Lipsa Das is back again! Have you seen people flexing catchy .eth addresses on Twitter? Here's how they do it. Learn all about crypto domain names...
Sending and receiving payments comes with a learning curve, especially if you're not using a centralized exchange. Copy-pasting wallet addresses needs to be done meticulously, because if you make a mistake, the money is gone. Let's not even talk about trying to enter or send a 40 character wallet address on your phone — nightmare!
There have been times where I have tried moving money between accounts, messed up the address, and sent the money to the same account. Duh. While I'll never get the $40 in gas fees back, crypto domain names might just be the thing to help me stop making expensive mistakes like these. Well, not as expensive as for the Bored Ape NFT owner who lost $300,000 on a typo, but you catch my drift.
Crypto domain names simplify payments by making it as easy as texting. For example, instead of a complicated wallet address, you can send a personalized website address such as "hedgehog.crypto" which then maps the payment back to your wallet!
So, how do these domain names work? In this article, I'll break down exactly how crypto domains work and how you can purchase your preferred domain name easily!
How do crypto domain names work?
To understand the power of crypto domain names, we'll first need to understand what domain name service or DNS is. Before DNS came into existence, the only way to access a website was through its IP address which is essentially a series of numbers like 126.96.36.199.
While IP addresses are convenient for computers, you can imagine the confusion that most people would have had if they had to memorize different numbers to navigate to a bunch of different websites.
DNS solves this by linking IP addresses to a human-readable name and takes care of the processing and translation of these addresses on the backend. Thus, you can now just type in "blog.hedgehog.app" and be navigated to your favorite crypto blog on the internet (well, we hope!)
Now, where have we seen a similar case of confusion before? That's right — with long values such as wallet addresses or transaction hashes! Crypto domain names serve a similar purpose as DNS on web2 for these identifiers. What's more is that they are directly registered on the Ethereum blockchain (usually) and have an associated NFT corresponding to it, making you the verifiable, true owner of the domain you choose to register. You can then easily use this domain to receive payments, host websites, and build your personal brand.
Are crypto domain names valuable?
Some .com domains that had been accumulated in the early 1990s before the internet boom have now made their holders millionaires. For instance, crypto.com, the popular exchange's domain name, was bought in 1993 by cryptography professor Matt Blaze. It was then sold to Crypto.com's parent company for over 12 million dollars in 2018.
Now, experts argue that blockchain domains are the Web3 counterparts of the .com domains. Since this industry is still evolving, many crypto enthusiasts have parked multiple domains hoping for a similar boom.
Today, people buy blockchain domains for these three key reasons:
You can think of crypto domain names as online real estate, much like the metaverse hype. Personalization and status are what drive the value of blockchain domains, similar to how NFTs such as Bored Apes or CyberKongz grant you instant recognition in the crypto community. It's also exactly the reason why people spend money on personalized number plates or phone numbers.
Crypto domains typically start from $20 and can go to thousands of dollars depending on the character length and the "desirability" of the domain. At this point, though, the value is all speculative, but it has been validated to some extent by notable sales such as Budweiser buying "beer.eth" for $95k or exchange.eth being sold for over 6,660 ETH.
Based on this initial response and past traditional market data, there is demand for crypto domains, especially the names with strong ties to the crypto ecosystem or personal brands. With numerous Twitter handles such as Vitalik Buterin subsequently being changed to their .eth counterparts, this phase marks Dot Com-type hype on blockchain domains. Ironic how we prove demand through Twitter though, isn’t it?
Traditional ecosystems like domain flipping are being built on top of crypto domains. Here, you can secure a premium name such as a single word domain or names of businesses, and then resell them for a profit. Anything related to crypto is fair game, with people stacking up on names like noborders.bitcoin, cashorcard.wallet and so on, which they think could fetch them a pretty premium later on.
This has been well adopted on crypto Twitter too, with people trying to buy ENS domain names of big businesses. If you luck out by buying the right domain, which a business is willing to pay the big bucks for, you could be the one we’ll be writing about next!
Websites hosted on blockchain domains
Another use case of having a blockchain domain is that the websites hosted by crypto domain names are censorship-resistant. The domain owner has full control over the website and its contents, and no one can take it down. For creators who spend hours creating content for their websites, this can potentially safeguard their efforts. However, currently these websites are limited to browsers that can support these new extensions like Brave, so creators would probably want to wait till they go a bit more mainstream.
Two of the most popular platforms that offer crypto domain names are Ethereum Name Service and Unstoppable Domains. Let’s go over both of them, understand how they differ from each other and how you can purchase your name from their website!
What is Ethereum Name Service (ENS)?
ENS is the first open-source, public blockchain domain protocol that has gained a lot of media popularity. It has been all the rage since they had their airdrop of 25 million tokens total (worth a neat $1000 million at the time of writing). This equated to a 5 figure airdrop for whoever had purchased a domain on their platform as of October 31, 2021. Some of these purchased ENS domains are now being exchanged for upwards of $50k on marketplaces like OpenSea.
In a nutshell, ENS is a decentralized name and lookup service built on the Ethereum blockchain. ENS primarily operates on the basis of two Ethereum smart contracts: one for the ENS registry that records all domain transactions, the owner of the domain, the resolver, and the cache; and the other is the resolver that takes care of translating the domain addresses to wallet addresses and vice versa.
Apart from its native extension .eth, ENS also supports other extensions such as .com, .org, .app and so on. When you purchase a domain from ENS, you receive an ERC721 token or an NFT with the domain name for a fixed period of time. ENS has a yearly renewal fee which costs around $5, but when you factor in the gas fees, this can easily run up to $50-$100 per year.
How to get a .ETH domain?
Getting a .eth domain is fairly easy, especially if you have transacted on the ETH network before.
Step 1: Navigate to app.ens.domains and connect your preferred wallet provider to the ENS website.
Step 2: Type in the domain name you want to own in the search bar. If no one has registered it yet, it will show that the domain is 'available'.
Step 3: Click on the domain to navigate to the registration page. Here, you can select the registration period and it will calculate the purchase price (including gas) for you.
Step 4: If you want to go ahead with the purchase, select "request to register". You should receive a notification in your wallet to confirm the transaction in a minute. Click "confirm" to approve the transaction and you’re now the proud owner of a .eth domain!
What are Unstoppable Domains?
Unstoppable Domain names, on the other hand, is a private San-Francisco based company that provides a service similar to ENS for domain extensions such as .crypto, .zil, and a variety of other extensions. However, there are areas where Unstoppable Domains distinctly stand out from ENS and are more convenient.
For instance, Unstoppable Domains is multi-chain and you can integrate wallet addresses from different blockchains like Bitcoin, Solana, Ethereum and 273 other assets into one single domain name. Unstoppable domains has also successfully migrated to a Layer-2 solution, Polygon, which means there are essentially no gas fees to mint a domain!
Compared to ENS renewal costs and gas fees that are sometimes more expensive than the domain itself, Unstoppable Domains is clearly the economical version in the space of blockchain domains. It also gives you true ownership of your name, rather than getting locked in a subscription model.
The key drawback is that Unstoppable Domains is centralized and thus, many of its decisions are made by a single controlling authority. Decisions such as protecting and reserving brand names from being registered have been criticized since they go against the blockchain's decentralized nature.
Unstoppable Domains had a record number of registrations after the ENS airdrop. Understandably, the allure of potentially snagging an ENS-like airdrop from Unstoppable Domains is helping adoption since they do not have a token yet.
How to purchase an Unstoppable Domain?
Purchasing from Unstoppable Domains is very similar to purchasing a domain on traditional marketplaces like Godaddy or Namecheap.
Step 1: Go to https://unstoppabledomains.com/ and use the search bar to look up the domain you want to register.
Step 2: Select the extension (or extensions) that you want and add them to the cart.
Step 3: Go to your cart and click 'Checkout'.
Step 4: In the checkout screen, you'll have a variety of flexible options such as a credit card, PayPal, cryptocurrency, and the Crypto.com app that you can use to complete your payment.
Step 5: Once you complete your payment, navigate to the "My Domains" tab on your account. Here, you'll see a list of domains purchased by you with an option to claim them. Claiming is the process of transferring the domain from Unstoppable Domains’ database to your personal wallet.
Step 6: You can use either the ETH network (this will cost gas fees) or the Polygon network (free mint) to claim your domain!
Note: Unstoppable Domains offers different price points based on the characters your domain name has. However, unlike ENS, they are one-time purchases meaning there are no yearly renewal fees! Here is a quick guide from their forum:
As we slowly move towards Web 3.0, innovations such as crypto domain names are likely to play a key role in getting more people into crypto. Apart from the technological aspect, these solve a psychological roadblock of crypto being too tech-heavy.
Currently, ENS has a significant first mover's advantage in the domain industry. However, platforms like Unstoppable Domains are catching up with their one-time fee model.
Even though the crypto domain industry is clearly still dwarfed when you compare it to the million-dollar sales of traditional domain names, we've to remember that it's still the early stages of this technology. The same could have been said for the internet in the 1990s, right?