Non-fungible tokens, known as NFTs, are reigniting a late 1990s tech trend – the short and sexy domain name.
Similar to the “.com” web craze, the latest fever in cryptocurrency markets has buyers scooping up blockchain domain names, which are being minted and sold as NFTs. Blockchain domains turn complex hexadecimal wallet addresses into easy-to-remember names and also enable censorship-resistant websites.
The domain names typically end in phrases such as “.crypto” or “.eth.” And some of the tokens are changing hands for upwards of $100,000 on NFT marketplaces like OpenSea.
Since starting in 2018, Unstoppable Domains has registered over 1.4 million domain names, including several for Fortune 1000 companies. The company sells domains that end in “.crypto”, “.wallet”, “.coin” and “.nft”, among others. The company also plans to launch “.blockchain.”
Rival blockchain naming service Ethereum Name Service (ENS) mints the popular “.eth” domain, which the company calls a “Web3 username.”
The idea for creating domain names had been floating around in the crypto universe as early as 2011. The first attempt of naming on the blockchain was Namecoin, which forked from Bitcoin in April 2011.
“It was a known issue that wallet addresses were long and complex,” Kam told CoinDesk in an interview during the recent Messari Mainnet conference in New York.
Once purchased, the domains can be linked to a unique wallet to make sending and receiving cryptocurrencies easier.
These blockchain naming services are similar to the Internet’s Domain Name Service (DNS) but possess different underlying architecture and are based on the Ethereum blockchain.
The NFTs trade on marketplace OpenSea, which sold the domain “sex.crypto” in August 2020 for a record 230 ether (ETH), or approximately $90,000 at the time. That same amount of ETH is now worth more than $600,000.
Largest resale of a .crypto domain ever 🎉
Sex.crypto sold for $90,000 (230 ETH) on @OpenSea today!
This is also the largest secondary sale of an individual NFT on OpenSea to date.
— Unstoppable Domains (@unstoppableweb) August 28, 2020
Last month, Budweiser bought “beer.eth” for 30 ETH, or $95,000. According to OpenSea sales data, the purchase sent sales of domain names up over 300% in the ensuing 24 hours.
OpenSea currently lists over 311,000 domain names for sale from Unstoppable Domains, with a floor price under 0.01 ETH.
At a time when the NFT frenzy has garnered breathless headlines from the New York Times and eye-popping auction results at storied houses like Sotheby’s, it’s perhaps not surprising the most popular blockchain domain names are, well, those focused on the fast-growing NFT industry.
“First names are also desirable, or any kind of crypto, gambling or finance-related terms,” Kam said.
Domains start at $20 and can go as high as tens of thousands of dollars, depending on the length and desirability of the name. Some of these NFTs have sold for $100,000 apiece, according to Kam.
“The market looks similar to that of traditional domains,” explained Kam. “Ninety percent of traditional domains are not used, they’re parked. It’s the same for crypto. You’re only going to use one to two as your decentralized identity. It doesn’t necessarily make sense to use a lot of them at once.”
To combat bad behavior, Unstoppable Domains has saved several thousand domains for notable brands and individuals, making them ineligible for purchase.
“We don’t want them squatted on or other people impersonating these individuals or companies,” said Kam. “We’re giving them away for free so they don’t fall into the hands of someone else.”
However, six-figure domain name NFTs are still dwarfed by the amounts being shelled out for hot, traditional internet “.com” domains.
A strong domain will greatly increase internet traffic and exposure to the sushi brand for their forthcoming new projects.
— Future Fund (@FUTURE_FUND_) February 19, 2021
Some speculators are betting the value of blockchain domain names will approach the value of their Internet equivalents if crypto adoption heats up.
Within the cryptocurrency community, domain names have also doubled as a major status symbol. Early snaggers of desirable domains tout them on social media for clout, analogous to displaying a profile picture NFT of a CryptoPunk or Bored Ape.
“People are starting to identify as their NFT domains,” Kam said. “They’re owned by you forever.”
On Twitter, Ethereum co-founder Vitalik Buterin notably changed his name to “vitalik.eth.” Ben Horowitz, co-founder of the venture capital firm Andreessen Horowitz (a16z) lists his name on his profile as “benahorowitz.eth.”
“If you have a short domain name, that’s kind of a flex,” said Jimmy Chang, a product manager at Unstoppable Domains, who also goes by 0xJim. “It symbolizes that you are early to something.”
In 2019, Unstoppable Domains raised a $4.3 million Series A backed by Draper Associates and Boost VC. Other investors in the company include Coinbase Ventures and Protocol Labs.
Source: Coin Desk