At first glance, CryptoKitties are googly-eyed virtual cats that come in an array of fanciful forms 害羞草研究所� from fluffy ninjas, to feline-duck hybrids.

But don害羞草研究所檛 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 it害羞草研究所檚 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 internet害羞草研究所檚 cat obsession.

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

害羞草研究所淟et害羞草研究所檚 put cats on the blockchain,害羞草研究所� 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 害羞草研究所� collectibles that can be bought, sold and 害羞草研究所渟ired害羞草研究所� 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 害羞草研究所� or in the game害羞草研究所檚 parlance, 害羞草研究所渃attributes害羞草研究所� 害羞草研究所� can be unlocked through the genetic lottery.

害羞草研究所淚ronically, (we害羞草研究所檙e) trying to be the next Bitcoin by showing that there is a use for this technology beyond Bitcoin.害羞草研究所�

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.

It害羞草研究所檚 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 害羞草研究所� 害羞草研究所渄igital scarcity.害羞草研究所�

Related:

Related: 害羞草研究所�

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 害羞草研究所渢rue digital economy possible,害羞草研究所� 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 University害羞草研究所檚 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 game害羞草研究所檚 popularity last December, according to the blockchain analytics site Bloxy. But by June, transactions had plummeted by 90 per cent to 114,000.

害羞草研究所淧eople should be skeptical of 害羞草研究所� investing more money than they害羞草研究所檙e prepared to lose, especially with these niche, fad-like collectibles,害羞草研究所� said Laskowski.

害羞草研究所淥nce the novelty wore off, I think that folks kind of found other things to do with their time.害羞草研究所�

When asked about the prospect of there being a CryptoKitties bubble, Bladon initially said it was 害羞草研究所渃ertainly possible,害羞草研究所� but later revised that assessment.

害羞草研究所淚 think we害羞草研究所檝e proven at this point it害羞草研究所檚 not a bubble for CryptoKitties,害羞草研究所� he said. 害羞草研究所淲e aren害羞草研究所檛 nearly as on fire as we were when we launched, and this is by no means an accident.害羞草研究所�

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 blockchain害羞草研究所檚 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 don害羞草研究所檛 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 害羞草研究所淜ittyVerse害羞草研究所� 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.

害羞草研究所淚 feel as if you害羞草研究所檙e owning like a piece of history,害羞草研究所� he said. 害羞草研究所淵ou害羞草研究所檙e basically trying to educate and create an entire industry.害羞草研究所�

While many CryptoKitties knockoffs, or 害羞草研究所渃opycats,害羞草研究所� have sprouted up in recent months, Bladon said most of them are missing a key ingredient in the game害羞草研究所檚 success.

害羞草研究所淐ats are the ambassadors for everything from pharaohs, to your mom害羞草研究所檚 Facebook page,害羞草研究所� he said. 害羞草研究所淲e害羞草研究所檙e trying to put an idea out there, and I can害羞草研究所檛 think of a better mascot for it than cats.害羞草研究所�

害羞草研究所� By Adina Bresge in Toronto

The Canadian Press

Like us on and follow us on .