Welcome to the world of digital collectibles where you can breed, sell and purchase virtual cats. The ‘oh so adorable’ factor along with recreational game centered non-fungible ‘one of a kind’ token made most of the blockchain enthusiasts the new ‘crazy cat ladies’.
The new ‘crazy cat ladies’
Cryptokitties that was developed at ETHWaterloo hackathon by four Pokemon enthusiast crypto developers, have now turned into a $12M separate business entity backed by Union Square Ventures and Andreessen Horowitz. A cat number 127 with pearl gem physical attributes of third order mutation has fetched $140,000 at Christie’s auction last May outbidding crypto hedge fund manager Mike Novogratz.
“Mr. Twardowski’s CryptoKitty art piece looked something like a giant computer chip. A pixelated image of a first-generation CryptoKitty was embedded in a physical structure — a hardware wallet assembled by the engineer Richard Moore— that contained an ERC-721 token. In non-crypto speak, that essentially means there were lines of computer code in the artwork that proved the origin and ownership of the CryptoKitty. (The digital cat itself is purple and goggle-eyed, and around its neck, it wears an attractive orb.)”– New York Times.
Many skeptics have called this craze as pricey Beany babies devoid of values. Such comparisons have always stemmed out of lack of understanding of emerging technology and cryptoeconomics. Previously, Bitcoin and other cryptocurrencies have been compared with Beany babies, tulip mania and even gold. Such frivolous arguments and skepticism gains legitimacy when new technologies gain enough market share without proper use cases.
In this article, I’ll try to look into the various real world use cases of cryptokitties that solve many compelling issues. Such relevance can be understood deeply once we dive into the technical details.
Non-fungible token(NFT) ERC721
Fungible vs non-fungible: Just like our currencies (US dollar, Euro, Pounds etc) Cryptocurrencies are means of exchange, store of value and such characteristics can be maintained through fungibility i.e mutually interchangeable quality. In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable, eg: flour, rice, currencies, oil, precious metals.
Why it is so special about being unique in non-fungible token(NFT)? Fungible tokens (ERC20) do not contain any unique data, they are blank tokens hence the interchangeable characteristics. Whereas NFT (ERC 721) are embedded with unique data identity hence creating verifiable decentralized digital scarcity depending on what kind of data you put into it. NFT projects like Cryptokitties, CryptoPunks and Decentralands (unique co-ordinates data embedded within the Land token) are all designed on ERC721 protocol.
Ethereum Request for Comment aka ERC 721 is created by Dieter Shirley and Axiom Zen. ERC721 has the same compliance of ERC20 token but its code defines contracts of events and functions that professes digital ownership and property rights, which has been a struggle in real world for entrepreneurs and creators to establish their IP rights ranging from software, music or digital contents. (ERC721 is expensive and have its limitations in deploying large databases of items in big games, is out of scope for this article and there is also ERC115 standard that allows for infinite numbers of fungible and non-fungible items in a single deployed contract)