You’re a child running around your grandmother’s house, all the sudden you hear someone screech, “STOP!” because you’re about to run into a shelf full of glass collectibles that took hours of time to find and hundreds or more dollars to buy. But this is the 90s, everything is still in print and physical form because the Internet has barely become a thing. Fast forward 20 or so years and you’re in the present and physical collectibles aren’t all the rage anymore. What are? Crypto games containing virtual collectibles.

While crypto games sound like the sci-fi of the future, they are actually the reality of the present. Currently, crypto games are being developed that use blockchain technology and a decentralized application (DApps) structure to create one-of-a-kind virtual collector’s items that can be purchased before or during the game for cryptocurrency. The most common cryptocurrency currently in use for these games is Ethereum. Crypto games allow you to do things like purchase unique virtual items and trade them for more cryptocurrency later on, think of something like virtual baseballs cards or virtual Beanie Babies. One example, CryptoKitties, lets you purchase cats and raise them with the hopes of selling a rare breed or mating, called siring, them with another crypto kitty to make desirable babies. Another game, Etheremons, boasts buying rare monsters that will hatch and you can raise them and make money by others purchasing your monster down-the-line.

Crypto collectibles are attractive for a few reasons, the first is that your property (the crypto collectible) can’t be stolen, deleted, or copied, because of the DApp structure as well as your collectible being stored on a blockchain. The second reason is these crypto collectibles can be worth thousands of dollars — the most expensive CryptoKitty ever sold was worth over $113,000. The third reason is simple, they remind a lot of people of their pasts when they used to collect baseball and Pokémon cards, or Beanie Babies. With all these pros, who wouldn’t want to invest in these possible giant money-makers? Well let’s take a look at some of the risks:

Do you really own your crypto collectible?

For all intents and purposes, yes, you do own it. Your name is on the public ledger under that collectible as the person to pay if you want THAT specific collectible. But let’s delve deeper. Only the collectible is owned by you, the string of DNA or unique information stored on the blockchain, but the artwork for the collectible? That’s owned by the company that launched the collectible. For CryptoKitties it’s Axiom Zen, for Etheremons it’s Etheremon. What this means is that you have no right to copy or use the image of your collectible in any way that you want, you only get to let it exist on your computer or in your wallet. All a company like Axiom Zen would have to do is change their Terms of Use and in one moment you no longer outright own that string, you only have limited license to simply use the DNA of your Kitty. So before you go purchasing a rare crypto collectible, make sure to read the terms of use to see if you own the artwork too.

Along the lines of artwork, how valuable is your collectible’s artwork?

When you purchase your crypto collectible, you think you’re buying something unique, uncopyable, something that has value, right? Well actually, because the company that launches the collectible owns the artwork, they can edit, change or delete the artwork whenever they see fit. In the case of CryptoKitties, the company could change the cat breeding algorithm tomorrow and your cat could become significantly less rare. The only way to rectify this would be to give ownership of the artwork to the person who owns the string, but that would mean millions of dollars lost in merchandise sale to Axiom Zen, so why would they ever do that?

Your crypto collectible is valuable, right?

You’ve just purchased your first crypto collectible for a nice sum of money, so when you sell it, you’ll make even more than you paid, correct? Well here is one of the most volatile factor of buying a crypto collectible: how much money you make depends on demand and future interest. Say you purchase a crypto collectible for $20USD and are promised double the return when you sell it, so you’re expecting $40USD to come rolling in. But then a new crypto collectible comes out, and nobody wants to purchase yours anymore. How much your collectible is worth is based solely on demand, and how much you make is based on future users joining and purchasing your collectible down-the-line.

The chances of these problems happening are probably unlikely, but it’s always good to know what you’re buying into before you jump. The problems with crypto games are not limited to three problems, but these present a few challenges for the world of DApps and blockchain technology to overcome before crypto games become a wide-spread phenomenon.

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