• NFTs Revive Dot-Com Era Domain Hype

  • Unforgivable tokens known as NFTs are rekindling a late 1990s tech trend – short, sexy domain names.

    Similar to the “.com” dot-com boom, the latest craze in the cryptocurrency market has buyers snapping up blockchain domain names that are being minted and sold as NFTs. Blockchain domains transform complex hex wallet addresses into easy-to-remember names that also shield websites from censorship.

    These domains often end with phrases like “.crypto” or “.eth”. And some tokens are changing hands for upwards of $100,000 on NFT marketplaces like OpenSea.

    “It’s the crypto version of the Internet domain,” explains Brad Kam, CEO of Unstoppable Domains, which minted and sells blockchain domains.

    Since the start of 2018, Unstoppable Domains has registered more than 1.4 million domains, including those of several Fortune 1000 companies. The company sells domains ending in “.crypto,” “.wallet,” “.coin” and “.nft,” to name a few. The company also plans to launch “.blockchain”.

    Rival blockchain naming service Ethereum Name Service (ENS) mines the popular “.eth” domain, which the company calls a “Web3 username.”

    The idea of creating domain names has been circulating in the cryptocurrency space since as early as 2011. The first attempt at naming on the blockchain was Namecoin, which forked from Bitcoin in April 2011.

    “It’s a well-known problem with long, complex wallet addresses,” Kam said in an interview at the recent Messari Mainnet conference in New York.

    Once purchased, these domains can be linked to a unique wallet, making it easier to send and receive cryptocurrencies.

    These blockchain naming services are similar to the Internet’s Domain Name Service (DNS), but have a different underlying architecture and are based on the ethereum blockchain.

    NFTs are traded in the marketplace, and OpenSea sold the domain name “sex.crypto” for a record 230 Ether (ETH) in August 2020 for about $90,000 at the time. That same amount of ETH is now worth over $600,000.

    Last month, Budweiser purchased “beer.eth” for 30 ETH, or $95,000. According to OpenSea’s sales data, the purchase caused sales of the domain to rise by more than 300 percent in the following 24 hours.

    OpenSea currently lists over 311,000 domains for sale from Unstoppable Domains with a reserve price of less than 0.01 ETH.

    At a time when NFT mania is garnering breathtaking headlines in the New York Times and jaw-dropping auction results at prestigious institutions like Sotheby’s, it’s perhaps not surprising that the most popular blockchain domains are, well, those focused on the fast-growing NFT industry.

    “The first name is also desirable, or any kind of cryptocurrency, gambling or finance-related term,” Kam said.

    Domain names start at $20 and can run into the tens of thousands of dollars, depending on the length and desirability of the name. Some of these NFTs have sold for as much as $100,000 a pop, according to Kam.

    “The market looks similar to what’s happening with traditional domains,” Kam explained.” 90% of traditional domains are not being used, they are parked. This is true for cryptocurrencies as well. You’ll only use one or two as your decentralized identity. It doesn’t necessarily make sense to use a lot at once.”

    To combat bad behavior, Unstoppable Domains has saved thousands of domains for prominent brands and individuals, making them ineligible to be purchased.

    “We don’t want them to be snapped up, and we don’t want other people posing as these individuals or companies,” says Camm.” We give them away for free so they don’t fall into the hands of others.”

    However, the six-figure domain NFT still dwarfs the amount paid for popular traditional Internet “.com” domains.

    In February, venture firm Future Fund acquired the domain name “sushi.com” for decentralized cryptocurrency exchange SushiSwap, reportedly for $1.9 million.

    Some speculators are betting that if cryptocurrency adoption heats up, the value of blockchain domains will approach that of their internet equivalents.

    Within the cryptocurrency community, domain names have also doubled as an important status symbol. Early adopters who snagged desirable domains touted them on social media to gain influence, similar to displaying CryptoPunk or Bored Ape’s personal photo NFT.

    “People started identifying with their NFT domains,” Kam said.” They’ll always be owned by you.”

    On Twitter, Ether co-founder Vitalik Buterin apparently changed his name to “vitalik.eth.” Ben Horowitz, co-founder of venture capital firm Andreessen Horowitz (a16z), lists his name as “benahorowitz.eth” in his profile.

    “If you have a short domain name, it’s kind of condescending,” says Jimmy Chang, product manager at Unstoppable Domains, also known as 0xJim. “It symbolizes that you’re something early.”

    In 2019, Unstoppable Domains raised a $4.3 million Series A round backed by Draper Associates and Boost VC. The company’s other investors include Coinbase Ventures and Protocol Labs.

    What's your reaction?