Blockchain domains as NFTs

When talking about NFTs, the conversation is usually dominated by art, like the images created by The Bored Ape Yacht Club, or collectibles found within video games.  While it’s true that in these capacities, NFTs have opened up a whole new market for artists and digital collectibles, NFTs can assume many other forms.  One of which is a web domain existing as an NFT.  Further, domains as NFTs have the potential to serve as a building block for the early stages of the next wave of the internet as a whole, web3.

What is a NFT?

The term, “NFT”, is a divisive one.  As mentioned, conversations around it are largely centered around collectibles sold on digital marketplaces.  However, NFTs can be and are so much more than unique digital items with pure collectible value.  The term, “NFT”, itself is an acronym for Non-Fungible Token.  This is an important distinction to be made between other digital currencies, as it applies to any unique digital asset (with its own unique value) that cannot be substituted by anything else.  When thinking of NFTs in this way, we can easily identify many different items that could be, or are, NFTs.  Items including, but not limited to:

• Titles to houses, cars, or other real-world assets
• Legal documents
• Loyalty rewards programs
• Blockchain web domains
  
  

What is a blockchain domain?

What exactly is a blockchain domain and how does it differ from a traditional web domain?  Blockchain domains are Top Level Domains (TLDs) that circumvent the traditional domain registry/naming system controlled and leased by the Internet Corporation for Assigned Names and Numbers (ICANN).  This new type of domain exists on a specific blockchain and is powered by the specific network it is associated with.  More than just an alternative to traditional domains,they are pieces of disruptive technology existing on various blockchain networks, providing the following benefits:

• Full ownership over the domain, which cannot ever be revoked
• One-time purchase of the domain
• High levels of security based on a trustless and permissionless system
• High levels of privacy with anonymous and encrypted ownership information
• Censorship and tamper resistant.

In early September we published an article about one type of blockchain domain that can be purchased, called Handshake, but it’s important to note that other types can be purchased as well.  Most notably, Ethereum Naming Service (ENS) and Unstoppable Domains, both operating on the Ethereum Network.  These domains are found for sale on two blockchain marketplaces, Handshake domains on Namebase and ENS/Unstoppable domains on OpenSea.

Blockchain domains as NFTs and their importance

As mentioned above, blockchain domains are NFTs, though they exist as more than traditional domain addresses.  A blockchain domain functions as an asset which exists on a permissionless and public blockchain which anyone can join; it also serves as an easy-to-remember address for sending and receiving cryptocurrency, making transactions involving cryptocurrency simple and easy.  It’s important to note that these domains are simply human-readable representations of the hexadecimal crypto wallet that they represent.  Since blockchain domains are digital assets existing on blockchain networks, they can be stored in other crypto wallets just like other NFTs can.

Once the blockchain domain NFT is minted, it can never be revoked.  It follows that blockchain domains exist as both unique domains and NFTs; blockchain domains are NFTs that can serve as cryptocurrency wallets, digital assets, and as web domains.  These unique NFTs marry cryptocurrency, digital identity, and internet infrastructure in a way that will likely be the first wave to the metaverse era of the internet.

As the upcoming iteration of the internet, web3, evolves and is broadly adopted, businesses will need to pivot to stay relevant within not only their respective industries, but also within the digital landscape as a whole.  Similar to how content marketing is absolutely essential for business growth today, so too will be participation within the web3 landscape.  Part of that participation will require ownership of digital real estate, i.e. blockchain domains.  As adoption of NFT domains grows, so too will the cost of such digital real estate, making early investment a key competitive advantage and potentially a lucrative one for some.

Early minimal investment could play a large role in a business’ success and visibility in the near future.  For instance, recently the domains samsung.eth and starbucks.eth both sold for 60 ETH (Ethereum currency), which equates to roughly $90,000 USD.  This is quite a large investment into a domain existing on a technology which has yet to be adopted on a large scale.  It doesn’t take much to think how much a keyword or phrase within their business’ industry would be valued as a piece of digital real estate once large scale adoption has taken place.

It’s clear that web3 is not going away, with major companies adopting web3 loyalty programs, the rise of NFTs, and the global presence of cryptocurrency as a whole.  While we don’t know when full adoption of web3 will take place, we do know that it will happen eventually.  The question is not if, but when.