CryptoKitties is a game where you collect, breed, and even sell virtual cats for real money. Every single cat in the game is entirely unique and also impossible to replicate. One single person owns them so that no-one can take them away from him/her, and it is impossible to destroy the virtual kittens.
All the kittens in the game are tradable within the platform, and some of them are even selling for real money. The game is a so-called dApp, which is short for Decentralized Application and an essential part of the DeFi field. This means that no single entity or individual owns the application.
CryptoKitties is the first decentralized application that has been made for game applications or "spare-time" use-cases. A team out of Vancouver created CryptoKitties, and the company's name is Axiom Zen. The game is running on Ethereum's blockchain, which is a well-known cryptocurrency.
The game has exploded recently, and there are even reports of people making big money selling these virtual cats. The sales of these cats have increased a lot, and it is reports say that over 12 million dollars have been spent on the purchasing of virtual cats.
You start of the game without having any cats, and the first thing you need to do is buy one from the store. The marketplace is user-friendly, and it is easy to start playing the game. Moreover, to start breeding the cats, you will need at least two unique cats (since they are all unique, it will not be that hard). It is possible to start with a single cat, but then you need to cooperate with someone else to start breeding.
If you have two cats, you can start breeding them right away. This is an easy process where you just select the cats that you want to breed and just push a button. Once the virtual cats have bred, an egg will spawn in your inventory. Once you click on the egg, it will hatch, and you will have an extra kitten in your stock.
The cats that you can buy can come from different generations. The generation that a cat is from is on view right beneath the number of the cat. Let's say we have two cats, both of them are part of the second generation. If these two cats then breed, the offspring will be part of the third generation of cats.
Each cat also has a different "gender" so one is what CryptoKitties calls a "Dame" and the other one is a "Sire". It is not explicitly explained that the "Dame" is female and "Sire" is male, but it is the "Dame" that gets pregnant, so I think we can assume their respective genders.
Once you have breed two of the virtual cats they will begin a "resting period" where there is a cool down until you can breed the same cats again.
As you progress with the breeding, the cats move further down in generations, and the mixture of genes continues.
Blockchain is the technology underpinning the game itself, and they run on an algorithm by the name of the "Genetic Algorithm", or the GA. This is an algorithm that tries to mimic that of real genetics. This means that the information that is stored within a kitten is like the DNA of living creatures. The information, in turn, holds the code on how all living things look.
For us humans, our DNA contains the code on how tall we are, what hair color we have, and a lot of other stuff. In CryptoKitties, the genes that affect the appearance are stripes, color, patterns on the fur, and facial expressions. The genes, in this case, can also affect the background color displayed along with the kitten.
In the human body — or any other animal/plant for that matter — the DNA is constructed with protein. In the case of the crypto kittens, the genes are built up by simple numbers.
Furthermore, in real life, two animals reproduce through the process of mating. This means that the DNA from one parent is mixed with the DNA from the other parent, and this results in a unique child. The egg and the sperm combine where the egg contains the mother's genes, and the sperm contains the genes from the father.
Since the genes are a mixture of both parents; and the mix can never be the same, every child/animal will have unique DNA.
The principles of the Genetic Algorithm works exactly the same. The unique code from one crypto kitten is mixed with the code of another, and this is how a new kitten is created. The split between the two parents varies each time that they mate so that even "siblings "do not share the same DNA and appearance.
The recreational process in GA is what they call crossover, and this is about when two virtual cats reproduce. As the GA creates the virtual cats and keeps them all unique, what do the blockchain and cryptocurrency provide to the equation?
One of the important terms that we need to explain for it all to make sense is that of Smart Contracts. Ethereum is using these kinds of contracts to store information and use the data to perform calculations.
When making a transaction with a cryptocurrency like Bitcoin, a so-called External Account is being used. And in this currency, only this is the only type of account that exists.
In Ethereum, on the other hand, two types of accounts exist; external accounts as well as contract accounts. Contract accounts are special in that they not owned by a single person. Just like an external account, they hold an address which is necessary when making transactions.
The contract accounts also contain a piece of code that is run every time a transaction takes place. This code is run by a miner to verify that a transaction, in fact, took place.
The contract accounts are the same thing as Smart Contracts, and they are constantly being calculated as transactions are verified.
KittyBase: The blockchain is public, and this means that all the code connected to the DAPP is publicly available. This also means that everyone can see the kitties' codes, and they are stored in these smart contracts. This place of storage is what they call the KittyBase, which is one of the smart contracts.
KittyOwnership: Since all the kittens are unique, it also means that they are irreplaceable. This means that one virtual cat can not be switched with another unless you want to change your inventory value. This contract is what they call KittyOwnership and is responsible for keeping the value of each kitten unique. It is not impossible that two cats have the same value, though. But it is through this contract that the value of the entire inventory can change if one cat is part of a transaction.
KittyBreeding: Another smart contract is KittyBreeding, and this one is what makes the crossover possible. The code within the contract makes it possible to combine the genes from two different cats into a new one.
KittyAuction: KittyAuction is another smart contract, and this one allows you to sell your kittens to other players. It does also make it possible to "lend "your kittens to breed with other players' cats.
KittyMinting: Lastly, we have a contract that they are calling KittyMinting. This is a function that works similarly to ICOs, and this is how to get the community going. It is how they make the first generation of cats that they are calling gen 0. These cats were given away for free so that the community could start somewhere.
All these contracts are explained by the main smart contract that is called KittyCore, and the explanations provided above are very simplified.
So how do people make money on CryptoKitties? The concept regarding the cats' values is based on the fact that some are rarer than others. It is the scarcity of a cat that increases the value, and this is also the principle in most collection-based games.
The players or the people collecting the visual kittens are mostly interested in the rare specimens. But since all the kittens are unique, aren't they all rare? This is actually an interesting aspect of the valuation of the kittens. Since they all have different traits, what is the deciding factor on what is rare and what is common?
According to one of the developers, it is actually the users that decide what is rare and what is not. If all players decide to breed cats with green eyes, more cats with green eyes will appear, and they will become less scares. Since they increase in numbers, they also become less rare, which drove down the value of the kittens. It is also part of the user's perspective and how they view the different traits that a kitten can have.
One of the rarest traits of the kittens is the generations that they come from. In the first year, gen 0 cats were created. In the smart contracts, it is stated that the creators can create 50 000 of these kitties from generation 0. Since they have a cap on them, they are rarer than the others and therefore have more value than a cat from, for example, generation 1.
Another factor that gives value to the cats is something they are calling Mewtations. Some of the genes do not exist in the generations 0 and can therefore only manifest if a mutation, or what they are calling a Mewtation, occurs.
Kittens that have mewtated (mutated) can be apart of different tiers. The first cat that receives a specific mewtation gets a diamond gem, and there are currently only 243 cats that have this gem. A kitten with a diamond gem is going on the market for about 3-4 ETH and 4 ETH is around $950. A kitten with a diamond gem that has not to breed with anyone yet can go for even more money, they are hard to value though since one has not been sold in a long time.
The second to the tenth cat that receives the same mewtation as the cat with the diamond gem receives a gold gem instead. These cats are rare as well but not nearly as rare as the first cat. These kittens go for around 0.5 ETH, which is about $120.
The gem system continues where the 11th-100th cat receives an amethyst gem, and the 100th-500th cat receives a lapis gem.
Other valuable types of kittens are founder cats, and they are the first 100 cats to ever exist on the platform. The value comes from their ID number, and the lower the ID number, the better. In the past few months, these kittens have sold from a range of 15 - 25 ETH, which amounts to $3,577 to $5,962.
This is an insane amount of money, and they are still 95% cheaper than they were in 2017. That would put the cheapest founder cat at about $71,000.
These cats were introduced by/for the team that worked on CryptoKittens. They were given out for exceptional work or was the price in some competition. Some of these exclusive cats have been sold for a huge amount of money.
One example was one cat that was sold for $140,000, and all the money went into a charity supporting artists. Someone could sell another cat for $25,000, and the money went to the protection of the ocean.
The value of these cats originate from the rarity and the age of the cat, and as the examples above showed, the value can vary drastically. Other exclusive cats are selling for "only "2-3 ETH, which proves that some are more valuable than others.
The Mewtated, Founder, and Exclusive cats are only a few examples of different cats that exist within the game. Looking at the different cats and the amount that people are selling them for, it is clear that people can make money on these virtual kittens. Being able to breed cats that gain a rare mewtation so that they receive a diamond gem is a great money boost. But it is not so sustainable since there is no guarantee that you will ever receive such a cat.
Generally speaking, even the regular cats are selling for money, which means that you can make smaller amounts of money selling the regular cats. And in the process of breeding, one might get lucky and be able to receive a cat with a special gem.
There are also breeding patterns that are out there that will tell you exactly which cats to breed with one another to create more rare cats. This is also somewhat of a gamble since the cats in demand change all the time. A cat that is super valuable today might not be worth as much tomorrow.
But breeding is just one way to make money on KryptoKittens; another way is to buy and then sell. It is sometimes possible to buy a kitten for a low price and then sell it for a profit.
Lastly, there is also a possibility to Sire one of your cats. This would mean that other people can choose your cat to be the Sire of their new kitten for money. You will get most of the profits, but CryptoKitties will take a small amount as commission. This fee is 3.75% of the total amount for the transaction.
Setting up an account to start trading CryptoKitties is a quite easy and fast process. However, if you want to learn more about all things relating to cryptocurrencies and CryptoKitties, you have already come to the right place. Make sure to visit the go-to blockchain education platform Ivan on Tech Academy for countless blockchain courses on everything from the technology underpinning CryptoKitties to Ethereum 2.0.
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