Since late November, some of the world’s savviest cryptocurrency investors have been hooked on a game that has cartoon sheep, cartoon wolves, a digital currency called $ wool — and the potential to make real money.
Graham Friedman, a self-described crypto evangelist, is among them. Mr. Friedman put up more than $20,000 of his own money to buy one wolf and one sheep — or, rather, unique digital images.
“I’m like, dude, the narrative is so cool,” said Mr. Friedman, a director at Republic Crypto, a digital asset strategy company. “I’m here for the waltz.” Wolf Game, as it is called, applies some familiar financial principles to a mysterious digital world. Players can buy sheep from the creator of the game, identified only as “the Shepherd,” and lend them back to “the barn” — essentially a storehouse — to earn interest. The payments are in $ wool, a digital token that can be used as a form of payment anywhere on the Ethereum blockchain, on which the game is built. To get a sheep back from the barn, players must pay a 20 percent tax in $ wool to those who bought digital images of cartoon wolves.
When Wolf Game’s creator discovered that the game was vulnerable to hackers and shut it down temporarily to fix its code, freezing everyone’s assets, players had little recourse. They simply had to wait and hope that the game would come back online and that they would be able to retrieve their holdings. This spooked some participants, who got out as fast as they could once the game was running again. But others, including Mr. Friedman, kept playing.
“Getting in there when it looked sort of damaged and reputation unsure turned out to be very smart,” Mr. Friedman said. By essentially buying the dip, he had tripled his investment to $60,000 as of January.
So it goes in the world of cryptocurrency — a market full of faceless users with nonsensical names who are just as likely to post animated pictures of dogs doing backflips on the moon as they are to buy or sell something of enduring value. There’s big money to be made, but a billionaire investor can get swindled just as easily as a newbie buying a tiny sliver of a single Bitcoin.
Got an idea? Issue a digital coin to fund it — all you need are believers.
And it’s getting wilder.
As stocks were sold off early this week, crypto prices also plunged. Bitcoin dropped nearly 13 percent before rebounding along with stocks. Ethereum’s own coin, Ether, was briefly down 15 percent. Their price declines have dragged down other digital asset prices, too. Analysts attribute the decline to investors who are pulling their money out of higher-growth, risky assets — including technology stocks — as interest rates are set to rise. That has put a dent in the argument, promoted by crypto boosters, that digital assets offer a hedge against losses in other markets.
Despite their volatile and occasionally inscrutable nature, cryptocurrencies are becoming more widely traded, used and held — El Salvador recently started accepting Bitcoin as legal tender, the Federal Reserve is studying whether to issue its own digital coin, and wealth managers are encouraging clients to explore crypto assets.
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