We’re excited to announce the closing of a $6M Series A for Rare Bits. Our good friend Nabeel Hyatt from Spark Capital is leading the round and joining our board, and several other amazing individuals and firms (First Round Capital, Craft Ventures, SVAngel) are co-investing. It’s an absolute pleasure to get to work with so many talented people and friends.
Our pitch to investors was really simple:
Because of new distributed ledger technologies like Blockchain, we believe that for the first time, you can truly own goods online; and so, we’re going to build a marketplace to help people easily buy and sell those goods.
A bit of background: Before when you played online games like World of Warcraft or FarmVille (which several members of the Rare Bits team worked on), you never truly owned any of the items you paid for or earned in the game. Those items lived in a database in the servers of the company operating the game, had restrictions on how you could use those items, and could be taken away from you by the company either removing your access to their service or by shutting down. There are numerous stories of users losing stuff that they spent a lot of time and money acquiring and it’s a risk with any online service that uses a centralized database.
Late last year, CryptoKitties launched as one of the first Ethereum-based games where users could buy or sell individually unique digital cats. Not only was this game “peak-internet” but it also demonstrated a new way of representing ownership in a decentralized way using the Ethereum
blockchain.Even if the CryptoKitties site shuts down, the Ethereum blockchain stores a record of who owns which cats, so that anyone could setup a new site or a new marketplace to let the game live on.
Even if the CryptoKitties site shuts down, the Ethereum blockchain stores a record of who owns which cats, so that anyone could setup a new site or a new marketplace to let the game live on.
While these cats may seem like toys, the underlying technology is one of the first examples of decentralized ownership and titling. The players of the game realized this as well and treated these items as investments rather than throw away digital goods. Some cats were selling upwards of 200 ETH ($200,000 USD) around the time the game launched and some users made over $100,000 by trading rare cats. We envision that more and more types of goods will be represented in this way because it provides a number of unique benefits to these goods that were not possible with centralized databases:
- Simple and secure decentralized peer-to-peer commerce, assets are fully in control of the end user without needing to trust middle men (just audit-able smart contract code!)
- Provable uniqueness and scarcity of goods
- Trackable chain of custody, enables validation and certification of goods
- Enables new revenue models, first party companies are now incentivized to encourage resale of their goods because they can participate in the resale ecosystem
While currently our focus is on enabling the exchange of items from games and crypto-based collectibles. We believe that very soon we could see software licenses, deeds to real estate, royalty rights, non-fungible securities, and many other goods be represented in this manner.
This is truly the start of a brand new asset class and we believe, given the unique properties, that there needs to be a new type of marketplace to exchange these goods.
We’re actively doing whatever we can to help create this new pillar of the global economy and are actively hiring. If you’re a like-minded engineer, product manager, or designer. Send us a note and we’d love to talk to you: founders@rarebits.io
