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Blockchain, which is the foundation for cryptocurrencies like Bitcoin, is a secure and transparent ledger that runs on decentralized networks. It enabled Axiom Zen, which spun out Dapper Labs to run CryptoKitties, to create unique digital items known as “cryptocollectibles” or “non-fungible tokens,” which cannot be copied. When rare CryptoKitties are born, players can bid for them, raising their value, which is why some CryptoKitties have sold for more than $200,000.
The game, if you can call it that, became a sensation after it debuted in November, but the activity has slowed as the craze over cryptocurrency has subsided. But the idea is to make blockchain technology accessible and relevant to everyday consumers, and the company is trying to make that happen even more through the KittyVerse, where developers can build new applications on top of CryptoKitties.
CryptoKitties accounted for about 25 percent of Ethereum’s traffic, and more than 3.2 million transactions have occurred on CryptoKitties smart contracts. Before the one-millionth CryptoKitty was born, a cat named Dragon sold for 600 Ethereum (about $170,000) on the official marketplace.
Bizarre or not, this sort of activity enabled CryptoKitties maker Axiom Zen to raise $12 million in funding from Andreessen Horowitz and Union Square Ventures. I spoke with Bryce Bladon, communications manager and a founding team member, about the CryptoKitties phenomenon.
Here’s an edited transcript of our interview.
GamesBeat: The activity level around games like CryptoKitties is hard for me to understand, just from watching on the outside. Lots of things have grown, but the numbers of people involved in this aren’t as exciting as, say, console games that are selling in the millions. What’s interesting about the level of activity?
Bryce Bladon: Well, I’d point out that there are fundamental differences between a console game and a blockchain game, not least of which is that console games have been around about 40 years now.
GamesBeat: But nobody’s paying $140,000 for a single console game asset, either.
Bladon: Not quite yet, at least! I think EVE Online might have the most comparable examples for things like that, but it’s still not quite the same yet. To me, the aspect that’s most interesting—a lot of people are apt to treat DAUs as the single measure of whether something is or isn’t successful. I’d certainly agree that it’s a relevant consideration, but I’d also underline that it’s far from the whole picture. Trying to equate something like CryptoKitties, or any blockchain experience, to something people are more familiar with, like Facebook, it’s not a good parallel in my mind.
Somebody suggested early on, in the early days of CryptoKitties, that unless users are coming back on five out of seven days, it’s not anything. I agree that something needs to be used for it to be valuable and understood, and that’s the entire ethos behind CryptoKitties and why we launched with a fractional product. I also think there’s a worthwhile consideration for the various ways in which people use these things.
A good example would be something like Blockchain Cuties, which actually has off-chain experiences as part of their game, for that very reason. It’s a clever way to get around scaling challenges while still allowing people to—even if it is a mostly superficial expression, they can interact with their collectibles or their NFTs or whatever you want to call them these days.
GamesBeat: The thing to notice also is that there’s just a lot of transaction value happening here.
Bladon: Absolutely. CryptoKitties is quite literally the most used smart contract in blockchain, outside of exchanges. There’s a lot of activity. I think a couple of weeks ago we had 1,200 Eth transacted in a week, something to that effect? Still very substantial numbers. Regardless of what I said about DAUs, they’re going up. That’s very impressive. The extent of that engagement is also going up, and that’s impressive to me as well.
GamesBeat: Some people also look at this as gamers and—the artwork, the graphics, they’re not that impressed by that aspect. It’s hard to understand that something with such simple graphics is turning out to be so sought-after. I see some parallels to other blockchain games, like Hyper Dragons. If you look at the graphics for that, it’s also very simple, with very rudimentary interactivity. Obviously graphics isn’t an issue that matters first and foremost to some people.
Bladon: Yes and no. I’d respond to a couple of things. First is the idea that all this game is, all that a CryptoKitty is, is a picture. In my opinion, the art has gotten substantially better, but that’s just me. At the same time, we talk about graphical fidelity, and that’s important to a degree. I’ve been playing games my whole life, and I don’t miss the days of Atari, when you had E.T. stumbling along in three colors. But again, keep in mind that blockchain games as an industry, as a category, have existed for what, 10 months? Although there were some basic experiences before CryptoKitties. It’s a bit narcissistic for me to frame it that way.
A CryptoKitty in itself is not just the picture, the art. That is certainly an expression of it. But what it might be tomorrow is so much more. What it already is is so much more. We have 48 KittyVerse experiences being built right now by 100 different teams. What your CryptoKitty is in each one of those things might be completely different. It’s yours, and you can use it as you see fit. This isn’t just an in-game asset. This is the first example of an entirely new kind of digital asset. Whatever you call it, what makes it compelling and interesting and novel is a variety of factors.
I do appreciate that graphics matter to an extent. I appreciate good pixel graphics, personally. A good piece of pixel art, to me, is almost more interesting than Unreal engine perfect 3D graphics. But in either case, in much the same way—again, another primary motivation with CryptoKitties was to put a consumer-friendly face on this technology, on this practical innovation with the ERC 721 token.
GamesBeat: Is there maybe a comparison to make to the beginning of the iPhone? Or the first time I played Battlezone in the arcades, and thought wireframe 3D graphics were amazing. In the early days of the iPhone the graphics weren’t anything to brag about, and now they’re approaching console quality.
Bladon: A personal favorite of mine is whenever I see a scan of an old video game magazine from the ‘90s, and it’s those terrible N64 models and a big headline about how graphics can’t get better than this. But I digress. The visuals of the cats, if they don’t appeal to you, I can appreciate why CryptoKitties doesn’t appeal to you right now, and that’s okay. But it’s only one aspect of so many more.
I’d also argue, on behalf of the design team, that there are literally—I can’t remember if it’s 17 billion or 17 trillion visual combinations, but suffice to say, there are lots of visual combinations, and they’re all modular. All of the various cattributes or traits or gene expressions—I think we might be past the hundreds at this point. All these different eyes and ears and so on can fit together and make something beautiful or weird or whatever it is you look for in your perfect digital cat. That’s a very interesting aspect.
GamesBeat: The uniqueness and ownership aspects are catching people’s attention – the ability to own something that could be more valuable over time.
Bladon: For sure. And I already mentioned the teams building in the KittyVerse, but it’s worth noting that each one of those experiences, those projects, represents new utility and new value that can apply to your cat. There’s a lot of different ways to apply value to these things, in much the same way there is with art.
You were talking about how people don’t see why a picture of a cat should sell for that much. Well, I might not see why a stretch of canvas with paint on it should sell as much as some original artworks have. But when you place it in context – a time, a culture, a place, a piece of history, or even just a personal connection to that thing—I might value my personal cat more than you value yours. There are lots of reasons people find value in things. And the fact that it’s secured and empowered by blockchain technology to be genuinely unique, to be digitally scarce, for you to own it, and for it to be essentially immortal – nothing can take it away from you – that’s incredible. It unlocks the possibility to reshape our entire relationship with digital assets.
Right now it’s just a cute picture of a cat. Tomorrow it might be an AR and VR expression of that cat. I might be feeding you a bit of a hint there in regards to something cool coming up in the next week. And beyond that, who knows? But it’s more than a picture of a cat in a frame. It will take on a life outside of that frame, I assure you.
GamesBeat: Do you think of CryptoKitties itself as a game, or as something more like a platform different developers work on to take these assets and use them for their games?
Bladon: It’s a fair question. I’d say CryptoKitties is a game, but I also admit that it’s potentially just one aspect of a much bigger game, the KittyVerse. CryptoKitties is maybe the breeding and marketplace aspect of that game.
That marketplace aspect is good and bad. It results in all this great press. But it also brought in that mindset a lot of people had with cryptocurrency – speculation, buy and flip. While people ascribing value to these things is very important, it overlooks a lot more of what these things represent and why they’re so interesting.
GamesBeat: Do you find the state of blockchain and cryptocurrency to be where you want it to be, or do you think it needs a lot of improvements to things like speed and cost of transactions?
Bladon: I’m constantly impressed by the people who are developing and building in this space. That’s been true since we launched CryptoKitties, and well before. At the same time, probably for the same reason, I’m glad to see that ICOs and all these coins that came out to capitalize on investment froth are winding down somewhat, or at least they’re at far less crazy levels.
As far as the state of the technology as a whole, again, it’s only been 10 months since we launched CryptoKitties, and a lot of advancements and improvements have been made. Some of those were inspired by us, and some of them are in direct opposition to us. I’d consider both equally valuable. A diversity of people building in the space results in a diversity of great new ideas. Candidly, decentralization as a concept needs diversity to exist.
I think the scalability issues and convenience issues of using blockchain technology still do need to be figured out. We need to find that right balance between the real world and the cryptoverse sometimes – the right balance between centralization and decentralization. I love the dreamers in this space, but I do think we need a dose of what would make your everyday consumer use this stuff, if we want to be relevant.
Obviously the value of something needs to be decentralized and it needs to come with securities. But about three months back we saw another big choke point on the Ethereum network because an exchange was using transactions as a voting mechanism to get coins listed on it. From the outside – this is just what it looked like to me – it seemed like it was a PR stunt around some kind of notoriety angle. That seems crazy. I get where they might have been inspired by it, but that’s the definition of doing something in a way that doesn’t serve the end users, doesn’t serve anyone else in the space, and seems to only have been done for personal gain. That’s worrisome, that the space is still gameable that way.
GamesBeat: It seems like it’s a lot of fun to find the best uses or combinations of blockchain and games. You’ve done a good job there. Can you see more areas where others are exploiting that combination?
Bladon: The potential always exists for bad players to capitalize on opportunities. I do think naiveté leads to it sometimes. When CryptoKitties launched we were accounting for a quarter of the Ethereum network at the time. While I’m not a big fan of most ICOs, I never intended for this product we were launching to block so many of them. That was never our intention. But that underlined an issue in the space and made it a priority for the Ethereum network.
That, to me, was a net positive. With that said, I’m obviously not going to point out areas where I think scammers could make a fat living. But I would point out that you do need to aspire around the best in people. You just also need to take the right steps to protect yourself, protect your customers, and protect the third-party creators who may eventually be building around you, to make sure they have protections in place.
Decentralization is incredibly powerful as a concept, with the value it can potentially bring to people. But it means that there is no big scary central service that can say yea or nay. I think that’s mostly good. With the questions around regulations and all these other aspects, regulations by definition are supposed to be there to protect consumers. You can make arguments on either side. I’m not going to wade into that mess.
GamesBeat: We had another big story out of Japan just now, where another wallet got hacked. It’s still the wild west, to some extent.
Bladon: It’s getting less wild, though. It’s still wild in a fun way. But I think now that it’s cooled down a bit, and a lot of people are hibernating through the winter to keep building. That’s something I’m very excited about.
One of the fundamental focuses of CryptoKitties since launch, and still now, is developer adoption, and not just of KittyVerse experiences. Obviously we want that, but in my opinion it’s a win for us and everyone else in the space if the next big innovation, the next big viral thing, doesn’t come from the CryptoKitties team. To me that’s a very good sign. By definition, decentralization is and is supposed to be—you don’t just want one wunderkind doing everything, because it all falls apart when that person gets bored.
I’m oversimplifying, of course, and I’d be thrilled if we did do the next big thing and solve the next big problem. But the space, by definition, needs a whole community of innovators and builders. It needs a lot of people making an impact, not just a cute cat at the center deciding which way this should go. I don’t think that would be the best possible version of this industry’s future. That’s why we have such a focus on empowering independent creators, and why we have a launch pad program to help them figure out a sustainable path to revenue. That’s why we have developer tools we give away for free. That’s why we released the Nifty License and iteratively improve on it, and all these other things. It’s to lower the barrier to entry and ensure that all ships are raised along with this big kitty-shaped whale.
GamesBeat: It’s interesting to have Ubisoft jumping in. I wonder if some of the other big guys will figure out what to do as well.
Bladon: Oh, it’s been interesting. I’m so impressed with Ubisoft. I’m incredibly pleased that the Rabbids have done two official crossovers: Mario and CryptoKitties.
GamesBeat: Anything else you’d like to talk about?
Bladon: The number of offers for people to run our next ICO—people have stopped hassling me on LinkedIn, and I see that as a net positive. [laughs]