It's hard to tell when the crypto bubble will burst, or if there is one

In a world populated with digital wolves, sheep and dogs, traditional notions of value don’t apply

- Emily Flitter and Karl Russell

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. Mr Graham Friedman, a self-described crypto evangelist, is among them. He put up more than US$20,000 (S$27,000) of his own money to buy one wolf and one sheep – or, rather, unique digital images of them called non-fungible tokens.

“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 per cent 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.