Hey, Let’s Breed Digital Horses
Sportico reports that One Digital Horse Recently Sold for Over $125,000.
Australia-based studio Virtually Human launched Zed [an online horse racing game] early in 2019, selling 4,450 digital horses that year with an average price of about $30. It relied on NFT technology to establish proof of ownership and allow for secondary transactions on sites like OpenSea, the popular digital art and collectibles marketplace.
Zed is now up to nearly 11,000 horses sold, with another 8,000 bred, spread across 3,600 so-called stables. Rare horses are now regularly selling for more than $15,000. One horse sold for $125,000.
“We’ve had hockey stick growth the last four weeks,” Virtually Human cofounder Chris Ebeling said. “The world has taken notice.”
Move Over Crypto Kitties
Does any of the above sound familiar?
It should.
On December 3, 2017 I reported People Spent $1M on Totally Useless Ethereum “CryptoKitties”
CryptoKitty Q&A
Q. How do I get a CryptoKitty?
A. Go to the “Marketplace” and look at the CryptoKitties for sale, or breed two CryptoKitties together.
Q. How much does it cost to buy a CryptoKitty?
A. There’s no standard price for CryptoKitties. Users set their own starting price when they sell their Kitty, and the price goes down until the auction ends or the Kitty is purchased by another user.
Q. Are CryptoKitties like Bitcoin?
A. CryptoKitties are NOT a cryptocurrency. They’re more like a cryptocollectible. The real-world analogy for a cryptocurrency is dollars or pounds; a cryptocollectible’s real world analogy is closer to assets like baseball cards or fine art.
Horses vs Kitties
Some greater fool paid $113,000 for a virtual beanie baby crypto kitty.
Hooray, a crypto horse just went for over $125,000.
But, but, but you can race the horses. Let’s do the math on that.
“Owners can pay entry fees to participate in races with prize pools ranging from a few dollars to several hundred,” notes Sportico.
Horse Math
I do not know what the entry fee might be but for the sake of argument let’s call it $0.00.
Next Let’s estimate the average purse is $100 with $75 to the winner.
Assuming the $125,000 horse won every race and collected an average of $75 each race and there was no entry fee for the race, your horse would have to win 1667 races to show a profit.
That was a purposely high estimate of a $100 purse with an absurdly low $0.00 fee. It would potentially take tens or hundreds of thousands of wins with a higher entry fee or much lower purse.
Fraud Potential
I sure see a fraud potential. It works like this.
Early investors or a single person with multiple IDs keeps selling his horse to himself for ever increasing prices.
If it’s multiple people it works like this: I will sell you my Cryptokitty or CryptoHorse for $20,000 if you buy mine for $20,000.
The bagholder game stops as soon as some sucker not in the scam game buys the kitty or horse.
The bids then stop.
Ready to invest in digital horses? I hope not.
By the way, the Fed and central banks are the direct sponsor of this kind of speculation when they flood the world with easy money. But, hey, let’s not call it inflation.
For discussion, please see Hello Fed, Inflation is Rampant and Obvious, Why Can’t You See It?
Mish
At some point all these crypto collections are going to $0.
Well, it is a damned good thing we did not have an internet back when pet rocks were a THING!
Crypto anything is the rankest for of speculation and certainly a few (or who knows several hundred) people have gotten very wealthy from sheer luck. But, as all pyramid scheme frauds go it took millions of people getting financially burned for those few to get as wealthy as they did.
I have no major beef against some well researched and nervy speculation, it is one of the vertebrata in the spine of capitalism, but speculation in real things has utility to the advancement of the economy, crypto is not real, never was, never will be. It is not legal tender, it is not a claim on any assets, it is not money nor a money substitute, it is not a store of value, and it is subject to vast fraud.
On top of everything else crypto represents it is an environmental disaster. The amount of energy used to run the servers would more than power a nation the size of Argentina.
Bitcoin consumes ‘more electricity than Argentina’
Cambridge researchers say it consumes around 121.36 terawatt-hours (TWh) a year – and is unlikely to fall unless the value of the currency slumps.
Environmental conundrum
“Bitcoin is literally anti-efficient,” David Gerard, author of Attack of the 50 Foot Blockchain, explained. “So more efficient mining hardware won’t help – it’ll just be competing against other efficient mining hardware.
“This means that Bitcoin’s energy use, and hence its CO2 production, only spirals outwards.
“It’s very bad that all this energy is being literally wasted in a lottery.”
The price of Bitcoin rose rapidly on Monday after Tesla announced its investment.
But commentators say the investment clashes with the electric car firm’s previous environmental stance.
“Elon Musk has thrown away a lot of Tesla’s good work promoting energy transition,” Mr Gerard said. “This is very bad… I don’t know how he can walk this back effectively.
“Tesla got $1.5bn in environmental subsidies in 2020, funded by the taxpayer.
“It turned around and spent $1.5bn on Bitcoin, which is mostly mined with electricity from coal. Their subsidy needs to be examined.”
And that is just BITCOIN which is one of now many crypto “currencies.”
Oh well, we are watching man fail in real time now. What is one more nail in our collective species coffin?
I do agree with you on this one …eloquent post !
Your fraud potential idea is wrong as there is a cost involved on each sale. First, in order to sell on Opensea, for example, you would need to pay from $80 to $125 right now as a charge for so-called “gas” (Ethereum cost of verifying transaction by miners) and then Opensea would take 2.5% of total sale price every time an item is sold. I know because I tried to sell NFT (real digital art, btw) on Rarible and Opensea.
At one time there was the Mississippi bubble. Now we have the whole Earth Bubble.
The Gray Market: How a Brazen Hack of That $69 Million Beeple Revealed the True Vulnerability of the NFT Market
Vonderful, vunderful. My plan is werking. You will own nuffing and you will be happy. Signed, Klause Shwab.
Nice, I was charitable usually I say basura, porqueria or somthing equivalent in yet another language
Show me the incentive and I’ll show you the outcome. Insane monetary (and now fiscal) policies breed insane malinvestment, on a grand scale.
Every Fed Governor should be hanging his/her head in shame.
“Assuming the $125,000 horse won every race and collected an average of $75 each race and there was no entry fee for the race, your horse would have to win 1667 races to show a profit.”
So…at least the cost is lower and the odds of winning are better than with raising real horses.
Just kidding. Sorta, kinda.
Theres a sucker born every minute and two to take his money. People are so unbelievably dumb. The world of crypto is full of gambling scams of all kinds, which makes some sense when you realize that owning crypto is just gambling in the first place.
If you can run a race a minute then your breakeven is achieved very quickly.
Yes but how often are they running races?
I presume the more frequently they run a race, the lower the payout.
Recall the total purse could be a “few dollars”.
I estimated high ($100) while also assuming $0 entry fee. Both unlikely.
The will run them as often as they can to keep the suckers interested. Why not several times a day since there is no connection to reality.
There are many people who go to Los Vegas to lose money gambling against the house and call it “fun”.
When I was a senior in dental school, the boss of my work-study job got the school to pay for me to go to the NIH national meeting…I’d worked on his project for 3 summers, and he wanted to reward me. I was basically flat-ass broke and already the father of two little girls, but I still managed to lose about $75, all on slot machines. At the time, I felt pretty bad afterward, about blowing all that money.
On the plane ride home I sat across the aisle from a working class looking dude who was coming home to Houston with his wife…..and I overheard him say they’d blown about $7000, and his attitude was “Easy come, easy go. That’s why we came.”
I never forgot that….and although I’ve been back to Vegas for various meetings and training courses many times since then, I’ve never been inclined to risk a single coin in any casino on any game of chance.
I simply work far too hard for my money to waste it that way. I’d rather blow it on fine dining and good wine, or on hobbies that at least provide me with some useless asset, like a vintage car or boat….or on travel to someplace with more interesting things to see than Vegas.
But that’s just me.
I worked in the financial markets so my day job was what some people would call betting but actually we put money in when the odds were definitely in our favor and where the risks limited. It was not betting like in the Los Vegas sense where people seek the dopamine hit. In my job that is the best way to lose money.
My brother used to there for 10 years and I never bet a dime when I visited. He didn’t either (he was a pilot and therefore very aware of risk). However his wife loved gambling a bit too much but he kept her in check fortunately.
I think you make a solid point… it’s no dumber than paying that for a real horse.
This might actually be a healthy thing, if we can make these virtual possessions without burning stuff. Most of the crap people have is optional, and was acquired to flesh out their identity. If we can satisfy that identity urge with imaginary stuff created with non-polluting energy, we could cut back on resource and landfill use… by a lot, probably.
Harleys sit in the garage mostly, and get talked about a lot more than they get ridden. If you have a virtual Harley, you can talk about it and ride it all you want for free, as recklessly as you like, with no fear of becoming a human crayon.
This kind of thing is very much happening in video games. People can get a virtual hat for a buck that will give them the same kind of peer reaction as $200 real hat. You don’t wear a $200 hat to keep the sun off your head.
The NFT introduces scarcity to what can easily be infinitely replicated… a bitmap or a 3d mesh. It introduces identity, and uniqueness, and people want to possess it because it makes them feel more unique and bolsters their identity.
We removed the hunting and gathering for survival. Now all we have left is big game. Might as well play it with imaginary pieces.
It was an inside joke meant for any real horse people out there, who literally spend millions on what amounts to a useless prestige hobby. It made better sense to me when it was Sea Biscuit vs War Admiral….now, not so much.
Sea Biscuit is one of my favorite books (and movies). The owner of that famous horse, Charles S. Howard, was a very successful car dealer in San Francisco. He paid $6000 for Sea Biscuit in 1933 during the depths of the Great Depression. Inflation has certainly changed things. 🙂
I suppose you have a point too…..in terms of not wasting limited resources…..as long as you aren’t talking about mining crypto, which is highly wasteful too, and unsustainable over the long run without changes being made. Fortunately, crypto mining is not the only way to generate crypto
But I just can’t make myself like virtual possessions…..including virtual art, which is getting big these days. I’m a dinosaur, I guess.
The difference is that real Thoroughbred is an incredibly beautiful animal. No program can imitate them.
I have had a lifelong love-hate relationship with horses. I got my first horse at age 7, and I grew up riding and raising horses. I had a dozen or more over the years. I have many horse stories and many scars.
They are beautiful animals, but they require a lot of attention and training….which was never my long suit. My father, however, was a great horseman.
I once had a job cleaning the Augean stables like Hercules, when I was a sophomore in college….or at least it seemed like it.
I used to ride till I was about forty when while on a wild gallop my back just blew out. The doc said I had to give it up. Over here I live surrounded on three sides by a horse training facility with mostly Thoroughbreds. On top of it the gendarmes have a mounted unit just down the street too and they patrol on horseback. They have been breeding horses for war for a few hundred years and those horses they ride are a pure pleasure to behold.
Nothing says bubble like this garbage
Is there a way to slip a few credits to a crypto-jockey to lose the race or to pay a crooked crypto-vet to feed your horse a stimulant?
Who the hell knows – I suspect not – Most likely will be honest , but yes, potential is present.
But they are talking about killing horses.
Imagine paying $125,000 for a horse and having it keel over in a race due to some random algorithm.
I believe real racehorses have died or broken legs during races so you could say that it reflects reality.
Horses do break legs or die and I bet but do not know that it is totally random. That is, poor runners and prize winners have nearly an equal chance of an accident or broken leg.
Now will they program it randomly or protect the better horses?
The more expensive the horse the less chance it will break a leg in my opinion. As it runs along it picks up health packages strengthening the heart and legs. but they cost credits.
You know maybe one could expand the idea to include actual races between politicians or maybe movie star races. There is already a built-in fan base many who would spend good money just to see their favorite win even if in the virtual world.
I bet there is an amazing game there
Who can build allies with Putin or against him.
Trump vs Biden, Antifa vs Proud Boys, Meghan Markle vs Queen Elizabeth
I suspect when quantum computers mature, all these currencies and tokens are going to get hacked and vaporize…. as will the encryption that supports our legacy financial system.
If atomic codes get hacked we will be vaporized also.
If the money is vaporized, we will launch the nukes out of pure spite.