If you are a blockchain enthusiast you would have heard recently someone paid $170,000 for the most expensive CryptoKitty ever.

It all started with digital pets. A digital pet is an artificial human companion. Just like any other pet, you need to feed your digital pet, play with it and clean it.

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Some digital pets can mate with other digital pets and they have digital kids as well. Now, this trend has gone for a while. Axiom Zen is a company which created CryptoKitties by combining the concepts of digital pets and Ethereum networks. CryptoKitties is a blockchain based virtual game that allows players to purchase, collect, breed and sell various types of virtual cats.

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You basically go to the CryptoKitties website and purchase one Kitty using Ethereum. So we have to first purchase Ethereum using our regular currency and use Ethereum to purchase the kitties. In order to understand CryptoKitties, we need to fundamentally understand how blockchain works.

The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value

Unlike regular bank transactions where the transaction records are stored in one database and controlled centrally by the bank, in a blockchain based system, the transactions are decentralized and distributed among the public. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.

CryptoKitties are basically crypto collectibles. They are similar to Pokémon cards which people collect, except that no two can have the same card. This is what makes CryptoKitty valuable. It’s because of its uniqueness. Every 15 minutes the company Axiom Zen creates a new CryptoKitty that only one person can buy. These are Generation 0 kitties which will be created until November 2018 capping 50,000 kitties. But there are already more than 50,000 kitties present because unlike regular Pokémon cards, people can breed CryptoKitties to generate new kitties. So if two Gen 0 kitties are bread, a new Gen 1 kitty is created.

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Gen 1 kitty will have different traits compared to Gen 0 kitties. More such generations of Kitties can be created using this breeding method.

Just like Pokémon cards, CryptoKitties also have attributes which are stereotypically called Cattributes. Every combination of kitty leads to breeding of a new form of kitty. So people can choose to either create a completely new kitty by identifying a unique combination or got for the combination of their choice. A total of 23 million dollars is spent till by CryptoKitty collectors. It’s equivalent to 30,000 Ether.

The appearance of a CryptoKitty is based on their code. The genes in their code define their physical appearance on 12 features.

 

Just like humans, CryptoKitties also have traits hidden in them which can be identified in their offsprings. The Genetic Algorithm which makes it happen is proprietary and kept hidden from users.

The pricing and popularity of CryptoKitties are based on the scarcity just like traditional Pokémon cards. Usually, any digital entity can be replicated. Say a popular song can be copied and posted on multiple websites on the Internet. However, a CryptoKitty can’t be replicated because they follow the principles of Blockchain. Hence it’s impossible to replicate these Kitties. Hence a particular owner of a CryptoKitty can proudly say that they own it. However, it’s not completely true. The owners of the CryptoKitty just own the code for the cat, not the cat itself. This is specified in the Terms and Conditions of their website.

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So this means, the company can change the artwork of CryptoKitties and you can’t do anything about it. All you own is just the code. This is good for the company because they can release comics or toys based on the CryptoKitties and you don’t have propriety ownership on the toy or comic book based on the physical appearance of the CryptoKitty you own.

The founders of the CryptoKitties feel that Blockchain is not mature enough to deal with Proprietary ownership of Art and hence users only own the piece of code.