San Francisco-based startup Rare Bits has raised US$6 million in a Series A funding round for its online marketplace for unique crypto assets and collectibles. The round was led by Spark Capital with participation from First Round Capital, Craft Ventures, SV Angel, Twitch CEO Emmett Shear, Greenoaks MD Neil Mehta, Aditya Agarwal, Ruchi Sangvhi, Justin Kan and Avichal Garg.
The startup will use the capital injection to staff up and scale its efforts to expand the supply of crypto collectibles and rare crypto assets in its marketplace, Rare Bits co-founder Danny Lee told Bitcoindicate.
Crypto assets and crypto collectibles are non-fungible tokens running on the Ethereum network that are provably unique and scarce. These blockchain-based digital items rose to fame when Ethereum video game CryptoKitties went viral with digital kittens going for well over US$100,000. At some point, CryptoKitties became the largest decentralized application on the Ethereum protocol, accounting for more than 13% of the network’s transactions. The craze peaked to the point that initial coin offerings (ICOs) could not launch due to network congestions caused by the sale and trading of digital kittens on CryptoKitties.
CryptoKitties, a creation of Canadian venture-studio Axiom Zen, allows users to buy, sell and breed digital cats. The company raised US$12 million from a roster of prominent investors last month.
Since the launch of CryptoKitties in November 2017, a horde of similar blockchain-based virtual games have launched to tap into the mania. These include CryptoCelebrities, CryptoPuppies, CryptoPets, Cryptobots and CryptoBunnies by China’s smartphone maker Xiaomi.
But for Lee, the crypto collectible phenomenon triggered last year is unlikely to fade away, noting that the decentralized application is currently being used by more than 1,000 users daily, producing 8,000 transactions at trading volumes of 95 ETH or approximately US$48,000.
“That’s already a ton of traction,” Lee said. “The crypto asset market in gaming is already sizable and continues to grow.”
Rare Bits, a web-based app that works in pair with Ethereum web browser extension MetaMask, was founded earlier this year to tap into this thriving market and “become THE place to buy, sell and discover all crypto assets,” Lee said. And while digital games and pure collectibles are currently the beachhead category for crypto assets, the startup believes there will be many different types of digital property to emerge in the near future.
“Going forward, when there’s a lot more inventory spanning multiple categories (e.g. digital collectibles/art, software licenses, etc.), this can easily be 1000x bigger,” Lee said.
“With many new platforms, we can expect to see many different use cases hit the market. Some might be shorter lived, like games, as they are more entertainment value driven. Others will definitely have longevity due to the practical utility these items provide.”