So many questions on how the concept works. You should have a peek into the White Pa-purr, written in a catish-language and clearly, with humor explained - worth the read.
CryptoKitties are digital, collectible cats built on the Ethereum blockchain. They can be bought and sold using ether, and bred to create new cats with exciting traits and varying levels of cuteness.
At launch, 50,000 “Gen 0” cats (colloquially referred to as “Clock Cats”) will be stored in a smart contract on the Ethereum blockchain. These Clock Cats will be distributed automaticallyvia smart contract at a rate of one cat every 15 minutes. Each cat will be sold by auction.
CryptoKitties are unique in appearance, with a distinct visual appearance (phenotype) determined by its immutable genes (genotype) which are stored in the smart contract. By allowing the cats to breed, they aren’t just a digital collectible. CryptoKitties is an exciting, self-sustaining community where users can create new collectibles and trade them on the ethereum blockchain.