DIGITAL currency Ethereum has dipped – opening at $664.65 on December 15 – a 4.38 per cent fall from the day before.
The cryptocurrency – can be purchased from the Coinbase app where users can also buy Bitcoin. But what is CryptoKitties, the new game which has increased the value of Ethereum?
What are CryptoKitties?
CryptoKitties, dubbed the next big cryptocurrency, is a new application built on the Ethereum chain.
It was launched on Thanksgiving and became available for transactions last Tuesday.
Players can buy and sell virtual cats for as much as $10,000, in a bid make hundreds of thousands more in real value.
Users purchase their collectable kitties with Ethereum, and then breed them to create more kitties.
Each cat has its own set of genes, uniquely coded as “Cattributes”. Users will make more money if their cat’s genes are appeasing to other players.
The players can make two of their own kitties breed a third, or they can pay another user to mate with theirs – if they’re looking for particular characteristics.
But the kittens have a cool down period, restricting how fast they can make new ones, in a bid to limit inflation.
Is the cryptocurrency as valuable as Bitcoin?
CryptoKitties has become hugely popular since its launch. Currently, it makes up around 4 per cent of all Ethereum transactions worldwide, it has already made $1.3million in sales.
But transactions were so popular on Monday, its network became clogged up.
In a bid to manage online congestion, developers had to raise fees to make new kittens, “birthing fees”.
Users exchanges are said to account for 15 per cent of transactions on the Ethereum blockchain.
The network blunder led experts to question whether CyrptoKitties would be successful in the future like Bitcoin.
Bitcoin has went against all odds this year. After experts deemed it almost useless, the currency is now worth an astonishing $15,000, after a valuation of less than $1,000 in January.
Peter Atwater, who studies market sentiment and heads Financial Insyghts, believes CryptoKitties can prosper.
He said: “The popularity of virtual cats fits the euphoria we see elsewhere in the crypto-currency space. It feels very reminiscent of the Candy Crush craze that helped propel the King Entertainment IPO back at the peak of the ‘Unicorn’ era in mid 2014.”
CyrptoKitties developers believe it will thrive because unlike Bitcoin, players will still have the value of their kitties secured on the Ethereum blockchain, even if the game and its creators disappear.
But there are risks with this cryptocurrency. Each time traffic to the network rises, CryptoKitties experiences a transaction backlog, so kitty fans are forced to wait for their new pets to be issued – which could affect how much money they earn.
Since the cryptocurrency is still in its infancy, its value is extremely volatile. Experts urge users to only invest money that they can afford to lose.