All Financial Wisdom

Blockchain and Cryptokitties

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Blockchain is already a widely known technology, but above all, it’s been well publicized. All companies claim to be in Blockchain today, but an important part of some managers only says it because it is in fashion, and don’t want to be seen as out of the loop.

Crypto kitties. Maybe you’ve heard of them? The crypto kitties have been a kind of virtual pseudo-game based on Blockchain, but it has also shown to have deep socio-economic implications. With this new reliable Blockchain wheel, we will be able to do impossible things for the internet so far.

What are cryptokitties?

It was not a mere trend or a fad, it was literally a viral fever that shook Ethereum at the stroke of Ethers.

For those who do not have the desire or time to read the many, many long articles about this fever, I will summarize below the essential points. The cryptokitties were kittens that were sold in the Ethereum network in exchange for Ethers, with the characteristic that they used the veracity of the Blockchain network to ensure that each unique kitten was owned by its owner, who had previously bought or exchanged it. In turn, our virtual pets could reproduce and have more kittens that could be equally sold.

Thanks to the magic of Blockchain and the algorithm that implements the cryptokitties, each kitty is unique and 100% belongs to only you: thanks to the technology of distributed accounting, nobody can take it away from you. Nor can it be cloned or destroyed. But you can exchange or sell it for Ethers.

Just as each Ether or Bitcoin is unique, and the Blockchain technology ensures this  through its decentralized and distributed structure, the cryptokitties are equally uniquely and distributedly verifiable and authenticable.

Apart from the more theoretical and formal considerations, in practice the reality is that a genuine crypto-market of totally virtual objects was created for the first time in history. And the anecdote is that this particular crypto-market, which was created specifically by this virtual pet buying and selling game, saw how some of these kittens came to be bought for $4,700 dollars.

And what is so socio-economically disruptive in a few simple virtual kittens?

Well there is, and a lot. The Cryptokitties are supposed to reinvent the internet. And we say to reinvent because if there was something that supposed an economic problem in the original Internet, it was the capacity that the digital technologies had of being able to literally and unlimitedly clone any virtual object.

This supposed a serious limitation to generate on the internet a sustainable economic model, since they remember that the economy is the science of scarcity. If there is no shortage, there is no price. The very foundations of the most traditional economy were shaken, and with them they had to transform sectors and business models such as music, literature, etc. and now comes Blockchain technology.

But this digitization of money and kittens no longer meets that ability of the original Internet to replicate any virtual object as many times as wanted. These are precisely the repercussions that we consider most important.

From the cyberpunks of the nineties to the crypto-economy

The critpo-kittens have managed to demonstrate how they can create unique virtual objects, but also have shown how, economically, you can create value with them in a 100% crypto-economic and virtual market. A crypto-value is created, now also totally virtual, but value at the end of the day, and really the type of value with the most vocation for the future currently.

Those cyberpunks born in the dawn of the internet, and who were the first to see the tremendously disruptive of the new tool of humanity, may feel disappointed with the cryptokitties. Those bit activists always saw that the internet was going to bring a revolution on many planes, including the economic one. Some even wanted to see, and even today in fact it has been (at least partially) in several business models, that the Internet could mean the abolition of private property.

The participants of the current system, on the other hand, base a large part of their wealth on the hoarding of assets (and foreign liabilities), all of which revolves around private property. These economically privileged of the current system, will not be so happy with the new model that is approaching, since logically they prefer the most absolute stability, which allows them to keep their more than comfortable position. The digital economy is removing the foundations of socioeconomies.

The crypto-kittens have revealed that we are not going to see the abolition of private property, but at the same time we are going to see the end of private property as we know it. The crypto-economy is not going to suppose a continuation of the current private property. It is a digital transformation more than the many that we are already seeing, and will undoubtedly illuminate a new type of private property.

They will agree that now we are really seeing the new economy, and no, we have not chosen it voluntarily. This has been skillfully inoculated into our socioeconomic system by that enigmatic Satoshi Nakamoto of whom we still know barely anything.

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