Can You Make Money Playing Crypto Kitty?
If you’re firmly entrenched in cryptoland, you will have already heard about the CryptoKitty phenomenon, a game launched on November 28th and now clogging up the Ethereum network. With the largest price to date for a CryptoKitty being clocked at $114k the ultimate question is — can you make money playing CryptoKitty?
What is CryptoKitty?
CryptoKitty is a game based on the Ethereum Network and it goes like this:
Every 15 minutes for 1 year, a new, unique, digital CryptoKitty is born. Think of this as a kind of immaculate conception. These are referred to as Genesis CryptoKitties and are assigned a generation of 0.
All CryptoKitties are sold, using Ethereum, in the Marketplace. The pricing mechanism works by the owner listing a start price which decreases over 12 months on a straight line basis until it’s purchased. For Genesis CryptoKitties the pricing is calculated as the average price of the last 5 CryptoKitties sold plus 50% and the price degrades over 24 hours, also on a straight line basis.
Users can mate their CryptoKitties to give birth to a new CryptoKitty that inherits some of the genetic traits from the parents and is itself, unique. If you don’t have two CryptoKitties to mate, you can mate yours with someone else’s Kitty and pay a siring fee to the dad. If you get greedy and pimp out your cat too aggressively, the cool off period increases. The next generation will be referred to as generation 1 and so on. Currently I’m seeing up to generation 7 in the marketplace.
The Game Creators are currently making about $10,000 per hour!
The game owners keep the proceeds of the sales of all the Genesis CryptoKitties and take 3.75% commission on all other transactions.
The price range in the Marketplace is staggering but that’s mostly skewed by wishful thinkers posting exorbitant starting prices hoping for a miraculous accumulation of wealth. A better approximation is what is the most recent Genesis CryptoKitties being sold for as this should approximate 50% on top of the average of the last 5 actual sales. A look at the Marketplace at time of writing had the most recent Genesis CryptoKitty starting at ETH 4.19 (around $1.8k at todays price of $280/ETH). Working backwards and assuming that’s with a 50% markup over the last 5 sales then that average price must be around ETH 2.77 (around $750).
The largest recorded price to date has been ETH256 ($114k at the time). This however, was most likely a sale between users.
Assuming the hype for the game lasts for a full 12 months, a big “if” in the gaming world. Then if you figure they create a Genesis CryptoKitty every 15 minutes for a year, that’s 35,040 Genesis CryptoKitties and a whole bunch of transaction fees. If on average the Genesis CryptoKitties hold at say, $2,000 each and we add in an estimate for transaction fees, we can easily see the game creators now looking at a $100mm plus revenue run rate over 12 months. Pretty sweet for the guys at Axiom Zen, but the game is genius, one has to say.
Can you make money from playing Crypto CryptoKitties?
Users can make money by selling their Crypto Kitties and pimping them out as sires. Like many things in life, if you got in early you could be making a pretty penny. However, at this point, literally only a month in, if you thought trading crypto was like gambling, then expecting to make money from playing this game would be a whole new level of unbounded risk assumption. That said, it is fun and no doubt, someone will emerge as a poster child for flagrant wealth creation.