Rare Bits

Rare Bits operates an online marketplace for non-fungible tokens (NFTs) and crypto-collectibles, letting users discover, buy, sell and auction unique blockchain-based digital assets, primarily items originating from Ethereum games and decentralized applications. At the time of its 2018 Series A, the marketplace listed more than 500,000 items drawn from roughly a dozen games including CryptoPunks, Ether Tulips, CryptoBots, CryptoFighters, Mythereum and CryptoCelebrities; one source describes the platform later reaching over one million listed assets. Users can consolidate their collectibles in a single visualized wallet, view historical pricing derived from the Ethereum ledger, browse related items, and either "Buy Now" or bid in auctions.

A second product, Fan Bits (fanbits.com), was soft launched in 2018 as a platform for creators, artists and musicians to publish their own branded sets of crypto collectibles that fans can buy in support of the creator. Company statements framed a longer-term ambition of extending tokenization beyond game items to licenses, tickets, rights and tokenized physical goods.

Founding story

The four co-founders - Dave Pekar, Amitt Mahajan, Danny Lee and Payom Dousti - had worked together on multiple early-stage startups. Mahajan (from MyMiniLife) and Pekar and Lee (from Animal Apps) met at Zynga after their gaming startups were acquired there, working on FarmVille, which grew to a peak of 32 million daily active users. Mahajan and Pekar subsequently founded Red Hot Labs, later acquired by Google, while Dousti worked at fintech VC fund 1/0 Capital and had sold sports analytics startup numberFire to FanDuel. The team considered building blockchain games themselves but concluded the larger opportunity lay in crypto-based property broadly, forming Rare Bits in 2017.

Business model

Two-sided marketplace connecting holders and buyers of crypto assets, with a complementary creator-facing tokenization product (Fan Bits) intended to increase supply of collectible inventory on the platform.

As of April 2018 Rare Bits added no extra marketplace fee of its own, in contrast to competing marketplaces charging up to about 1 percent. Instead, when a crypto-item developer charges a fee on secondary sales (for example 5 percent), that fee is split with Rare Bits for arranging the transaction. The company was also refunding users the Ethereum "gas" cost of executing purchases and sales, ranging from a few cents to a few dollars depending on network congestion.

Traction

The exchange launched in February 2018 and did more than $100,000 in transactions in its first month. By April 2018 it listed more than 500,000 items from about a dozen games, with one item sold for over $10,000 and sales in the 5-10 ETH range described as not uncommon. A source reports the platform later exceeded 1 million listed assets. Founders also noted a spike in auction activity for Crypto All Stars items after that game shut down.

Latest developments

The most recent company-specific developments in the sources are the 2018 Series A and the soft launch of Fan Bits. One aggregator profile notes a Mosaic Score suggesting potential market challenges but provides no further detail or date.