The online obsession of CryptoKitties draws comparisons to Beanie Babies. Call it a fad, a passing fancy or a meaningful innovation, it provides new-wave collectors with a unique collectible that is not only digital but something that nobody else can own — but you!

But what are they, and why are they financially so valuable?

Cartoon Cats

CryptoKitties are little cartoon cats generated programmatically with billions of possible combinations. They've got big-eyed expressions and pouting faces. And users are paying big bucks to own them. They entered our zeitgeist, November 2017, when users started flooding Ethereum’s blockchain.

Note that there are several differences between Ether [ethereum’s native token] and Bitcoins (the cryptocurrency with the largest market capitalization as of January 2018).

Ether vs. Bitcoins:

  • Its block time is 14 to 15 seconds, compared with 10 minutes for bitcoin.
  • Transaction fees are generally considerably lower for Ether than for Bitcoin. In December 2017, the median transaction fee for ether corresponded to $0.33, while for bitcoin it corresponded to $23. That’s however changed significantly with the value of crypto kitties entering the scene [see current values below.]
  • Ethereum uses an account system where values are debited from accounts and credited to another, as opposed to Bitcoin's system, which is more analogous to spending cash and receiving change in return.

Breeding of Digital Cats

The Cryptokitties game involves the breeding of digital cats to generate progeny that become valued collectibles, as they are propagated. According to some estimates, the game had 1.5 million users who were responsible for $40 million worth of transactions on its platform. Individual cryptokitties have sold for more than $300,000 a piece, some say. As of this posting, the average sale price for a cryptokitty was $65.76.

Investors drawn to the flame . . .

Like moths to the fire, it’s not surprising the popularity of this craze has attracted investors into its fold. For starters, Andreesen Horowitz and Union Square Ventures, both of which are top venture capital firms, poneyed up $12 million into its development. Also basketball star Stephen Curry signed on to release the first celebrity-branded Cryptokitties.

Investopedia’s columnist Rakesh Sharma sums up the Crypto kitty mania most succinctly: “Whether these collectibles end up like Beanie Babies, whose markets and valuation have returned to earth after their soaring popularity during the 1990s, remains to be seen.” What do you think, dear reader? How many Cryptokitties could you purchase? After all you might just be able to double your money in a short turn-around — a year? a month? days? hours? Time will tell. Let us know if you will be jumping into the Cryptokitty market?

Primary Source: Investopedia