Blockchain domains can eventually replace website addresses
Microsoft has called out blockchain domains as the next significant threat to the tech industry. It’s not surprising, given that blockchain domains are tipped to replace website addresses someday and give holders far more rights over their online identity.
Arguably, the real issue is that blockchain domains present a significant challenge for the powerful companies that have historically controlled people’s digital identities. While at the same time offering a clear opportunity for disruption.
More alarming is that the statement is not new and was delivered in Microsoft’s October 2021 Digital Defense Report. In the report, Microsoft calls blockchain domains “an emerging threat outside of regulation.”
In that sense, they are an emerging threat to the robust business currently controlling the web identity industry. But blockchain domains are not a threat to the everyday people who will use them to gain benefits. Unlike traditional domain names, where the host has centralized power to pull them down, blockchain-based domains are forever.
Sound familiar yet? Big companies are taking a swing at NFTs, cryptocurrencies, and decentralized technologies because they pose a significant threat to their way of business. More importantly, their way of making money.
What are Blockchain Domains?
One core reason blockchain domains exist is to facilitate crypto transactions without the need to remember long hexadecimal strings. At a basic level, it allows users to replace hard-to-memorize blockchain wallet addresses with simple ones like Iankane.eth rather than 0xd6e7a25039EA9af1fF1968cd960E0024dBcA53c1. Furthermore, replacing wallet addresses with domain names also decreases the chance of input errors while typing the address.
Blockchain domains live on permissionless or public blockchains like Ethereum or Polygon and are secured through smart contracts in the same way as NFTs. In general, blockchain domains aren’t stored on a server. Instead, they’re held in a public ledger or registry accessible to anyone. Blockchain domains can be matched to a crypto wallet address in the same way that the DNS system can match an IP address to a .com URL.
Additionally, once a blockchain domain is minted, they live in the holder’s crypto wallet forever. Renewal fees apply for some domains, including ENS, and there are options to secure 100s of years of registration in advance.
Blockchain domain sales
Sales of blockchain domains through various platforms are surging. More importantly, they are outstripping .com sales by a considerable margin. The number of .com sales throughout 2021 was approximately 127,000. We are not considering other .io and various .co.uk registrations.
Ethereum Name Service (ENS) registrations in the last 30 days alone total almost 354,000. Unstoppable Domains has racked up an impressive 2.4 million registrations since launching and recently escalated itself to unicorn status with a $1 billion valuation.
Almost three times as many ENS domains were registered in one month than in an entire year for .com domains. This could be a strong indicator of the future. Arguably, those scooping up blockchain domains are investing in a piece of digital real estate set to increase in value over the years.
Brands face speculator competition
For brands who need to maintain a tone and presence across multiple platforms – domain names are comparable to social media handles. However, there is a big difference because in the eventuality that a brand has to try to gain control over a branded account established by a bad actor on those platforms, they can appeal to the centralized controller.
Blockchain domains are not the same because once a sale occurs, it is final and immutable. Nobody can force anyone to relinquish control of a blockchain domain unless the registration period expires.
This means that the longer people, and brands, wait, the more they’ll have to pay to be a part of Web3. The trend is not new and started with the .com boom in the early 90s. In 1993, a professor of computer science at the University of Pennsylvania had the unique foresight to buy the top-level domain crypto.com and then sold it in 2018 for $12 million.
It is worth noting that regular consumers can’t buy .com domain names from registered brands. Companies like ENS Domains and Unstoppable Domains try to uphold a similar approach by reserving domains for a brand. However, some domains will likely still end up in the hands of speculative consumers. Again, nothing we’ve not seen with traditional domain names.
We’ve already seen Puma register puma.eth, while Budweiser owns beer.eth after paying 30 ETH, or roughly $95,000 at the time of the purchase. Check out the wallets connected to these Web3 domain names here:
- Puma.eth – has a total value of $36,082 at the time of writing
- Beer.eth – contains less than $9,000 in value
The threat is real(ly) for businesses, not users
If the inevitable happens and blockchain domains come to replace email addresses and bank details and eventually represent a person’s complete digital identity. Some changes will inevitably need to be made to ensure personal information is kept private and safe.
The threat outlined by Microsoft is one they and other companies will face if and when blockchain domains go mainstream. Arguably, for now, buyers are mostly speculating on brands and other domain derivatives like the triple-digit ENS names. At the same time, crypto natives are securing their personal and family identities in preparation for the future.
DappRadar reported on speculators securing brand names such as nike.eth, tesla.eth, and more over a year ago. A few weeks ago, somebody shelled out 300 ETH, or around £315,000, to secure the coveted 000.eth domain name.
The level to which the world leverages blockchain technology will become more apparent over the coming years, but one thing is obvious. The world is headed toward a more decentralized setup, and people are excited about the opportunities of Web3.
Just as cryptocurrencies and NFTs have flashed a glimpse of their true potential, so will blockchain domain names. Understandably, those sitting at the top of established, multi-billion dollar domain businesses are somewhat scared of what’s to come.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in various cryptocurrencies, including BTC, ETH, and RADAR.