CryptoKitties is a blockchain based video game developed by Axiom Zen that allows players to purchase, collect, breed and sell various types of virtual cats. It represents one of the earliest attempts to deploy blockchain technology for recreational and leisurely purposes. The game's popularity in December 2017 congested the Ethereum network, causing it to reach an all-time high in transactions and slow down significantly.
CryptoKitties is not a cryptocurrency. Instead it operates on Ethereum's underlying blockchain network, as a non fungible token (NFT) unique to each CryptoKitty. Each CryptoKitty is unique and owned by the user, validated through the blockchain, and its value can appreciate or depreciate based on the market. CryptoKitties cannot be replicated and cannot be transferred without the user's permission even by the game developers. Users can interact with their CryptoKitties, having the ability to buy, sell, and sire (breed) them. A test version of CryptoKitties was unveiled at ETH Waterloo on October 19, 2017, the largest Ethereum hackathon in the world. As of December 2, 2017, Genesis, the first and highest selling cat was sold for 246.9255 ETH (~$117,712 USD) on that day.
The virtual cats are breedable and carry a unique number and 256 bit distinct genome with DNA and different attributes (cattributes) that can be passed to offspring. Several traits can be passed down from the parents to the offspring. These include pattern, mouth (shape), fur, eye shape, base color, accent color, highlight color, eye color, and optional wild and environment characteristics. Other features like cool down times are not passed down but are instead a function of the 'generation' of the offspring, which is one higher than the maximum generation between the two parents. In December 2017 a CryptoKitty sold for $100,000.
On March 20, 2018, it was announced that CryptoKitties would be spun off into its own company and raised $12 million from several top venture capital firms and angel investors. The investment round was led by New York based Union Square Ventures and San Francisco based Andreessen Horowitz.
In May 2018, CryptoKitties launched their first celebrity-branded CryptoKitty with Stephen Curry, an American professional basketball player. As part of the partnership, Curry was given three CryptoKitties with special imagery, the first of which he put up for auction. The company later suspended the auction, claiming that Stephen Curry wasn't as involved as they initially thought. The company was later sued for trade secret theft over the Stephen Curry collectibles.
In October 2018, CryptoKitties reached the milestone of 1 million cats being bred with a volume of 3.2 million transactions on its smart contracts. In November 2018, Dapper Labs, which was spun out of Axiom Zen as the developer of CryptoKitties, raised an additional $15 million in a venture round led by Venrock.The company doubled its valuation in this round.
A CryptoKitties' ownership is tracked via a smart contract on the Ethereum blockchain. CryptoKitties are distributed automatically, via smart contract, at the rate of one every 15 minutes (672 per week) for one year. Each CryptoKitty is represented in the form of a non-fungible ERC-721 token, which allows for each entity to have specific cattributes.
Based on the limited number of cats going into circulation and their limited genomes, there is a limit of 4 billion total cats that can be bred. Each cat will have a distinct visual appearance ("phenotype") determined by its immutable genes ("genotype") stored in the smart contract. Because cats are tokens on a blockchain, they can be bought, sold, or transferred digitally, with strong guarantees of ownership. A CryptoKitty does not have a permanently assigned gender. While they can only engage in one breeding session at one time, each cat is able to act as either matron or sire. The owner chooses with each breeding interaction.
A group known as Axiom Zen innovation studio developed the game. Until November 2018, Axiom Zen intends to continually release a new CryptoKitty every 15 minutes, with the rest of supply determined by breeding of CryptoKitties. CryptoKitty owners may put them up for sale via an auction for a price set in Ether (ETH).
There are concerns that CryptoKitties is crowding out more serious, significant business that use the Ethereum platform. As of December 5, 2017 Etherscan has reported a sixfold increase in pending transactions on Ethereum since the game's release just a week earlier. "CryptoKitties has become so popular that it's taking up a significant amount of available space for transactions on the Ethereum platform", said Garrick Hileman, from the University of Cambridge. Ethereum miners increased the gas limit in response to CryptoKitties, which allowed for more data per block and increasing transactions per second. A variety of similar websites such as: Etheremon, Ethertulips, and CryptoBots, were also created. Resale sites such as RareBits were also created as a response.
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