During an interview with CNBC, Ethereum-based digital asset marketplace Rare Bits co-founder Ammit Mahajan, who also co-created the popular social network game FarmVille, has disclosed that the company raised $6 million in a Series A funding round led by Spark Capital, Twitch CEO Emmett Shear, and founder Justin Kan.
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Digital collectibles like CryptoKitties are embedded onto the immutable blockchain protocol of Ethereum as smart contracts, and these contracts can be transferred out of the native CryptoKitties app to platforms like Rare Bits to trade them with other Ethereum users and investors.
Rare Bits first gained popularity within the cryptocurrency community after users of CryptoKitties, the most popular decentralized application (dapp) game according to DappRadar, started to sell digital kittens on the marketplace.
Essentially, as a digital collectibles platform on which users can breed and create characters, CryptoKitties is similar to the old Japanese classic game Tamagotchi; the main difference between the two games is that on CryptoKitties, users can actually buy and trade in-game collectibles or items.
For many years, the rapidly growing gaming industry has tried to find efficient methods of facilitating the trading of in-game items. Platforms like GameFlip, G2A, and PlayerAuctions have operated as intermediaries and moderators to help players purchase and sell in-game currency, gold, items, skins, and rare finds.
After a digital content distribution platform, Twitch is a gaming industry-focused business; it primarily supports gamers and streamers unlike other platforms like YouTube that target a wider range of content creators.
It is likely that the possibility of trading in-game collectibles on the Ethereum blockchain; Twitch CEO and founder Emmett Shear and Justin Kan to invest in the platform, seeing the potential of Rare Bits of evolving into the first successful blockchain-based auction platform.
Speaking to CNBC, Rare Bits founder Mahajan said that in the long-term, the platform hopes to see non-cryptocurrency products on the platform alongside digital collectibles, such as backstage passes to concerts and second-hand products.
In the short to mid-term, Mahajan said that the team will need to focus on bringing people from outside the cryptocurrency sector to its Ethereum-based platform. At the moment, Rare Bits would appeal to cryptocurrency enthusiasts but to bring regular consumers in the bigger market, Mahajan said that a special incentive structure will be necessary.
Emphasizing his realistic stance on the lack of adoption of the blockchain as of current, Mahajan said:
“The issue with this today is if I have nothing to do with Ethereum, I don’t know anything about it and I’ve never thought about it, why would I ever go out of my way to buy Ethereum and get involved in this ecosystem? Imagine if a celebrity like Beyonce or someone really well known were to release ten backstage passes on the blockchain, how many millions of people do you think would go out of their way to acquire one of those things?”
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Ultimately, Mahajans stated that the goal of Rare Bits is to remove the “blockchain” and “Ethereum” tags from its platform to remove the barrier between the cryptocurrency sector and normal consumers.
“In the final version of our product, we may not even mention the fact that we’re using Ethereum or using the blockchain. In an ideal world, you come to the site, you buy something you want, you exchange it, trade it [or] use it, but you don’t care or even need to know that the underlying technology is crypto-based.”
But, there certainly is a risk in dropping its niche market in the cryptocurrency sector to take on a bigger market and to successfully carry out that strategy, the team will need to ensure its platform operates as fast and efficiently as centralized platforms.