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Luxury Brands Are Testing the Tech That Powers CryptoKitties

Sure the cypherpunks love CryptoKitties, but turns out luxury fashion brands are also taking a shine to the digital fluffballs.

Or at least, they’re into the technology behind the ethereum-based decentralized application that captured the hearts and minds of crypto enthusiasts in December of last year.

According to French startup Arianee, which boasts former employees and advisors from luxury brands such as Tiffany’s, Omega, Balenciaga and the Richemont group, the same technology can be used to help these firms create unique identities for bespoke handbags and expensive watches.

What Arianee did to test that theory was create a new blockchain – a copy of ethereum which combines both permissioned and permissionless elements through its use of a consensus mechanism it’s calling “proof-of-authority.” It’s permissionless in the sense that users who want to sell products to one another can interact with the blockchain, but the verifying of the ledger and issuance of new tokens is controlled by the participating businesses.

“The consensus that seals blocks and adds blocks is not fully accessible. You have to register your identity within our governance to become one of those nodes, and in our case, that’s really the brands or third-party experts,” explained Luc Jodet, head of business architecture at Arianee.

The crypto tokens running over the blockchain are based on ethereum’s ERC-721 standard for non-fungible tokens.

The ERC-721 standard is all about scarcity (non-fungible tokens are unique and distinguishable entities) and that makes for a logical solution to import from the gaming and digital collectible world to use for tokenizing luxury goods.

Jodet could not talk openly at this stage about which brands might be running nodes on the Arianee blockchain, but pointed to the startup’s advisors at Richemont – a Switzerland-based holding company that owns Cartier, Dunhill, Jaeger-LeCoultre, Montblanc, Purdey, Vacheron Constantin, and Van Cleef & Arpels – as logical candidates.

Commenting on the appropriation of these types of tokens for luxury goods tracking, Courtney Brock, co-founder and COO at Blockade Games, who’s been an advocate for the use of ERC-721 tokens for multiple business verticals, said one of the benefits of this token type is that a single contract could work for all goods and include all the information for each product line, season, production number, etc.   

“The thing that 721s are really good for is tracking a unique asset,” she said, adding: 

“If you were to use an ERC-20 or just a regular blockchain, you would actually have to create a new protocol for each line, like if you wanted to distinguish between lines.”

Handbags and glad rags

And with that, Arianee’s team sees two main benefits to high-end businesses from its smart assets technology.

First, there’s what it calls “post-production traceability,” which provides a readily verifiable authenticity stamp for each item. This can also carry details about the item’s provenance or its service history (expensive watches have to be serviced every two years) and this information can then easily be transferred if the item is resold.  

The second, more subtle application is how the token connects the owner with the brand itself, as opposed to the intermediate retailer (again, useful for reselling luxury goods).

“Because it’s a token it can be transferred from one owner to another and can record information about the item’s history, with the smart asset there remains a connection, a communication channel, that is always open between the current owner and the brand,” Jodet said. 

Arianee has built three prototypes: one for watches, one for handbags and high fashion items, and a third for champagne bottles.

In the case of champagne, post-production traceability becomes extremely important to track the bottle once it leaves the vineyard, making sure it was kept in a cellar and which shop actually sold or resold it, said Jodet.

And these three tests aren’t the only ones on Jodet’s mind.

He told CoinDesk:

“This works for any luxury products you could imagine, such as jewelry. We have something with musical instruments we are exploring, and art as well.”

Lavish users

All blockchain technology needs a network effect and certainly one of Arianee’s strengths is its heavyweight advisory board which could help create the adoption. 

One of those advisors is Guillaume Boilot, chief operating officer at Vacheron Constantin, which has been creating paper “passports” for the last 260 years to go with its rather high-end watches (owners of Vacheron Constantin watches have included Napoleon Bonapart, Pope Pius XI and Harry Truman).

These watch passports pertain to three individual numbers: one on the case; another buried inside the watch; and a third issued by third party, Hallmark of Geneva, which would be a potential candidate to run a node on the Arianee blockchain should Vacheron Constantin decide to tokenize their products. 

Boilot stressed that his company is presently at the testing stage with this technology, but added, as a brand under the Richemont holding company, that his parent company would be the most likely to run a node for all the brands under its umbrella.

Anything that enhances authenticity in a transparent and verifiable way is a win for luxury products, Boilot told CoinDesk, adding:

“All our watches have alligator straps, for example, and we think that in the coming years our clients would like to know where does the skin come from.”

Interestingly, he said, much of the demand for his company’s rare and collectible watches comes from the Chinese market, and this realization has also has been a motivation to explore blockchain, since China is one of the countries where people are taking a significant interest in the nascent technology. 

“We really think our clients, many of whom are Asian, will want to have the digital asset [representing their watch] in their wallet,” Boilot said. “We see that many of them know about bitcoin mining and trading and are familiar with blockchain.”

Cat admiring necklace image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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How to Explain Crypto Collectibles to Your Banker

Courtney Brock manages business operations for Blockade Games in Austin, Texas.


Its May 11, 2018 and I receive a surprise in the mail: an overnight package from FedEx. It’s addressed to my company, Blockade Games.

Another surprise: Our bank, Wells Fargo, thinks we may be a money services business (MSB) and has a stack of paperwork for me to fill out. Thank you, traditional banking system. It’s not like we didn’t spend two hours answering all of these questions when we set up the account or anything.

The document is from Wells Fargo’s “Enhanced Due Diligence Center.” Yeah, you’re probably rolling your eyes like I am. Even better, if they don’t receive the requested information by the deadline, they’ll close our account. Fantastic.

Our contact’s name is Alex, and he’s actually pretty cool. He knows a little bit about cryptocurrency, but I have to do a lot of talking to explain how a video game company uses blockchain. He agrees we are not a money services business and instructs me on how to fill out the paperwork online.

I’m sure there are lots of other small companies utilizing blockchain technology that are going through similar situations, so this post is dedicated to them. A special dedication goes out to everyone building and innovating in the cryptogames space.

We formed Blockade Games in January to work on our first game, Neon District. The game hinges on a single concept: Almost every item is represented by a non-fungible token that has the ability to become rare and unique through game play.

The things we’re doing are new, and finding the right words to describe them can be difficult. But I’ll give it a go.

Talking to noobs about bitcoin

Stepping back, when talking to people about cryptocurrency I find most have at least heard about bitcoin. If they’re a little savvier, they might know about ethereum or litecoin. Some folks might have even heard about Ripple and XRP, but you can tell them that’s a story for another day.

Outside bitcoin, cryptocurrencies can be called altcoins or tokens (there is also an unflattering term that rhymes with “bitcoin”). Each of these designations has a different definition based on how the coin’s blockchain is developed.

Countries all over the world have different ways of classifying them for regulation and taxation. In Singapore, they’re considered a product until invested and then they get treated more like a stock. They’re a taxable asset in Israel and private money (whatever that means) in Germany.

Rounding up the ranks as the most progressive jurisdictions, Japan and Australia recognize bitcoin as currency, though the internet seems to be in disagreement as to whether either has brought it into full legal tender status. In the U.S., bitcoin and all other cryptocurrencies are regulated as commodities.

So, what makes bitcoin or any other cryptocurrency a commodity? A 2017 article from the Economist explains it pretty well:

“In economic terms, commodities are vital components of commerce that are standardized and hence easy to exchange for goods of the same type, and have a fairly uniform price around the world.”

In other words, they’re fungible. Every ounce of gold or oil will cost the same amount as any other ounce of gold or oil. One satoshi of a bitcoin will always be worth the same amount as all other satoshis in a bitcoin, just like pennies in a dollar.

That’s why it’s so easy to trade cryptocurrency like stocks. They’re fungible and interchangeable so no matter how much of a bitcoin you buy (and you can buy less than one bitcoin), variables like where the bitcoin came from should not change its market value. You’ll get exactly what you ordered. Unless you get bitcoin cash, but that’s also a story for another day. (Yes, my commentary brings all the trolls to the yard.)

In fact, the permanent public ledgers of these cryptocurrencies are so secure, it’s plausible we’ll see all forms of stocks and bonds tokenized in the coming decades.

Fun fact: Diamonds are not considered fungible nor are they traded on a commodity market. As anyone who’s shopped for an engagement ring knows, each part of a diamond is different in cut and clarity, so much so that the price of diamonds as a whole cannot be standardized. Each diamond must be individually inspected to determine its value.

Just like bitcoin is frequently called digital gold, non-fungible tokens (NFTs) could be called digital diamonds. The value of each token comes from a combination of rarity and identified desirable features.

Talking to noobs about NFTs

In the fall of 2017, teams from Decentraland and Cryptokitties attended the ETHWaterloo hackathon in Canada with a new protocol to play with.

Called ERC721, it was a departure from ethereum’s ERC20 standard for smart contracts, which are both programmable and fungible. The features of ERC-20s make them the perfect vehicle for the ICO. But ERC-721s were designed for something different.

The ERC-721 protocol makes each token unique. They may operate on the same smart contract, but each token has its own cryptographic signature.

For example, each Cryptokitty has a unique genetic code that assigns a kitty with physical “cattributes.” These kitties can then be bred to produce a new tokenized kitty with its own genetic signature reflective of the genetic signatures of both parents. A player can’t counterfeit a CryptoKitty as each kitty’s authenticity is recorded on the blockchain.

If being able to be able to distinguish a digital original from a digital copy weren’t revolutionary enough, CryptoKitties presented another new reality for digital games.

For the first time ever, a player could truly own the digital assets they acquire within a game. When an asset is purchased, owned, or gifted, it belongs to the player and not the game. If the game servers shut down, the assets don’t go with it. If a player wants to sell an asset, that’s up to them. And one day when enough game developers are using this technology together, players may be able to transfer beloved assets from one game into another.

On the surface, CryptoKitties can be seen as a silly game that briefly possessed people’s senses, causing them to spend over $20 million in ether on digital cats. In reality, CryptoKitties is a proof of concept for a technology with a mind-blowing range of potential use cases.

In November of 2017, bitcoin had broken $10,000 for the first time, thousands of altcoins and tokens had been launched, billions of dollars raised by ICOs … and digital cats became the first widely adopted commercial use case of blockchain technology. It shouldn’t come as a surprise, though: games are always a testing ground for revolutionary technologies.

Within a month, at least two to three blockchain games were being announced every day. It’s important to note that this wasn’t the first time blockchain technology had been incorporated into games or online collectibles. Several projects had already been paving the way, utilizing Counterparty tokens (fungible tokens created on the bitcoin blockchain.) However, the development of a non-fungible token standard was the spark of creativity needed to move crypto-gaming into the mainstream consciousness.

Still not an MSB

It’s May 31, and I receive a second identical package from FedEx. I open it with a lot more side-eye than curiosity this time.

Of course, it’s another money services packet from Wells Fargo. This time the letter informs me that that the bank has not received the requested information. At this point, I’m pretty confused because I know I sent back everything they needed the first time around.

Fortunately, there is an email waiting for me from Alex stating that they had the original document and just needed to clarify a couple more items.

I’m realizing that a large part of my job now involves educating professionals in other fields how to interface with a blockchain business. Especially banks.

Despite the fact that we can accept crypto as a currency and will occasionally pay for business operating expenses with crypto as a currency, our blockchain product is not a currency. I can see why this is confusing as all get-out to them.

Comparing NFTs to baseball cards is helpful. You can’t use a baseball card as money, but someone may pay money for a baseball card based on its unique and rare attributes.

Alex thanked me for my help in understanding this new and crazy world. I’m sure it’s not the last time I’ll be explaining how this works.

Explaining crypto image via Shutterstock.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Felines to Futbol: NFTs Are Crypto's Hottest New Buzzword

The World Cup may be completely analog, but don’t tell that to crypto developers.

Soft launching now, a new company called CryptoStrikers is entering the so-called “crypto collectibles” market with tokens commemorating the stars of this year’s World Cup. The thing is the tokens it’s offering aren’t the same you’ll see listed on a popular market index like CoinMarketCap.

Rather, CryptoStrikers is the latest example of something called an NFT, or a non-fungible token, a term that just might be becoming the buzziest product category in blockchain today.

That’s because while they first got noticed when CryptoKitties went viral, NFTs continue to garner attention from entrepreneurs. Validating that idea, Status, one of last year’s biggest initial coin offerings (ICOs) has backed the company behind CryptoStrikers as the first inductee in their new accelerator.

“By providing radical transparency of ownership and authenticity through the use of smart contracts, CryptoStrikers has enhanced the experience of collecting sports cards,” Status’s Ben Morris told CoinDesk.

And it’s not just digital sports cards, just like it wasn’t only about digital kittens, that makes industry stakeholders salivate over NFTs.

Whereas one bitcoin is effectively the same as any other bitcoin (they are fungible), each NFT token is unique and as such, may be valued differently by the market. Each token (whether it represents a cat or a soccer player) has different attributes that its home website’s software uses to generate the look of its avatar – including hair color, nose shape, outfits, age and rarity.

Because NFTs have specific qualities that should play to people’s interest in real-world collectibles, crypto insiders hope they can bring the general public into the ecosystem.

They’ve already done so somewhat, a point investor Arianna Simpson of Autonomous Partners spoke to in a Q&A on Token Daily in April.

“I actually believe Cryptokitties are a widely misunderstood phenomenon,” she said during the show, adding:

” I believe gaming and non-fungible blockchain-based assets will be some of the first consumer applications that really hit mainstream. It’s also incredibly cool that something like 25 percent of their user base are people who had never held ether before.”

Amitt Mahajan, cofounder of NFT online marketplace Rarebits, agrees.

“People’s relationship with digital items is about to change,” he said, pointing to the fact that digital books and movies people buy online can’t then be resold or traded because of their strict licensing.

“What that means is you’ve truly never owned anything online,” he continued. “When CryptoKitties came out – which is kind of the canonical example of NFTs – users realized that too.”

More mechanics

And each time an NFT has blown up, it’s adapted the model by adding a new mechanic.

To game makers, “mechanics” are an action the rules of the game allow players to take. For example, in the card game “Go Fish,” asking for a card from your opponent would be a mechanic. The most interesting games tend to mix up a few mechanics that can combine in surprising ways.

While we’re just in the earliest days of NFT game play, already the industry has iterated on the simple mechanics of holding the tokens. For instance, CryptoKitties allows users to breed their cats, creating a new, unique kitten with a mixture of attributes from its parents.

Crypto All Stars, a collectible token game where players “owned” avatars of famous people in the industry, had a snatching mechanic. If someone bid a price 20 percent more than the last person had paid, they got the token whether the previous owner liked it or not (although the previous owner got a profit, too).

And CryptoStrikers is taking the mechanics a step further.

Currently, CryptoStrikers offers two different packs of four cards. The standard pack sells for 0.025 ETH and will go off the market on July 15. The premium pack (there are only 500 of these packs available) is more likely to contain very rare cards and went up for sale on May 14 for 0.05 ETH.

Intriguingly, on Thursday, it was also offering standard packs in exchange for CryptoKitties, though this offer was only good for a limited time. That may have been because creators were trying to signal that their project has similar significance to the original ERC-721 token, whose cute cats made ethereum almost unuseable in December.

But above that, CryptoStrikers adds a mechanic whereby users don’t know which cards they will get in their purchased pack, just like with physical sports cards. And as their real-world counterparts, CryptoStrikers has built a trading platform into its website that allows not only for trading between cards but also selling the cards for ETH.

CryptoStrikers declined to comment to CoinDesk.

User builds

But building out new mechanics doesn’t have to be relegated only to the game’s developers.

Because NFTs are decentralized, the codebases are open-source and can be used by other entrepreneurs or enthusiasts to create new user interfaces or game play on top of it. For instance, entrepreneurs took CryptoKitties code and built two separate applications for the fluff balls – KittyHats, which allow users to purchase accessories to adorn their kitty and KittyRace, a race car game that allows the kittens to take the driver’s seat.

One way to start envisioning the future of NFT is by looking at the evolution of trading card battle games.

Magic the Gathering is a wildly popular collectible card game of monsters and mages on paper decks. Its creator, Wizards of the Coast, released the first set in 1993 with a ruleset for playing the game, but it wasn’t long before fans started developing their own games with the cards.

Then Blizzard released Hearthstone in 2014, a super popular digital card game played over the internet. It shares a lot of characteristics with Magic but, because it’s computerized, it can add fun effects and interactivity that Magic can’t. Yet, because it was created by a centralized company, cards can’t leave their initial platform and users can only play the games its makers provide.

Several NFT providers have begun iterating on this idea.

According to Status’s Morris, CryptoStrikers seems headed in that direction.

“As an open source project, we really liked their vision of having the community build their own games and applications on top of their platform,” he said.

And another company, Myethereum, is in that arena as well.

Speaking about Myethereum, Devin Finzer of OpenSea, another NFT marketplace, told CoinDesk:

“There’s a card game that I think a lot of people are excited about. Their vision is: ‘We want to build the ability of anyone to build a card game on top of it.'”

And user experience

Still, most NFT enthusiasts agree that the industry has a long way to go when it comes to user experience.

The interfaces for these games are buggy and confusing. In purchasing two standard CryptoStriker packs to test out the game, I found that moving them to auction was slow and cumbersome, taking a surprising number of steps that burned a lot of ether in gas fees.

And user experiences like this can break a game.

“The niches or the industries that best take advantage of the NFTs will be the ones that make the user experience seamless,” Harrison Hines of the forthcoming token offering platform TokenFoundry told CoinDesk, adding:

“You’re going to need to disguise all the unfun things about blockchain.”

But that’s also more about the ever-evolving decentralized application (dapp) layer that’s being built on blockchains.

And currently that’s still not exactly the vision everyone expects. Even with a significant amount of initial buzz, these projects haven’t succeeded in garnering the user base that more traditional apps have, plus apps have struggled to keep the users they do entice occupied.

As we previously reported, the biggest dapps aren’t that big.

Status, which is sort of like a WeChat for ethereum users, plans to chip in to making NFTs more user-friendly by incorporating the technology into its platform, according to Morris. So, for example, Status users will be able to give and receive NFTs over chat, which could really advance the trading aspect.

But even more forward thinking is Hines, who imagines a future where every Instagram photo is an NFT and its owner can earn revenue when other’s license it. On top of that, celebrities and brands could sell updateable photos, building an ongoing relationship with fans and limitless upselling opportunities.

Imagine, Hines said, if Justin Bieber sold an NFT photo of himself on an app, and then the fan who owned it met him in real life and got him to “sign” that photo.

“Now you can update it so his autograph is forever tied to that item,” Hines said.

But there’s a lot of technology, especially scaling technology, that needs to be built between here and there.

“If Beyonce released a backstage pass NFT, ethereum would crash overnight,” Rarebits Mahajan said, concluding on a more optimistic note about how much more interesting the space can get:

“Our view on it is this is: We built Ebay and there’s no Pez dispensers and Beanie Babies yet.”

CryptoStrikers cards via CryptoStrikers Twitter account 

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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'Ebay for CryptoKitties' Raises $2 Million from All-Star VCs

More money is being poured into crypto cats.

Well, cats, and the slew of other non-fungible digital items made possible by new token standards, such as ethereum’s ERC-721, which now have a home in OpenSea, a marketplace for allowing users to buy and sell these items – an Ebay for CryptoKitties if you will.

Coming out of Y-Combinator last winter, OpenSea today announced a $2 million seed equity round led by 1confirmation, with participation from a series of other high-profile crypto investors, including Founders Fund, Foundation Capital, Blockchain Capital, Coinbase Ventures, Chernin Group, Stable Fund and Blockstack.

“When CryptoKitties came out, it was this exciting, mainstream, fun use case for blockchain,” Devin Finzer, co-founder of OpenSea, told CoinDesk.

Indeed, the ethereum-based decentralized application for buying, selling and breeding digital cats was a quick hit within the community, launching in November last year and peaking in December, when the game nearly brought the ethereum blockchain to a halt as it tried to deal with a significant increase in transactions.

Many concluded that the game helped push blockchain technology and cryptocurrency into the mainstream, and others argued that the game displayed a blockchain use case that could expand away from silly cats and into serious business (such as real estate). For instance, Union Square Ventures and Andreessen Horowitz led a $12 million investment round to spin CrypoKitties out of its parent company so that the team could really dig deeper into future applications for the concept of non-fungible digital items.

And while those serious applications have yet to be realized, a spate of similar games were created after CryptoKitties success, including the more general CryptoPets, CryptoCelebrities and Crypto All-Stars.

But according to OpenSea, users need a place to more easily buy and sell those items.

It turns out OpenSea wasn’t alone – the decentralized online marketplace for physical items OpenBazaar has plans to open up its platform for digital items such as CryptoKitties as well, plus OPSkins recently created Wax, a platform for spinning up decentralized exchange services for these items.

So far, it looks like a fine idea, according to Finzer, who said:

“We’ve so far had about half a million [dollars] in volume pass through our marketplace.”

The go-to marketplace

One of the keys to OpenSea’s success, according to Finzer, is the team’s relationship with crypto game developers.

As to be expected, OpenSea has done best in offering a “store” for games that don’t already have built-in marketplaces (many game developers want to focus on the game and so aren’t keen to building a marketplace on top). As those game developers hear about OpenSea, they’ve typically just made OpenSea the game’s official digital shop.

“We’ve kind of developed a synergistic relationship with game developers,” Finzer said, adding that OpenSea offers a revenue share model depending on what marketplace duties are handled by what party (although Finzer declined to discuss this in more detail).

Yet, OpenSea is available for more than just games, although that’s the company’s main stream of business. For instance, one art project used OpenSea and Finzer said it could also work as a marketplace for software licenses.

We’ve barely scratched the surface on what these crypto collectibles and a marketplace for them could offer.

One thing that’s interesting about these programs, for instance, is that because a CryptoKitty, for example, is just a piece of code, different interfaces will create completely different visualizations of that cat (as recently displayed by a viral art image made purely from code).

These different visualizations could be shared between users and might make the games even more fun.

Zombies for kitties

Plus, Finzer wants to facilitate the trade of items that aren’t even part of the same game.

This would go above and beyond digital games today, where items that are part of a centralized game must stay within that universe, he said, adding:

“I could be breeding zombies and you could be breeding kitties. I think what that results in is, these items having a lot more value than they would in the existing digital world.”

In fact, this kind of cross-collaboration has already happened – a new game called KittyRace allows users to race their CryptoKitties.

This kind of thing, Finzer said, has garnered quite a bit of interest from other crypto gaming companies.

This interest in digital items isn’t new only to the world of cryptocurrency, though. In fact, the market for gold within the massively multiplayer online role-playing game World of Warcraft is so lucrative that prisoners in China are made to mine the stuff for sale to gamers in the developed world.

Yet, Finzer said, he plans to stay out of the world of trading digital items for physical cash, namely because it’s a business that’s somewhat frowned upon, but also because he doesn’t see a lot of opportunity in enticing more traditional gaming companies to move to a blockchain.

“The technological benefits of moving an existing game to a blockchain are actually negative now,” he said.

That doesn’t get Finzer down, though. He sees tremendous opportunity focused on crypto.

He concluded:

“Our thesis is that the most interesting use cases for blockchain-based games will come from new games rather than existing games.”

CryptoKitties image via CoinDesk archive

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Crypto Collectables? Ethereum's Next Killer App Is on Its Way

As silly as it might sound, the popular CryptoKitties app might foreshadow a powerful up-and-coming use case for ethereum – digital collectibles.

After its launch last week, CryptoKitties quickly became the most popular ethereum app – so popular in fact that there’s now CryptoPuppies (for those that prefer man’s “real best friend”),  and CryptoPets (which lets users choose any kind of digital animal pet they prefer).

But while some in the crypto community are skeptical of this new trend (“Dear god no,” said one reddit user to the idea of Pokemon on the blockchain), others see CryptoKitties as an unlikely pioneer in what could be one of the platform’s biggest applications.

Blockchain thought leaders such as litecoin creator Charlie Lee and Earn.com CEO Balaji Srinivasan, to name a few, argue the app is “actually important,” because it shows the promise of using the blockchain to instantly transfer all kinds of assets without a third party.

Lesser known, though, is that there’s reason to believe a real uptick in usable, consumer-friendly applications could be on the horizon. That’s because the system for creating these collectibles hinges on a technical standard similar to ERC-20, the same tech that sparked the boom in initial coin offerings (ICOs) in 2017.

Strange as it may seem, your favorite furry fluffball is made possible by a powerful technical standard underlying CryptoKitties called Ethereum Request for Comments 721 (ERC-721).

“People have been talking about [ERC-721] for a long time, but no one implemented it before. CryptoKitties happened to be the first,” Philippe Castonguay, developer relations manager for cryptocurrency exchange protocol 0x, told CoinDesk, adding:

“There’s a very big market incoming for ERC-721.”

The utility of uniqueness

According to many crypto developers, ERC-721 is better suited for digital collectibles than ERC-20.

For starters, tokens created with ERC-20 are “fungible,” meaning every token is just as good as any other token, like every U.S. dollar is just as good as any other U.S. dollar.

While this is a necessary property for a currency, it isn’t suited for “crypto collectibles” like CryptoKitties, since different cats need to have unique attributes, such as age, breed or color, permanently attached to them. In this way, some mixture of attributes within certain cats can become super rare, making them not only highly sought after, but also remarkably valuable.

One such cat on CryptoKitties traded for $110,000.

Secondly, ERC-20 tokens are divisible, meaning users can divide them up into tiny amounts for buying, selling or trading.

While this property is, again, useful for currency, it isn’t helpful for collectibles, since collectibles are generally only as good as their condition.

In CryptoKitties, half a cat wouldn’t be that fun or valuable to have.

All that said, there are still questions surrounding ERC-721. Although, it’s quickly gaining traction and is already being used,  it’s not yet complete and several developers are unhappy with the code as it stands today.

As such, Castonguay expects the standard to evolve:

“It will mature into a more robust and more acceptable standard over time.”

From punks to kitties

That said, the ideas underpinning ERC-721 aren’t completely novel, but are instead iterations on already functioning digital collectible systems.

For example, CryptoPunks created its own non-fungible token for trading pixelated punk heads over ethereum (CryptoPunks has even seen a spike in usage since CryptoKitties launched).

Following the success of CryptoKitties, startups and developers are beginning to express interest in ERC-721 as a way of making crypto assets easier to use.

James Martin Duffy, co-founder of startup LoomX, which is working on scaling infrastructure for ethereum, told CoinDesk, he has plans to deploy projects using the standard going forward.

“I see [ERC-721] tokens having huge potential in the realm of digital collectibles and online games,” Duffy said. “You could use them for digital playing cards … or in-game items in a massively multiplayer online role-playing game. The tokens could represent the swords, armor and other objects that your character has in his inventory. “

And it doesn’t stop there. According to Duffy, ERC-721 could also facilitate the tracking, trading and management of real-world assets such as houses or cars.

He’s not the only one that’s excited about the potential, though.

Developers of 0x, a decentralized exchange for ERC-20 tokens, see such a promising future for ERC-721 that they’re planning to add support for the token soon. In this way, ERC-721 tokens can be traded for ERC-20 tokens and ether as well.

Castonguay concluded:

“We see a future where all of these different kinds of tokens can be exchanged seamlessly.”

Toys image via Shutterstock

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