Blockchain Beanie Babies: Future of e-commerce or fad?

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

But don’t 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’s 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’s cat obsession.

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

“Let’s put cats on the blockchain,” 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 - collectibles that can be bought, sold and “sired” 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 - or in the game’s parlance, “cattributes” - can be unlocked through the genetic lottery.

“Ironically, (we’re) trying to be the next Bitcoin by showing that there is a use for this technology beyond Bitcoin.”

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.