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Crypto Kitties Have Taken Over Ethereum Network and ICOs are Canceling

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When I first heard of Crypto Kitties, my first reaction was that it was hilarious, cute, and definitely not something to be taken at all seriously. At most, it would be the Tamagotchi of the cryptocurrency world, a lighthearted fun thing that would come and go before you have the chance to blink twice. Of course, like Tamagotchi, Crypto Kitties is suddenly everywhere. Unlike Tamagotchi, Crypto Kitties bogged down the Ethereum network so badly that its Twitter account had to issue this announcement:

“Due to network congestion, we are increasing the birthing fee from 0.001 ETH to 0.002 ETH. This will ensure your kittens are born on time! The extra is needed to incentivize miners to add birthing txs to the chain. Long-term solution will be explored very soon!”

Crypto Kitties May Be The First Ever Blockchain Game Fad

The concept behind crypto kitties is pretty simple. You can buy, sell, trade, and breed virtual cats. Unlike real cats, Crypto Kitties hatch from eggs. As you might expect, the rare cats can be pretty darn valuable. In fact, it’s been reported that users have spent over $1 million on these virtual pets so far and the “Genesis” kitten sold for about 246 ETH (about $113,000).

SIMETRI Research

The surprising success of Crypto Kitties means that it’s already being called the Beanie Babies of the cryptocurrency world. At the height of the Beanie Babies craze, some of the rare Beanie Babies could sell for thousands or tens of thousands of dollars — and then the market crashed, leaving even the most expensive stuffed animal toys as today’s garage sale fodder. A year from now, the person who purchased the Genesis kitten may wonder what he or she was even thinking, while the people who cash in before the market crashes will walk away with a nice pile of Ethereum.

Are they cute? Sure they are. Just bopping around the site, I encountered ones with cute names like “Blue Catzilla” and “Tiger Kitty.” If it gets remembered over the long term, though, it might be remembered as one of the cryptocurrency world’s first fad and linger as a fun thing for little kids.

Right Now It’s Bogging Down the Ethereum Network, Though

I know right?! As mentioned before, Crypto Kitties had to double the birthing fee to make sure kittens hatch in a timely fashion. As of a few hours ago, transactions in Crypto Kitties amounted to 15% of new computations on the Ethereum network. If anything, Crypto Kitties is being blamed, or credited, with unveiling weaknesses in the Ethereum network. So much for being the world’s computer unless Ethereum can increase its infrastructure to meet the needs of popular apps like this one.

Again, this gets back to the issue of scalability. The issue of scalable blockchains appears to be the root cause of the Bitcoin Civil War and is still the cause of some lingering sore feelings. In all the fighting, probably nobody ever thought that Ethereum might also have some scalability issues. The Crypto Kitties issue caused Johnson Lau, a Bitcoin Core contributor, to make a joke on Twitter about needing Ethereum Cash, “or many kittens will be killed.” Or, more accurately, delayed in the hatching process as the transactions behind them get held up by limitations in the Ethereum network.

We also know of at least one project that has been rescheduled due to the crypto kittie congestion issue.

Better Now Than Later, Right?

With the rise of Ethereum as the base of so many ICOs, it’s better that Ethereum’s weaknesses be exposed now, rather than wait until it’s expected to handle the sheer processing load that one would expect of a genuine “world’s computer”.

As Martin Köppelmann, founder of Gnosis, put it, “I’m all for experiments.” It may be that Ethereum is still in the experimental phase and seeing what it can do as a decentralized computer network that enables self-executing smart contracts. As Crypto Kitties reveals, Ethereum will have to figure out what it needs to become truly scalable — and simply increasing block size and reducing block times may not solve the problem when its nodes command only so much processing power.

That means it’s a good thing that Crypto Kitties happened now rather than after Ethereum sees an increase in demand for more serious purposes. It unveiled a serious weakness in the system by bogging it down and forcing the creators of Crypto Kitties to increase fees. Now the Ethereum developers just need to figure out how to scale the system — preferably with less fighting over whether the system needs to be scaled at all.

DISCLOSURE

Authors at Crypto Briefing are invested in cryptocurrencies. The author of this post may be invested in digital assets mentioned here.

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Heidi Hecht
Heidi Hecht is a cryptocurrency and Blockchain enthusiast, freelance content writer, and author of the ebook Blockchain Space: How and Why Cryptocurrencies Fit Into the Space Age. She lives in Florida within about half an hour's drive of Disney World on a good day (and wishes that Walt Disney could accept Bitcoin). When she isn't writing about cryptocurrencies, science, and tech topics, she can usually be found playing with her hyperactive rescue cat, Rudy.

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