ARI SHAPIRO, HOST:
A new fad in cryptocurrencies is making some people rich and leaving lots of others scratching their heads. Stacey Vanek Smith and Cardiff Garcia, the hosts of NPR's daily economics podcast The Indicator, tell us about the thriving marketplace for adorable cartoon cats called CryptoKitties.
STACEY VANEK SMITH, BYLINE: Are you looking at Founder 32 right now?
WITTYKITTY: Mmm hmm. Yeah.
VANEK SMITH: How does it feel to look at Founder 32?
WITTYKITTY: Oh, it just puts a smile on my face every time I look at it.
CARDIFF GARCIA, BYLINE: This is WittyKitty, as he's known in the CryptoKitty universe. We agreed not to use his real name because it would have outed him in the secretive CryptoKitty community. Founder 32 is his prized CryptoKitty.
VANEK SMITH: For the uninitiated, CryptoKitties are these one-of-a-kind digital cats. You buy them with Ethereum, a cryptocurrency. And you can trade them with other users or breed them to make new CryptoKitties.
GARCIA: CryptoKitties made headlines earlier this year when one Kitty sold for $140,000 at an art auction. WittyKitty owns more than 5,000 CryptoKitties. And we asked him how much he paid for his favorite Kitty, Founder 32.
WITTYKITTY: Ten thousand or something.
VANEK SMITH: That's a...
VANEK SMITH: Did it feel weird to spend that amount of money on a cartoon picture of a cat?
WITTYKITTY: Oh, yeah, he - I mean, it took me a lot of willpower to click the button.
GARCIA: He started breeding Founder 32 with other cats and selling the offspring.
WITTYKITTY: I've sold over 200 Ethereum worth, so in total...
VANEK SMITH: How much is that?
WITTYKITTY: ...Around 115 K.
VANEK SMITH: You've made $115,000 on CryptoKitties, like, selling your CryptoKitties.
WITTYKITTY: I actually haven't cashed out, so I actually - so I still believe in the game, so I've been reinvesting all of it except what I need to live.
GARCIA: He's a believer. So for him, yeah, it's a game. He loves playing it. He loves the cats. But it's also an investment.
VANEK SMITH: Do you think, like, buying CryptoKitties is like the equivalent of buying Apple at, like, 8 bucks a share?
WITTYKITTY: I think Gen Zeros yes.
VANEK SMITH: Not everybody agrees.
HUNTER HORSLEY: I don't know - I don't know about that.
VANEK SMITH: Hunter Horsley is the CEO of Bitwise Asset Management, an investment fund for cryptocurrency.
HORSLEY: I think it's a little bit like buying a Beanie Baby or a piece of your friend's artwork.
VANEK SMITH: But he says there is something really exciting and really groundbreaking about the CryptoKitties themselves. And that is because a CryptoKitty is what Hunter calls a nonfungible token. So this means it is not interchangeable with something else like it. So a $10 bill, for instance, is fungible. It does not matter which $10 bill you have in the world. They're all the same. They all have the same value.
GARCIA: Things that are not fungible - wine, paintings, cars, property or, in the case of CryptoKitties, a drawing of a particular cat. Hunter says this could have huge implications. So we know, for example, that things like our emails or our online documents and photos are all really valuable to us. And they feel like they belong to us. But actually, we don't own them. And it's really hard to price all that stuff. There's never been a way, for example, to price an individual email or a photo.
HORSLEY: We haven't had a good way historically to represent that value. What nonfungible tokens represent is the ability to put a price on every specific unit.
VANEK SMITH: It represents an entirely new kind of property.
GARCIA: In the meantime, WittyKitty is still making money selling his CryptoKitties, but his investment has lost a lot of its value.
VANEK SMITH: Ethereum has been dropping against the dollar all summer, which probably means the great Founder 32 is not worth nearly what he was last year. Stacey Vanek Smith.
GARCIA: Cardiff Garcia, NPR News. Transcript provided by NPR, Copyright NPR.