A blockchain-based game that lets you birth and trade digital kittens raised $12 million in new funding last week from some of the most revered tech venture capital firms in America.
The game is called CryptoKitties, and it runs on Ethereum, a blockchain network created specifically to execute “smart contracts,” which are scripts that carry out immutable agreements and exchanges of value. Bitcoin runs on its own blockchain, a decentralized ledger maintained by “miners” who upload bundles of transactions; Ethereum is a separate blockchain and has its own digital token, ether. The price of ether (ETH) is down 46% in 2018 so far, but up 800% in the past 12 months.
The excitement around Ethereum is all about its potential for storing and keeping track of anything that relies on authentication and verification: think real estate deeds, job contracts, resumes, or even autographed sports memorabilia.
And it just so happens that a digital kitten game is the first product to demonstrate that potential.
That may sound silly, but forget what the game is about—that’s not the point. The appeal is what the game proves: that Ethereum is perfectly suited for digital collectibles, any digital-only item that is unique, one-of-a-kind, and can’t be duplicated or stolen.
It is often games that first demonstrate the potential of a new technology. And people are really playing CryptoKitties. Users have spent more than $23 million to create or buy kittens, at an average sale price of $69 per kitten, according to a page that tracks CryptoKitties data.
Thus: $12 million in new funding. The round was led by the Silicon Valley firm Andreessen Horowitz, which has invested in major bitcoin startups like Coinbase and Earn.com, and the New York firm Union Square Ventures, whose founder Fred Wilson is a huge bitcoin believer.
“We think digital collectibles is one of many amazing things that blockchains enable that literally could not be done before this technology emerged,” Wilson writes at the USV blog about the CryptoKitties investment. “We also think digital collectibles and all of the games they enable will be one of the first, if not the first, big consumer use cases for blockchain technologies.”
Who else participated in the investment round? Naval Ravikant, the founder of AngelList, who is involved in stealth cryptocurrency hedge fund MetaStable along with Andreessen Horowitz and Union Square Ventures, and Fred Ehrsam, a cofounder of Coinbase. In other words: Everyone in crypto is gaga about CryptoKitties.
Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.