For those who remember, or participated in, the Tamagotchi and Digimon fad a couple of decades ago – thanks for nothing. For those unfamiliar with the fad, they were electronic games on keychains that people would carry around with them. Each game had a pet that would hatch and the owner was required to “feed” the pets at regular intervals, otherwise they would die. People actually paid other people to feed their pets so they would not die.
This virtual cat investment has similar characteristics except you are playing with some serious money. Known as Cryptokitties, they are virtual cats bought using cryptocurrencies and like real cats can be bought for a wide range of prices. Currently the average price is about $85, but like any collector’s item there are some that will cost you more than $10k. But these Cryptokitties can breed. You have to purchase a license to do this, but that can be a second type of investment because they cats have characteristics called “cattributes.” Like genetic material, the right combination of DNA can make your Cryptokitties worth millions.
To join in the fun you need to convert your existing cash investment into a cryptocurrency called ether. Once you start breeding you have no idea what cattributes your offspring will have. There are roughly 4 billion possible combinations, so it is virtually impossible to know the characteristics of your next Cryptokitty.
Now that we know the upside potential, what should be expect the future of Cryptokitties to be from an investment/financial perspective. Investing $84 is not really a lot of money, and unlike the lottery there can be many winners; people who have been lucky enough to own a cat with the highest quality cattributes that will be potentially worth thousands or even millions of dollars. That may sound farfetched, but looking at it from a different perspective may have you buying a few yourself.
What is the difference between investing in antique car and a Cryptokitty? A car is only worth as much as someone is willing to pay for it, just like a Cryptokitty. But Cryptokitties don’t have to be insured (as of this writing), don’t rust, can’t be stolen, and require virtually zero maintenance. The only two things that may give an investor reason to pause is: 1) the purchase of a Cryptokitty requires conversion into cryptocurrency, something which many people are unfamiliar with, and 2) there is nothing tangible to hold on to.
For the uninitiated, cryptocurrencies are edging their way into the mainstream economy. There are ATMs that allow you to convert cryptocurrencies such as Bitcoin, into a more familiar coin of the realm. In North Carolina, there is at least one car dealership that is accepting payment of cryptocurrency, and is willing to look at payment terms using cryptocurrencies. The bottom line for cryptocurrencies is that they are becoming more accepted because more than half of the money in the United States does not exist in cash or coin, but in electronic banking systems
As for the second argument of not having anything tangible to show for your investment, it is suggested that it can be a definite advantage to an investor. Unlike the Tamagotchi and Digimon characters you actually had to spend time monitoring or else they would virtually die, Cryptokitties are self-managing. All you need to do is wait and see that the digital reproduction unit’s characteristics are to see if you have a rare breed. It is the law of supply and demand on a virtual scale.
Looking at the traditional world of stock investments, making money is not only based on the value of a company, but on the indices that track the total market’s value rise and fall. Biotechnology stocks are an option to invest in the future of medicine, but in the majority of cases you are investing in the potential of an idea that you hope will become a reality in the future. Investors who play it safe or are overly conservative have little chance of seeing any substantial return on investment. Ask anyone who has stood on the sidelines of this continually booming stock market.
Unlike the Tamagotchi and Digimon fads which benefitted the manufacturers (and pet sitters) Cryptokitties are a way to see an actual return on an idea that captured the imaginations of millions of people in Japan and around the world. Yes, you will not be investing with Monopoly money, but your downside is significantly lower because like any collectible investment it almost always has some value. There are people who spent their lifetimes collecting vinyl record collections who now find their time, effort, and money largely lost because of digital music. Cryptokitties does not appear to have a downside of that type.
If you are a visionary, you may see variations on the Cryptokitty theme in the future. As a matter of being practical, gaining some experience in this type of virtual investment market can only be of benefit to you. Start slow and see if it is as fun and profitable as the stock market once was.