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Comment by elif | Hacker News Reader

Well, I would say there are two things to consider:

1) it's not just an investment in the asset.

It pays dividends. The asset can breed once per week, so that could be $1k+ per week generated.. paying for itself over time. Since this is the lone genesis kitty, its offspring could fetch a totally arbitrary value.

2) This is ethereum we are talking about. If the ether was bought 1 year ago today, it would have cost $1,557.1. Someone could have made a $1.5k investment 1 year ago which is now paying for itself weekly.

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> It pays dividends

It doesn't pay dividends in ETH, it pays dividends in more kitties. Is that really a dividend?

If apple shares could only pay dividends in more apple shares instead of USD would they have any value?

> This is ethereum we are talking about. If the ether was bought 1 year ago today, it would have cost $1,557.1. Someone could have made a $1.5k investment 1 year ago which is now paying for itself weekly.

Ethereum at least has a purpose, cryptokitties do not seem to have one. Besides, you can't just say that the price of one crypto asset will go up because a different one has gone up in the past!

> If apple shares could only pay dividends in more apple shares instead of USD would they have any value?

Um, yes.. as long as Apple shares can be sold for USD (which they can).

And it sounds like these “cryptogkitties” can be sold for ETH. Your analogy confuses me.

Apple shares are worth money because they entitle one to a share of ownership and voting rights in a company that engages in real wealth production, and would be worth lots even if they reinvested all their dividends like Amazon.

The same cannot be said of these kittens... that this obvious point even needs to be stated is just sad.

I think the point is one can imagine someone believing their $117k cat breeding lots of kittens that they can manage to sell for ETH (and/or later exchanged to USD), netting them a profit after some time.

People are obviously paying for kittens, and skins in Counter-Strike and tons of other meaningless things. Are you saying these markets are imaginary?

He's not suggesting the markets are imaginary, simply suggesting that there isn't a backing asset to stabilize them. Sure people buy counter-strike skins right now but there is very little reason to believe that the current version of counter-strike in which these skins exist will be popular in perpetuity. At some point people will move on from the game, maybe even to the next version of counter-strike... at which point those assets values will decrease significantly. Just like people moved on from beanie babies, and just like they'll move on from crypto kitties.

To suggest that these things are anything other that highly speculative is intellectually dishonest at best, gambling at worst.

> Ethereum at least has a purpose, cryptokitties do not seem to have one

Neither do collectible stamps, yet people buy them regularly. The most expensive one costing $200K, with the face value of 15 cents.

$200K?

"On May 22, 2010, the yellow stamp was auctioned once again by David Feldman in Geneva, Switzerland. It sold "for at least the $2.3 million price [that] it set a record for in 1996"." https://en.wikipedia.org/wiki/Treskilling_Yellow

> If apple shares could only pay dividends in more apple shares

Google shares don't pay any dividends at all.

Why exactly do people pay 1,000 USD for one share of GOOGL?

Are they buying an option on the right to receive dividends at some indeterminate point in the distant future?

Do they think they'll receive a fraction of the enterprise value when Google gets bought by a bigger company?

Will Google get sold off piece by piece and they'll get a pro-rata share of the liquidation proceeds?

Why would you pay "real money" for an electronic entry in the broker's ledger for an intangible asset that may never get converted back into USD?

> Are they buying an option on the right to receive dividends at some indeterminate point in the distant future?

> Do they think they'll receive a fraction of the enterprise value when Google gets bought by a bigger company?

> Will Google get sold off piece by piece and they'll get a pro-rata share of the liquidation proceeds?

Yes, but also a bet on other people's demand for those things - its asset backed. Since they all are based on USD I think they're a little safer bet than a cat fad.

> Yes, but also a bet on other people's demand for those things

Exactly.

> its asset backed

Not really. Google's assets minus its liabilities are $139 billion. The value of its stock is $724 billion.

So 81% of the company's value isn't "backed" by anything -- not the company's assets, not the promise to pay dividends in the future, nothing.

No, it DOES pay dividends in ETH. You can set a `Sire Fee` and let your cat be the sire for other players cats.

> It doesn't pay dividends in ETH, it pays dividends in more kitties. Is that really a dividend?

No, that’s not paying dividends, that’s diluting share value.

The logical thing to do for a recipient of more shares is to sell them into the market for currency, thus diluting the value of remaining shares.

We saw this Virtual Pet Movie already in 2010 with Zynga and people buying virtual food with real $$ to feed Zynga Cats on facebook site and sub sequent Zynga IPO at $10 .

After few years of IPO we all know where Zynga virtual pet compapny is .

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