Financial markets and financial systems develop through a mix of proactive and reactive developments, and the landscape of crypto has seen a lot of both throughout the last 15 years, often the result of rather unusual causes.
The early legitimisation of Bitcoin as an actual currency came from an ad hoc pizza order, which eventually led to the development of crypto cards that made buying and selling tokens far closer to paying using a fiat bank card.
There have been several truly unusual events that have had unusual and long-lasting side effects, but perhaps one of the biggest was how a single app accounted for over a quarter of all transactions on crypto’s second-biggest blockchain.
Its influence affected not only the blockchain itself and the ecosystem surrounding it but also created the groundwork for what would become a massive boom for crypto just a few years later.
The Legacy Of CryptoKitties
Whilst there had been some experiments in buying and selling with crypto previously, by 2017 the initial wave of experimentation had slowed somewhat, as several early adopters from other industries had become rather more reserved about payments through crypto.
At the time, given that most stores that used crypto also used fiat currency, people who were not already converts opted to choose the path of least resistance, especially given that under the proof of work model Ethereum used at the time, transaction fees could fluctuate quite wildly.
This was a stated reason why Valve, owners of the Steam online content delivery platform, stopped accepting payments in crypto; the volatility was very useful for speculation but made consistent pricing a nightmare, something that would later be resolved through the use of stablecoins.
Another solution to increase adoption was to create something that could only be paid for using cryptocurrency, which led to the development of CryptoKitties.
Whilst not the first-ever blockchain game, with Etheria predating Dapper Labs’ effort by two years, CryptoKitties was the first blockchain project to demonstrate what cryptocurrency could offer that went above and beyond everything else.
As an actual game, CryptoKitties was exceptionally simple; players own virtual cats who have different fur colours, eye shapes, facial expressions and accessories, with these traits having various levels of rarity points.
The cats can be bred, leading to different “cattributes” being passed from parent to kitten.
However, what makes it different from a typical monster or animal breeding game is that these cats are stored as non-fungible tokens that are stored in a crypto wallet and can be traded, bought and sold the same way as any other cryptocurrency token.
They cost Ether to buy and generate Ether when sold, meaning that some lucky owners could make money as CryptoKitties breeders, at least at the start of the game.
Whilst never marketed as a “play to earn” game, there were people who made money by speculating on rare cats and selling them via the auction house in the game or using an external site.
It would serve as a direct influence on games such as Axie Infinity, which for a time was the most successful play-to-earn game ever made, in part because it added other revenue streams and an actual game on top of the breeding mechanics.
It would also prove the market for generative NFTs in general, as whilst CryptoPunks predated it, a boom in 2020 and 2021 of NFTs, in general, was led by the boom of generative projects such as the Bored Ape Yacht Club, which became the de facto mascot for the crypto boom in general.
However, CryptoKitties’ biggest impact is far less direct than this and comes as a result of an unintended side effect of its huge success and caused a shock to Ethereum, Ether and the blockchain concept.
The success of CryptoKitties led to an unprecedented demand on the blockchain, with huge numbers of transactions that slowed down the chain as a whole and led to an exponential increase in “gas fees”, the transaction charge to use Ethereum.
Ultimately, the limit was increased, more data was allocated per block and more transactions could be executed each second, improving the overall speed of the network and ensuring that when the big boom period came for NFTs in 2021, the infrastructure was ready for it.
On the subject of infrastructure, the final great legacy of CryptoKitties is that it led to the development of marketplaces, most notably OpenSea, the NFT sales platform that was for a time one of the biggest linchpins of the Ethereum blockchain.