Depending on your generation, you may be shocked to learn that the movie business is dwarfed by the financial might of the videogame market. The latest Star Wars movie, The Last Jedi, has generated $1.3 billion worldwide. In the videogame world, Candy Crush Saga, a 2012 released mobile game with more than 2.7 billion downloads, is estimated to have generated more than $4 billion. It is still going strong as one of the 10 highest grossing mobile applications in 2018.
Games are as much about telling stories as movies. The Legend of Zelda series launched in 1986. The saga follows Link, a Hylian from the land of Hyrule. He attempts to save both Princess Zelda and Hyrule from Ganon, using the Master Sword which can only be found through many trials and tribulations. Through gameplay – through a series of games – we learn about Hyrule, its “people” and its rulers. And we grow to bond with Link as we follow him from childhood into his adult years.
Likewise, the use of games has become increasingly important in the field of education. By engaging students in “games” where they earn points, rewards and recognition for academic achievements, they are more likely to see improved results.
It also has spurred the growth of emerging technologies like virtual reality and augmented reality. For a few months in the summer of 2016, you couldn’t find a young person who wasn’t in an augmented reality world exploring Pokemon Go on their cell phone.
So what does this have to do with blockchain?
On November 28, 2017, Axiom Zen unleased a virtual cat game on the Ethereum blockchain. In December, CryptoKitties virtually halted transactions flowing through that blockchain for nearly two weeks. The game, which generated more than $5 million its first week, helped illustrate to a new group two key components of Ethereum. First, the transmission of value – money – through the token value of Ether could be done seamlessly, cheaply and quickly (although the last two were impacted by the very success of the game). And second, it demonstrated the ability of developers to deploy applications on the decentralized blockchain using smart contracts.
A CryptoKitty is essentially a unique playing card. Each one (described by the game producers as a “breedable Beanie Baby”) has a 256-bit unique code. The gender-fluid Kitties, when combined with another Kitty, produce virtual offspring with up to 4 billion possible genetic variations. A secondary market then values the uniqueness of the Kitty, resulting in profit based on a combination of luck and growing demand for the collectible.
A CryptoKitty sold for more than $100,000 during the first week of the game, with the average Kitty selling for “merely” $25. Every 15 minutes a new Kitty is released for the first year by the “system”. The starting price is set as the last five sold plus 50%. Remember, you need two! Some Kitties can breed every minute (that’s the characteristic that led to the $100,000 off-spring), while others must wait a full week.
CrpytoKitties aren’t the future of on-line gaming. But they do illustrate that people are interested in games with an element of gambling and financial risk. This is a truth that must be acknowledged to explain the over-exuberance in these early days of the cyptomarkets. Of course, the same thing should be said about the early days of the Internet financial markets too.
The real lesson – aside from people’s love of gambling- is that crypto is about more than moving money quickly and seamlessly using blockchain. The promise of Ethereum and so many other newer cryptocurrencies is that the chain will power decentralized applications. As a bonus explaining how the next Facebook, YouTube or whatever else will run on the blockchain is now a lot easier. And it is all because of a simple game using simple “smart contracts”.
So while today’s games – and today’s applications – are mostly run on centralized servers, the gamification of the blockchain has begun. Blockchain is about more than tokens and money. It is about the ability to utilize worldwide computing power to more efficiently breed and transact one CryptoKitty at a time.