What CryptoKitties And Coinbase’s 100K User Increase Means For Blockchain In The Coming Year

I recently saw someone on LinkedIn say:

“The killer app for the blockchain is not tokens, but it is the creation of private economies or ecosystems. Tokens are just enablers to that.”

They were disappointed that the first real use of Ethereum was focused on tokens and helping companies raise money, instead of creating ecosystems.

Well, maybe they’re in luck, because it turns out that the second killer app is a game with kitties.

Which sort of makes sense. The internet and kitties go together like bread and butter.

Why wouldn’t it be the same with blockchain?

It explains why CryptoKitties has caused holders to spend millions of dollars.

It may seem mundane, but it’s actually a major step in educating the public and making blockchain more accessible a mainstream audience.

And widespread adoption all comes down to use cases.

Everyone has heard of bitcoin by now, because it involves money and finances, and the people who bought in early have seen massive returns. Those types of gains tend to make the news.

But as more users are attracted to blockchain networks — and not necessarily just for financial reasons — we need to ask:

How is this influx going to affect emerging technology?

Mainstream Adoption Is On The Rise

The use cases that have seen mainstream adoption, like bitcoin, have received massive media attention.

Let’s look at bitcoin:

It hit $10,000 right after Thanksgiving and over $18,000 into the holidays. It’s not entirely coincidental — it had been getting a lot of media coverage. Everyone went home over the holidays and started talking about it. Suddenly, bitcoin spiked and Coinbase added 100,000 users over Thanksgiving break.

But the goal for blockchain right now is to attract people who aren’t just in it to make a quick buck.

That’s where gamification can really be helpful. It attracts more people and increases the value of the technology. A game like CryptoKitties is exactly the sort of thing that can catch fire and keep people using the network.

Remember Farmville?

The more use cases that appear, the more media attention blockchain will get. And that’s going to lead to an increase in adoption and development.

Blockchain-Based Engines Are Here

I did a lot of game design and mechanics studies when I was working on my Master’s at NYU.

I studied the history of video games, and I learned a lot about the early days in the 80s and 90s. I discovered that at one point, game developers at id Software had developed a game engine — first Wolfenstein 3D, then Doom, then Quake — that worked really well.

So, for the next few years, almost every game used that same engine. (See a history of the Quake engine family tree).

We’re essentially seeing the same thing develop with CryptoKitties, but with a blockchain-based engine.

It’s built on a newer token called the ERC 721, which allows the trading of collectibles. That token can be used to trade other items that are appreciating in value due to speculation. It could be anything from CryptoKitties to baseball cards.

In the coming year, we’ll see more of these derivative games built on top of the existing engine — similar to the progression of early video games.

Upgrades Are Needed

While CryptoKitties may be a step towards mainstream adoption, the game has also highlighted some underlying issues that still need work.

Since the game’s release, pending transactions on Ethereum have increased sixfold, accounting for more than 15% of the total traffic on Ethereum. Some people worry that this traffic undercuts more serious use cases, but it will be beneficial in the long run.

Why? That kind of traffic forces more investment in infrastructure.

It’s a wakeup call to Ethereum and Coinbase (or really any mainstream-focused blockchain based consumer app) that they need to upgrade and prepare to scale.

If the exchanges can’t handle the traffic from CryptoKitties, then what will happen when more apps go mainstream?

And even with all this traffic, there’s still work to be done on the game itself to make sure that the underlying mechanisms are fully hidden from the user. When I played it, I was impressed with a lot of aspects. But I was ultimately frustrated because it was still decently complicated and didn’t offer a seamless user experience.

Eventually, the goal is that all the processes and extra steps are hidden from users.

They’ll be able to sign in with one click, just like any other app. Then, they’ll enter a card number that will load their crypto wallet and transfer currency from Coinbase to play the game.

Right now, the user has to wade through those steps without help.

What This Means For The Future

The value in all of this attention and development is really the underlying technology.

Cryptocurrencies and CryptoKitties are just use cases for blockchain, but their adoption is essential to growth.

I think about the early days of the internet — no one had an idea that it would turn into what it is today. People were still trying to figure out how to use it.

Then, email came along.

Suddenly there was this extremely powerful and important use case that changed how people thought about the internet.

I can remember my dad showing our family emails when I was younger, and we were all amazed. You could instantly send a digital note to someone halfway around the world. It was groundbreaking.

That’s where blockchain is at.

We know the technology has incredible potential, yet we can’t grasp all of the possibilities. But applications like CryptoKitties are helping grow the user base and expand our understanding of what’s really possible.