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Here’s the story of how I turned 0.05 ETH into 1.5 ETH – a massive profit.
I bought a few cats, spending a total of about 0.05 ETH, which at the time was about 25$. I played around with breeding them, and then I tried selling them.
The first few nights was exhilarating. I started playing just before the game went viral. Supply couldn’t keep up with demand. At the peak of the madness, I was selling ANY CAT for at least 0.05 ETH. I even sold a Generation 5 plain cat for 1 ETH. How crazy is that?
I was up almost 1.5 ETH from putting in 0.05. But I kept putting my money back into more cats and chasing after what I thought were “rare genes”…
Was Cryptokitties just a bubble?
How did I get sucked into spending my hard earned money on digital cats? I bought Ethereum to hold it! I mean, that was my plan. At first I was making money from the hysteria and the need to get “any cat” at any price. I didn’t realize it was happening till it was too late.
The cats kept multiplying – as cats tend to do. The exponential multiplication of cats led to a price crash. The birthing fees increased. I could no longer sell just any old cat, I had to upgrade to get rarer breeds to keep up.
The “rarity” of the cats kept changing. I couldn’t keep up. I’d buy a cat thinking it was rare, but the next day it wasn’t. A few days later, I figured out important details like how to calculate gene density and peak market times, but I was already down quite a bit of ETH by this time.
There’s a lot of strategy involved in this game, it’s not just a game of chance. Chance is a strong factor though and any financial success you might have in this game will probably be the result of luck.
The game introduces a unique element with the cooldown time. Each time a cat breeds, the time it takes to breed again doubles. Eventually there will be cats that take 1 week, 2 weeks, 1 month etc to breed again. This should lead to a distribution of potentially rare and valuable breeds over time.
There is also the random element, because breeding is not always successful in passing down a genetic trait. Kitty genetic services claims to be able to predict the offspring, but it was not accurate for me (possibly due to not enough data in their machine learning algorithm).
Now here’s a little math that I should have done before throwing my money into cryptokitties:
A lot of people are still buying Gen0’s for a price of at least 0.5 ETH. New Gen0 cats drop every 15 minutes: 0.5 ETH x $700 USD * 4 drops per hour * 24 hours per day = $33,600 USD.
In order to maintain the current price of the Gen0’s, someone has to keep buying them at these prices! The automatic auction for the Gen0’s takes the average price of the last few Gen0’s sold and adds 50% to it. If people stop buying them, the prices will drop.
To protect their investment, people who paid absurd prices for their Gen0’s have an interest in keeping the value of new Gen0’s high. They also need to control the gene supply if they bought a rare gene. If an Ethereum whale wanted to buy one Gen0 per day till November 2018, it would cost him or her close to $115,500 USD. (November 2018 is when the Gen0’s will stop being created).
To see the average price of cats check out http://catstats.io
Potential sales for Cryptokitties in the future:
To maintain the current prices above 0.5 ETH for Gen0’s, it will cost over 11 million dollars worth of ETH over the next year.
Is this even possible? Well, technically yes. There are lots of ETH whales out there who started acquiring ETH when it was 1$ or less. These people can afford to do that, but would they ever make their money back? Let’s look at some more figures:
2016 total revenue of global video game market: 91 billion
2016 total revenue of US video game market: 30 billion
2016 total revenue of global toy market: 87.4 billion
2016 total revenue of US toy market: 25 billion
Source: I Googled it, but you should double check these figures.
Ethereum market cap:
~ 75 Billion USD (Likely to be much higher since I wrote this)
While it’s technically possible for the market to support the current prices, it’s definitely a long shot. I, like many others still holding cats, am still hoping the value will rise one day – but I’m not holding my breath.
Cryptokitties growth stats and metrics:
The number of users joining the game is still climbing. I have been watching the Cryptokitties Alexa rank increase for the past few days. The number of transactions on the Ethereum network also keeps going up due to the kitties.
These are clear indicators that the trend isn’t over just yet.
The developers are banned from playing, which is to prevent them from using their knowledge to breed the most valuable cats. The inner workings of the GeneScience contract are obfuscated and only known to the programmers – for the time being – until someone reverse engineers the code, or someone leaks the details. The code for the GeneScience contract is published on the blockchain and can be seen here.
Are there bots buying and selling the cats?
Yes. Within the first few days whales started producing bots to buy and sell the rare cats. This can’t be stopped using captchas (Clicking “I am not a robot”). The reason this can’t be stopped is because Ethereum is decentralized. The buying and selling isn’t happening in a centralized location where IPs can be banned or behavior scrutinized. You could ban IPs from accessing the website, but the website is just the visual representation of what is happening on the decentralized blockchain. Price and rarity can be checked using a bot, auctions can be sniped, and sales can be made during peak times – all without the need to “see” the cats graphically. I wonder if it’s possible to make the contract accept only digitally signed requested, issued only once the captcha is solved.
Remember, a lot of the big players and ETH whales come from the financial and gaming market – two markets that make heavy use of bots. Day traders and algorithmic bots are going to take advantage as much as possible and this is impossible to stop with the existing captcha system. Don’t worry, there is still hope for human players! Bots may be quick but they are often dumb! Still think bots are smart? Check out this bot that tried to write a Harry Potter novel.
Cryptokitties Free Tips and Tricks:
The first thing you need to do if you want to get started is to buy Ethereum. If you buy through Coinbase using this special link, you will get a free 10$ worth of bitcoin when you make your purchase. (I will also get 10$ worth of bitcoin).
Next, you’ll need to catch up on the basics:
– Read the Cryptokitties Reddit
– Check the latest rare genes on Cryptokittydex.com
– Check the price of Ethereum on Coinmarketcap.com
– Convert from ETH to USD on the fly using Currencio
Cryptokitties Tip #1: Make only 1 move at a time. You have to wait for the blockchain to confirm at least 1 block before you can make another move. Sometimes it sucks having to wait 2-3 minutes between moves, but hang in there. DO NOT send another transaction while there is one pending, or you will make things worse. How do you cancel a pending transaction? If you made a move but it’s taking too long, it’s probably because the gas price wasn’t high enough. Example: You tried to buy a rare kitty at the end of an auction for 25Gwei, and you really want the transaction to go through – but it’s been pending for 20 minutes! Oh no! Try making a different move with a higher gas price, like cancelling an auction, selling or siring for 31Gwei. The transaction with the higher gas price will replace the pending transaction on Etherscan.
If you read through Reddit, you might have read about sending yourself a zero transaction through MEW. Zeroing transactions through MEW will cost you gas and you won’t get anything for it. Only zero a wallet with MEW if you have a nonce out of order in the pending transaction queue. (Explained below).
What is a nonce? A nonce is a one-time number. It has to be unique and it has to be in order. Each time your wallet generates a transaction, it also generates an incremental nonce by adding +1. The first transaction from your wallet will have the nonce 1, then 2, then 3 etc. Each time you broadcast a transaction the nonce increases in metamask. The problem happens when the Ethereum network hasn’t confirmed nonce #1, and you broadcast nonce #2. If they both have the same gas price and it is too low, such as 25Gwei during busy times, both transaction will continue to be pending. The Ethereum network will try to process the highest nonce and the highest gas price first. In our example above, you tried to buy a rare cat at 25 Gwei. Let’s say this was nonce #1 and the transaction is still pending. We will submit a new transaction with nonce #2, for 31Gwei. If you’re in a hurry, enter a very high gas price like 60 Gwei. When nonce #2 gets mined, nonce #1 will disappear from the transaction queue. Ethereum will NOT process a transaction that has a nonce lower than the previous confirmed nonce. In this case, nonce #1 will disappear and the rare cat you wanted to buy will still be for sale. Wait for nonce #2 to confirm. Once it’s confirmed, try to buy the rare cat once again with a higher gas price like 51 or 60Gwei.
Cryptokitties Tip #2: Download parity or mist. It will take you a few days to download the full blockchain, but you’ll have a competitive advantage. If you start playing and you get the message “Sorry, We are unable to locate the Transaction Hash” on etherscan, that is because the metamask node you are using is overloaded. The first thing to try is changing to an alternate RPC server. In metamask, at the top left click where it says “Main network”, and select “Custom RPC”. Add the server https://mainnet.infura.io. You might have better luck broadcasting to this node, but your best bet to avoid network congestion is to broadcast to your own local Ethereum node. Update: So far the team at metamask has done an incredible job of scaling up their nodes – you probably won’t need to do this.
Cryptokitties Tip #3: How do I know which kitty I sold and for how much? Put this in your browser: https://etherscan.io/address/YOURADDRESSHERE . If you want to see which kitties you bought or sold, click on internal transactions. Next, click on the latest ParentTxHash. You can see how much the sale was for. If you want to get the kitty’s ID#, you need to look in the box that says Input Data:
Copy the hex number at the end of the string (that’s the kitty’s ID), and paste it into this hex to decimal conversion tool. Next, go to https://cryptokitties.co/kitty/YOURKITTYIDHERE . Now you can check which cat was sold and for how much!
Cryptokitties fees and gas explained:
You’ll need to understand a bit about how gas works in Ethereum. Gas is computing power on the network, and it’s measured in ETH.
Here’s the breakdown of how gas works in the game:
– Every move you make in the game costs gas money.
– The more gas you pay, the faster your transaction goes through. (Useful for auction sniping)
– Use this website to see the price of gas. It goes up and down depending on how busy the Ethereum network gets.
I believe the game can possibly be addictive, so please be careful. Here is an article about how the brain gets addicted to gambling. Good luck, and remember to keep it a game.
If you want to learn exactly what mistakes I made and how to avoid them, I wrote this handy Cryptokitties strategy guide.
Don’t you think you owe it to yourself to have have all the competitive advantages found in this insightful booklet?