Punks, kitties and virtual tulips: the technology underlying cryptocurrencies has created a whole new world of digital art.
Blockchain, the technology that underpins cryptocurrencies such as bitcoin and ether, is being heralded as the revolutionary future of everything from digital cash to stock trading, land registries, logistical solutions, voting and identity verification – all very serious stuff. But it also has its lighthearted uses. One example can be seen in the growth of “cryptocollectables” – digital art that’s built on the blockchain. Instead of buying a physical vase, painting, or sterling-silver cow creamer, collectors can now buy a unique, “non-fungible”, tradable cryptographic token that has, as its “physical” manifestation, a unique piece of digital art.
Collecting in cyberspace
The first cryptocollectables came in the form of “rare Pepe trading cards” featuring the American alt-right political mascot Pepe the Frog. Other examples include “cryptopunks” – tiny, eight-bit digital images of cartoon faces – or ethertulips, collectable tulips which the makers, in a rare example of crypto-honesty, describe as “tulip mania… on the blockchain”. But perhaps the best-known cryptocollectables to date have been “CryptoKitties”. CrypoKitties are digital images of cartoon cats, each unique (you can see one above), which can be bought, traded and bred to create new kitties.
CryptoKitties were created “to explore the concept of digital scarcity, implement a non-fungible token within smart contracts… and make blockchain technology accessible to everyday consumers”, says their creator, Canadian company Axiom Zen. Every 15 minutes, Axiom Zen releases a new kitty and puts it up for sale. New kitties can cost anything between 0.05 and three ether (the cryptocurrency of the ethereum blockchain – at the time of writing, one ether is worth roughly £350) depending on the desirability and scarcity of the kitty’s attributes. A total of 50,000 kitties will be generated, but up to four billion unique cats can be created by breeding. Ownership is tracked by a smart contract (a mini app embedded in the blockchain) and cats can’t be traded without the owner’s permission.
Pointless, perhaps, but big business
It may sound trivial, but it’s big business. Axiom Zen collects the money paid for each original “clock cat”, then a 3.75% fee on subsequent sales, plus more fees when cats are bred. So far, more than 300,000 kitties have been sold at a cost of 45,000 ether, currently worth almost $25m. At the height of the craze, in December 2017 (when cryptocurrency values were also spiking), one cat sold for the equivalent of $117,000. The number of transactions was so high it caused severe congestion on the ethereum blockchain. Axiom Zen now plans to spin off CryptoKitties into its own company, raising $12m in the process.
More than just cartoon cats
But it’s not all cartoon cats. Blockchain is making its way into “serious” art, too. DADA is a platform where digital artists can create limited edition crypto-artwork, which is sold in much the same way as CryptoKitties. Artists sell their art, with ownership recorded on the ethereum blockchain. Similar concepts include Curio Cards, the R.A.R.E. Digital Art Network, and SuperRare.
The concept may appear whimsical, but it’s not going away. And blockchain isn’t just a useful way to tag digital art. Physical art can be “tokenised” – investors can buy a digital share in a real work of art, tradeable on the blockchain. It is also proving useful in recording provenance, in much the same way as it is being used to track goods being moved in supply chains.
News bytes… more trouble for tezos
► Troubled cryptocurrency tezos is back in the news (though not yet in anyone’s wallets), with reports that it could undergo a “hard fork” before it has even launched. (A “hard fork” is the creation of a second, parallel cryptocurrency that inherits all the transactions in the parent blockchain up to the time of the fork, then runs independently). Tezos – founded by husband-and-wife team Arthur and Kathleen Breitman – has been beset by infighting and legal disputes since it raised $239m in an initial coin offering (ICO) in July 2017. Investors have been waiting patiently for the launch, but the final straw appears to have arrived when the Tezos Foundation, which controls the protocol, said it would force investors to undergo “know your customer” and “anti-money-laundering” checks before they could get their hands on any coins. This was not mentioned in the ICO and is anathema to many crypto-enthusiasts. The forked currency would have no such checks. Known as ntezos, it describes itself as an “independent and self-governing network running the tezos software”.
► The price of graphics cards – chips that process and display computer images, particularly the 3D graphics used for games – has tumbled alongside the price of bitcoin, writes Avi Mizrahi on the Bitcoin.com website. High-end graphics cards were prized by bitcoin miners – those who verify transactions on the bitcoin blockchain – for their ability to perform quickly the complex calculations. Miners snapped them up, leading to a shortage, with cards selling at huge premiums to the manufacturers’ normal retail price. At the turn of this year, when bitcoin hit almost $20,000 (it’s now around $6,600), a Geforce GTX 1070 Ti sold for around $900, says Mizrahi. It can now be bought for $550, with prices “very close to their levels before the craze”.
► Hedge funds that invest in cryptocurrencies have seen returns dive this year, writes Emma Dunkley in the Financial Times. After gaining more than 2,700% in 2017, crypto-funds have “posted negative performance in four out of five months this year”, according to US analytics firm HFR. HFR’s Blockchain Composite Index is down by more than 33% in the year to date.