game has seen a decline in sales and popularity since its peak in 2017, with fewer than 100 sales per day by 2022.

Overall, CryptoKitties is a unique blockchain-based game that offers players the opportunity to collect, breed, and trade virtual cats. While it may be possible to make money through careful breeding and trading strategies, it is important to approach CryptoKitties as a high-risk investment and only spend what one is willing to lose.

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