Whenever I hear about people spending outrageous amounts of money for something that should be really cheap, the first explanation that springs to mind is money laundering.
For example, let’s say I want to sell x$ illegal goods. I just tell the buyer to bid up my 1 million virtual cat and I’ll transfer the goods to you. The transaction goes unnoticed. What’s even better, the buyer can sell the cat at a lost and recover some Cash.
What’s more the money launderers buy and sell the virtual pets so as so mix up their money in the market.
There was a huge art deal recently. You have to wonder how much of the money laundering factored into the purchase of Salvator mundi.
It goes even further. Participants in the market know that money laundering is taking place and rely on it for profit. They bid up the virtual goods.
Of course, there is also a pyramid scheme / hot potato at play as well. Last one holding the bag loses.
And yeah, there are the naive folks whose out there with their money in not a understanding what’s really going on.
Valve profits from this quite nicely, and second life. Lots of these games with virtual goods.
Again, it's been a while and not a topic I actively tried to remember, so please don't take this as necessarily authoritative.
There's plenty of people out there with stockpiles of ethereum that they mined early on, or bought during the pre-sale in 2014. For them, it's just virtual tokens. It's not like they're using any hard-earned cash from the real world to buy virtual kitties.
You're free to believe in what you want to believe, but to me it's pretty obvious: the $3M that circulated in the CryptoKitties over the last 5 days is real, and certainly not from people laundering money.
You can also hang out with the devs and other hard core users (investors?) on CryptoKitties' Discord channel [3]. Some surreal but fascinating conversations.
ps: to offer a different perspective: I bought a Gen0 cat on Sat for fun; today the cheapest price is 3x. Not sure the future liquidity of the kitty marketplace (particularly if it crashes and burn, like Pokemon Go, which is very likely), but some folks are rushing to it like an ICO boom.
[1] https://twitter.com/nicksdjohnson/status/937596285917548544
[2] https://www.cryptokitties.co/kitty/101
[3] https://discordapp.com/channels/387021283503636500/387024670...
I would have the same reaction if I learned someone was trading Apple Stock or other non-cash asset for these kitties.
I disagree with the policy, but that’s how it works. Using a mixer makes it more difficult to explain the source of the money, it makes things worse not better.
There's also an anchor effect from loss aversion. If I bought a crypto-cat for 1 Ether, and then Ether price increase by 300%, I might refuse to sell the crypto-cat for less than 1 Ether, even though there's no intrinsic reason for my cat to appreciate at the same rate as the base currency.
any marginally successful one of those is going to rake in tens of millions of dollars via those transactions
the only difference here is the technology used is perfectly fungible
when that perfectly fungible technology powers the entire ecosystem, it isn't improbable that one third party application will catch on.