In the past few weeks, one particular application written on top of the Ethereum blockchain has received much attention from those in the cryptocurrency space. The application is called "CryptoKitties" and is a somewhat strange use case for the ethereum platform. The application allows its users to buy, breed, and trade digital " kittens" that are generated by the application. In this way, CryptoKitties are a lot like a futuristic implementation of old-school trading cards. Each CryptoKitty has its own set of unique properties or attributes, called "cattributes" that make the kitten unique and hopefully valuable. The more valuable the kitten, the more its owner can expect to be paid to breed the cat with other users' kittens, or the more they can hope to sell the cat for, if they so choose.
The cat's owner is paid in Ether for these transactions and can cash the ether out for USD via any Ethereum exchange. More simply, users are making actual money from "breeding" digital cats in what is essentially a video game.
While this all sounds a little bizarre, the program is actually a very interesting case study and one of the first Ethereum applications with widespread appeal. In fact, Financial Insyghts' head, Peter Atwater said: "The popularity of virtual cats fits the euphoria we see elsewhere in the crypto-currency space. It feels very reminiscent of the Candy Crush craze that helped propel the King Entertainment IPO back at the peak of the 'Unicorn' era in mid 2014." As of December 14th, the application accounts for 15% of all Ethereum transactions. The application is adding thousands upon thousands of daily transactions to the Ethereum blockchain. These additional transactions are actually bogging down the entire decentralized network and causing users' transactions to take much longer to be confirmed by other users. This application is actually a very good test of the Ethereum network and it has proven that the technology has a ways to go before it can hope to process the amount of transactions that was promised. This has caused the Ethereum developers to look for ways to improve the speed and reliability of the technology.
In addition to the problem of slowing down the network, other Crypto experts are taking issue with the fact that the app is not truly completely decentralized. While the majority of the code is written on top of the Ethereum blockchain and is therefore open source and decentralized, there is some proprietary code for generating the kittens that is closed source and centralized. This code lives on the developers website and in theory, could be taken down at any time. This would effectively cause the entire game to go down and all users' cats to disappear. This is why experts are warning about investing too much money into these cats.
All this leaves me with a few questions:
- Would you invest in digital "trading cards" in a manner like this, and would you trust the technology?
- Do you think applications like this are the future of blockchain and cryptocurrency technology?
- What ideas for decentralized crypto-applications would you like to see implemented in the future?
Sources: https://www.thesun.co.uk/money/5087162/ethereum-price-cryptokitties-cryptocurrency-bitcoin-currency-trading-december-14/ and https://www.coindesk.com/scratch-cryptokitties-isnt-ethereums-vision-apps/
-Christian Blandford