Wed, Dec 06, 2017 - Page 10 News List

‘CryptoKitties’ overwhelms Ethereum network

Bloomberg

Since its 2015 debut, digital evangelists have preached how the Ethereum network will be perfect for applications such as managing supply chains and securities sales. What it is actually used for is buying kittens.

CryptoKitties, an online game that debuted on Nov. 28, is now the most popular smart contract — essentially, an application that runs itself — on Ethereum, accounting for 11 percent of all transactions on the network, according to ETH Gas Station.

That is up from 4 percent on Friday for the network, which uses the distributed-ledger technology known as blockchain.

The game is clogging the Ethereum network, leading to slower transaction times for all users of the blockchain, which is a digital ledger for recording transactions.

“The pending transactions on the Ethereum blockchain have spiked in the last 24 hours, mostly from CryptoKitties traffic,” CoinDesk director of research Nolan Bauerle said in an e-mail.

In the game, players buy cartoon kittens and then breed them with other cats. More than 22,000 cats have been sold so far for a total of US$3 million, according to Crypto Kitty Sales.

One of the cats went for US$117,712, although average sales price hovers about US$109, according to the sales tracker.

Each cat has a unique identity that is logged on the Ethereum blockchain.

Axiom Zen, a company with offices in San Francisco and Vancouver that helps incubate digital start-ups and new products, created CryptoKitties.

“We wanted to make blockchain technology accessible to the everyday user, as we believe this is a key step in otherwise seeing the technology adopted,” Axiom Zen communications manager Bryce Bladon said in an e-mailed response to questions. “We wanted to explore blockchain applications outside of ICOs [initial coin offerings] and cryptocurrencies.”

He also said the company wanted to “leverage the power of fun and games” — hence, the kitties.

CryptoKitties is one of the first blockbuster applications to emerge for Ethereum. The blockchain is already used for transactions in digital currency called ether, the second-largest after bitcoin.

It is also widely used for issuing tokens in so-called ICOs, with which start-ups raise funds.

The game is the first successful non-coin-related application to emerge on the blockchain.

CryptoKitties’ success could be a sign that Ethereum might thrive as a gaming platform.

Indeed, many users of blockchains are the same kind of people who already play PC and console video games, and it could take a bite out of the US$108.9 billion global games market.

If the game’s popularity continues to skyrocket, it could also potentially increase average transaction prices. Since Ethereum’s fee structure is affected by demand, costs could go up for everyone.

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