The boost and fall of CryptoKitties

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On September 4, 2018, a user only known as Rabono purchased a vengeful-looking cat named Dragon for 600 ether, which at the time was equivalent to US$170,000, or US$745,000 at the digital currency’s value in July 2022.

It represented the most significant ever made for a nonfungible crypto token (NFT), a brand-new idea for a special digital investment at the time. In addition, it was an opportunity for CryptoKitties, the 1st successful blockchain tech game, to make headlines. Nonetheless, the exorbitant buy concealed a more terrible reality: CryptoKitties have been dying for some time.

A odd outcome for one of the most historically significant non-fungible token’s (NFT)  ever, Dragon was never resold. As the non-fungible token(NFT)  market soared to record sales, amounting to nearly $18 Billion in 2021, newer non-fungible token’s (NFT)  like “The Merge,” a work of digital art that sold for the equivalent of $92 Million, left Dragon behind. Has everyone simply moved on to more recent blockchain tech initiatives? Or are non-fungible token’s (NFT)  all doomed to this fate?

Smart contracts, blockchains tech, and cat genes

You need go back in time to comprehend CryptoKitties’ gradual demise. Technology of  Blockchain Tech may have started with a 1982 study by computer David Chaum, but it gained widespread notice after Satoshi Nakamoto’s anonymous creation of Bitcoin, a digital currency. A blockchain tech is fundamentally just a big Excel spreadsheet that records transactions one after another.

The difficulty lies in how blockchains tech maintain the ledger’s security and stability in the absence of a central authority; each blockchain tech has a different method for doing this. Regardless being a well-liked investment and useful for transactions that resemble money, Bitcoin (BTC) has little support for other uses. Because they enable complicated “smart contracts”—executable code stored in the blockchain—newer alternatives, like Ethereum (ETH), have grown in favor.

1 of the earliest initiatives to use smart contracts was CryptoKitties, which used the Ethereum (ETH) blockchain tech to link code to tokenized data structures. Each “gene”—a unit of the game’s code— describes the characteristics of a virtual cat. Players can buy, acquire, trade, and even breed new felines. The cat’s code likewise makes sure that each cat’s crypto token is distinct, just as Ethereum (ETH) crypto tokens and bitcoins. This is where the nonfungible crypto token, or non-fungible token(NFT , comes in. A fungible good is one that may be replaced by an identical item by definition; a Bitcoin (BTC) is equivalent to another Bitcoin (BTC). In contrast, an non-fungible token(NFT)  has a special code that doesn’t apply to any other NFTs.

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There is one more aspect of the blockchain tech you  needs to comprehend, and that is “gas.” In exchange for the computational labor the network needs perform to verify a transaction, certain blockchains tech, like Ethereum (ETH), levy a fee. Consequently, the network of the blockchain tech is prevented from becoming overworked. Strong costs are a result of high , which makes customers hesitate to complete a transaction. The network is kept from becoming saturated and transaction times from growing unduly long thanks to the ensuing decrease in demand. Nonetheless, if an non-fungible token(NFT)  game becomes popular, it might be a vulnerability.

Growth and decline of CryptoKitties

CryptoKitties, which was on November 28, 2017, following a five-day closed beta, quickly gained notoriety with the tempting tagline “the world’s 1st Ethereum (ETH) game.” As reported by Bryce Bladon, a founding member of the team that developed CryptoKitties, “as soon as it released, it pretty much instantly went viral.” “That was a really confusing period.” As reported by nonfungible.com, sales volume increased significantly from just 1,500 nonfungible cats on launch day to greater than 52,000 on December 10, 2017, with several CryptoKitties selling for prices in the hundreds or thousands of dollars. The value of the algorithmically created cats in the game resulted in coverage in countless newspapers.

Furthermore, the game’s usage of the Ethereum (ETH) blockchain tech may have contributed to that technology’s success.

In addition to the launch of CryptoKitties, Ethereum (ETH) shot off like a rocket, rising from less than $300 per crypto token at the start of November 2017 to slightly over $1,360 in January 2018. Throughout late 2017 and 2018, hundreds of new blockchain tech games based on Ethereum (ETH) were released, contributing to the currency’s growth.

Between the more well-known examples are Ethermon, Ethercraft, Ether Goo, CryptoCountries, CryptoCelebrities, and CryptoCities. Several of them showed up shortly after CryptoKitties. This was the break that Ethereum (ETH) had been hoping for. Nonetheless, CryptoKitties faltered as Ethereum (ETH) surged higher, which would later prove to be a worrying indication for future of the blockchain tech gaming.

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Early in December 2017 saw a peak in daily sales, which fell off in January and averaged less than 3,000 by March. The fact that the value of the non-fungible token’s (NFT)  itself decreased more slowly is evidence that the game still has a strong fan following, including Rabono, who purchased Dragon long after the game’s height. Through 2018, their activity broke records for the value of non-fungible token’s (NFT). The game was maintained in the headlines accordingly, but no new participants were attracted.

In the present day, CryptoKitties is fortunate to reach 100 sales a day, and the overall worth is frequently under $10,000. There are still significant transactions, like the selling of Founder Cat #71 for 60 ether (about $170,000) on April 30, 2022, although they only happen occasionally. In July 2022, the majority of nonfungible furry friends will only be valued several  ethers, or several  tens of dollars.

It’s doubtful that CryptoKitties’ decline into obscurity will stop. The company that owns CryptoKitties, Dapper Labs, has moved on to other endeavors like NBA Top Shot, a website that enables basketball fans to buy non-fungible token(NFT)  “moments,” which are essentially video clips from NBA games. Attempts to contact Dapper Labs for an interview regarding CryptoKitties were unsuccessful. 2019 saw Bladon leave Dapper.

What happened?

The final blog entry (4 June 2021) on the game’s webpage, which commemorates the breeding of the 2 millionth CryptoKitty, contains a hint about the game’s end. Breeding, a key gameplay element, enables owners to mate their current non-fungible token’s (NFT)  to produce artificially produced progeny. Consequently, the non-fungible token’s (NFT)  had intrinsic worth within the game’s environment. Each non-fungible token(NFT)  had the capacity to produce other NFTs, which players could resell for a profit. On the other hand, the market was likewise oversaturated with this game mechanic. This, as reported by Xiaofan Liu, an assistant professor in the school of media and communication at City University of Hong Kong and coauthor of a report on the emergence and decline of CryptoKitties.

“The rarity of a cat determines its value, which is determined by its genetic makeup. The second factor is the quantity of kittens available, as reported by Liu. More cats appeared as more people did. More players increased demand, but they likewise increased the opportunity to increase by breeding additional cats. This quickly decreased each NFT’s rarity. Bladon concurs with such evaluation of the breeding process. He admits, “I think the critique is justified,” that the intention was to arouse curiosity and excitement. In addition, he believed that it would persuade people to keep their non-fungible token’s (NFT)  rather than selling them right away because, in principle, breeding should provide longstanding value.

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Another, more urgent issue was brought on by the sheer volume of CryptoKitties: It effectively destroyed the Ethereum (ETH) blockchain tech, the second-most valuable digital currency in the world by market cap (after Bitcoin). As was previously mentioned, Ethereum (ETH) prices transactions using a fee called gas. Gas costs will increase whenever there is an increase in transactions (buying, siring, and so on), and that is exactly what happened when CryptoKitties went to the moon.

As reported by an interview with Mihai Vicol, market analyst at Newzoo, “players who wished to acquire CryptoKitties incurred hefty gas fees.” The range of those gas surcharges was $100 to $200 per transaction. You were required to pay both the gas fee and the cost of the CryptoKitty. That’s a serious problem.

The hefty fees were an issue for greater than just CryptoKitties. The entire blockchain tech was influenced by the complication. As the game gained , gas prices increased for anyone who required to make a transaction in Ethereum (ETH) for whatever reason.

For Ethereum (ETH), this dynamic continues  to be problematic. When Yuga Labs published Otherdeeds— non-fungible token’s (NFT)  that promise owners access to metaverse network real estate—on April 30, 2022, it dramatically increased the price of Ethereum (ETH) gas. On average cost of gas increased from approximately $50 the day before to briefly exceeding the equivalent of $450.

Despite the fact that the demands CryptoKitties placed on the network decreased as players left, gas will probably be the game’s death knell. A CryptoKitty typically costs in the middle of $40 and $50, or approximately 0.04 ether, which is frequently less than the gas required to complete the transaction. Even casual CryptoKitties owners and hobby breeders are unable to do so without investing hundreds of dollars.

Games on the blockchain: two steps forward, one step back

The dramatic boost and collapse of CryptoKitties provided a chance for its several, several successors to grow and learn from its errors. Several people have ignored the lessons learned: Axie Infinity and BinaryX, two well known blockchain tech games, experienced a similar initial boost in price and activity followed by a protracted decline.

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“Everything that represented CryptoKitties’ success was imitated. Bladon claims that most things that weren’t instantly apparent were disregarded. And it turns out that several CryptoKitties’ issues were hidden from the general public. The CryptoKitties project did experience some setbacks, though. There were numerous outages. Several of the folks we dealt with had never utilized blockchain tech before. Tens of thousands of dollars’ worth of ether were lost a flaw we had. Recent non-fungible token(NFT)  projects have experienced similar issues, often on a far bigger scale.

Liu is unsure about the way blockchain tech games can solve this issue. He replies, “I don’t know, is the short answer. The lengthy response is that it affects greater than simply blockchain tech gaming. For the majority of the game’s existence, World of Warcraft, for instance, has experienced severe inflation. The steady influx of gold from players and the rising cost of new things added by expansions are to blame for this. Another fundamental issue with today’s blockchain tech games is that they are frequently overly simplistic, which is related to the constant need for new players and items.

As reported by Vicol of Newzoo, “I think the largest issue blockchain tech games at present have is that they’re not fun, and if they’re not fun, people don’t want to invest in the game itself.” Everyone who makes a buy wants to gain  more money than they invested.

Once the downhill spiral starts, that possibly idealistic wish becomes unachievable. Players rapidly leave and don’t come back because they have no other emotional connection to the game than growing an investment. Several blockchain tech games appear to have ignored the dangers associated with CryptoKitties’ rapid boost and protracted decline, but others have taken note of the burden it put on the Ethereum (ETH) network. Nowadays, the majority of blockchain tech games make use of sidechains, which are autonomous blockchains tech connected to more well-known “parent” blockchains tech. A bridge that connects the chains makes it easier for crypto tokens to move in the middle of them. As all gaming activity takes place on the sidechain, this prevents a spike in fees on the main blockchain.

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The fact that sidechains are proven to be less secure than the main blockchain tech poses issues for even this novel approach. The Axie Infinity sidechain, Ronin, was attacked, allowing the attackers to escape with the equivalent of $600 Million. Another sidechain utilized frequently by blockchain tech games, Polygon, had to patch an that put $850 Million at danger and award a $2 Million bug bounty to the hacker who realized  the complication. non-fungible token(NFT)  owners on a sidechain are now suspiciously examining its security.

Recall Dragon

Little greater than $30 worth of ether is being held by the digital currency wallet that houses the almost $1 Million kitty Dragon, and it hasn’t traded in non-fungible token’s (NFT)  in years. Since wallets are private, it’s possible that the owner of one went on to another. Even stated, it’s difficult to look at the wallet’s inactivity without concluding that Rabono lost interest in it.

Bladon is still proud of what CryptoKitties accomplished and hopes it propelled the blockchain tech industry in a more path, regardless of of whether blockchain tech games and non-fungible token’s (NFT)  soar to the moon or plummet to zero. Before CryptoKitties, “everyone would have believed you were talking about digital currencies if you stated ‘blockchain,’” claims Bladon. “I’m most proud of the fact that it was truly novel. There was genuine technical innovation, and there appeared to be genuine cultural influence.

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