At first glance, CryptoKitties are googly-eyed virtual cats that come in an array of fanciful forms B次元官网网址� from fluffy ninjas, to feline-duck hybrids.

But donB次元官网网址檛 underestimate these collectible critters, because some CryptoKitties have commanded six figures on the virtual market, and the B.C.-based company behind the project says itB次元官网网址檚 attracted more than US$12 million in investments.

And depending on whom you ask, the blockchain-based game is either a sign of where the digital economy is heading, or just another crypto-craze fuelled by the internetB次元官网网址檚 cat obsession.

For Vancouver-based developer Axiom Zen, it all began with a simple idea, said CryptoKitties communications director Bryce Bladon.

B次元官网网址淟etB次元官网网址檚 put cats on the blockchain,B次元官网网址� Bladon recalled a fellow CryptoKitties co-founder saying.

And that, more or less, is what they did.

The result is a virtual game that CryptoKitties, which spun off into its own company in March, has compared to breedable Beanie Babies on the blockchain B次元官网网址� collectibles that can be bought, sold and B次元官网网址渟iredB次元官网网址� on the Ethereum network.

When a CryptoKitty changes hands, the exchange is logged by the blockchain, a digital ledger of transactions that is shared among a network of computers.

Every CryptoKitty is encoded with a one-of-a-kind token, which like its digital DNA, determines its heritable traits. When two felines breed, new characteristics B次元官网网址� or in the gameB次元官网网址檚 parlance, B次元官网网址渃attributesB次元官网网址� B次元官网网址� can be unlocked through the genetic lottery.

B次元官网网址淚ronically, (weB次元官网网址檙e) trying to be the next Bitcoin by showing that there is a use for this technology beyond Bitcoin.B次元官网网址�

A run-of-the-mill virtual kitten costs only a few dollars, but CryptoKitties of special pedigree can have exorbitant price tags.

One CryptoKitty was purchased for US$140,000 at a charity auction in May, and others have garnered similarly eye-popping sales in the cryptocurrency ether.

ItB次元官网网址檚 hard to profit off virtual commodities that can be copied and pasted with just a few keystrokes, but Bladon said blockchain technology has given rise to a new phenomenon in e-commerce B次元官网网址� B次元官网网址渄igital scarcity.B次元官网网址�

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Blockchains can set limits on how many and what types of CryptoKitties are in circulation. This means limited-edition CryptoKitties are verifiably rare, and thus, more valuable.

As Bladon sees it, this ability to limit virtual supply makes a B次元官网网址渢rue digital economy possible,B次元官网网址� because it means crypto-assets can have real-world values.

Still, he noted, CryptoKitties are not financial securities, and he would steer users away from treating them like investments.

Marek Laskowski, co-founder of the blockchain.lab at York UniversityB次元官网网址檚 business school, said the comparison between CryptoKitties and the short-lived Beanie Babies craze in the 1990s may have been more apt than the crypto-collectibles company anticipated when it previously touted the analogy on its website.

There were more than 1.3 million transactions involving CryptoKitties at the height of the gameB次元官网网址檚 popularity last December, according to the blockchain analytics site Bloxy. But by June, transactions had plummeted by 90 per cent to 114,000.

B次元官网网址淧eople should be skeptical of B次元官网网址� investing more money than theyB次元官网网址檙e prepared to lose, especially with these niche, fad-like collectibles,B次元官网网址� said Laskowski.

B次元官网网址淥nce the novelty wore off, I think that folks kind of found other things to do with their time.B次元官网网址�

When asked about the prospect of there being a CryptoKitties bubble, Bladon initially said it was B次元官网网址渃ertainly possible,B次元官网网址� but later revised that assessment.

B次元官网网址淚 think weB次元官网网址檝e proven at this point itB次元官网网址檚 not a bubble for CryptoKitties,B次元官网网址� he said. B次元官网网址淲e arenB次元官网网址檛 nearly as on fire as we were when we launched, and this is by no means an accident.B次元官网网址�

Bladon said CryptoKitties is taking steps to reduce its traffic on the Ethereum network, which like other blockchains, can have slow payment processing times.

Given blockchainB次元官网网址檚 high transaction fees, Laskowski said he thinks the future of this technology will be using these networks to trade assets with underlying value, such as stocks, rather than the code associated with cartoon cats. In fact, he said, users donB次元官网网址檛 even own the cartoons themselves.

CryptoKitties holds the copyright to all of its feline graphics, but it recently updated their terms of service to allow owners to use images of their virtual pets for certain purposes.

This move reflects a broader push to give users more control over their CryptoKitties, said Bladon, including creating a B次元官网网址淜ittyVerseB次元官网网址� of third-party projects offering more ways to engage with the game, like taking part in cat fights.

Glenn Eggleton, a software developer in London, Ont., is part of the team behind KittyBattles, which allows CryptoKitties to square off in a Pokemon-like arena.

Eggleton, who maintains a herd of around 180 CryptoKitties, said the open-source nature of the game makes him feel less like a player and more like a stakeholder.

B次元官网网址淚 feel as if youB次元官网网址檙e owning like a piece of history,B次元官网网址� he said. B次元官网网址淵ouB次元官网网址檙e basically trying to educate and create an entire industry.B次元官网网址�

While many CryptoKitties knockoffs, or B次元官网网址渃opycats,B次元官网网址� have sprouted up in recent months, Bladon said most of them are missing a key ingredient in the gameB次元官网网址檚 success.

B次元官网网址淐ats are the ambassadors for everything from pharaohs, to your momB次元官网网址檚 Facebook page,B次元官网网址� he said. B次元官网网址淲eB次元官网网址檙e trying to put an idea out there, and I canB次元官网网址檛 think of a better mascot for it than cats.B次元官网网址�

B次元官网网址� By Adina Bresge in Toronto

The Canadian Press

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