Do you own a website domain? How about an NFT? If you or your company is beginning to use cryptocurrencies and integrate into web3, then you may soon realize you need both.
Before considering blockchain domains, let’s review traditional website domains and how they work. When you buy a website domain, you are simply buying the rights to that website name, for example FreeLunchTrading.com. You pay for the domain and a domain registrar records your ownership in the domain name system (DNS). Internet users can then search for the domain and the resolver will match the website domain with the corresponding IP address or webpage.
Having a limited number of organizations control pricing and access to the domains presents many problems, like censorship, security, equal opportunity, and efficiency. For example, if you buy a domain from one registrar, you are not able to transfer the domain for 60 days. There are also many instances of government agencies and companies repossessing ownership of domains and corrupting the routing information to disrupt access.1 Usually the registrars restrict domains for legitimate reasons like trademark laws, but this is irrelevant because disputes are decided in expensive court cases where corporations have a significant advantage.2
Blockchain domains offer a solution to unjust censorship by removing the companies in the middle, sometimes called trusted third parties (TTPs). Instead of trusting the registrar, resolver, and government agencies to all cooperate efficiently, blockchain domains rely on crypto networks like Ethereum to keep track of who owns which domain. Unlike traditional domain name companies, the ethereum network is automated and permissionless, which means everyone has access to use the network all the time. This is a powerful step forward in expanding access to the internet and information. Registering domains on the blockchain also inherits the security benefits of the crypto networks. Crypto wallets are not subject to many of the hacks and problems that traditional “email and password” accounts have.
The most successful blockchain DNS is the Ethereum Name Service (ENS). Users pay for their domain with Ethereum on an annual basis by connecting their crypto wallet to the ENS registration app. The idea is for this name t The domain is then transferred to the user in the form of a non-fungible token (NFT). Non-fungible means the tokens are valued individually so they are not interchangeable with each other. Because the domains are tokenized in this way, they are easily traded and have features that traditional domains do not.
As the owner, you can set the domain as the primary name of your wallet. This makes payments very simple because remembering FreeLunchTrading.eth is much easier than remembering the 40 digit hexadecimal pseudonymous address that crypto wallets start with. After you name your wallet, the wallet really becomes your digital identity as you add to it. You can set other information for your domain, like a Bitcoin address, website links, social media, and email address. The wallet can also contain other tokens which grant access to exclusive platforms and products.3
Founded in 2017, ENS opened the registration app and operated as a company in the USA. In 2021, the ENS Foundation was incorporated in the Cayman Islands and revoked its control of the domain system by airdropping governance tokens to all users active before October 30, 2021. An airdrop means sending a bulk amount of tokens to a group of wallets. ENS now operates as a fully decentralized autonomous organization (DAO). A DAO makes decisions by participants proposing changes and delegates voting on the changes. Delegates are given influence by holders who delegate ENS tokens to the accounts of the trusted participants. This is the primary function of the ENS token, to operate the voting and proposing of articles in the ENS constitution.4 This function is similar to the idea of voting shares in traditional equities. This governance structure is very experimental, but has exciting potential in many different applications.
The domains on these crypto networks could have just as big of an impact as the currencies on these networks. We have already seen brands like Budweiser and Adidas adopt this technology early to establish their metaverse products.5<?sup> This year, ENS domain sales are hitting all time highs, even during a global economic recession.6 The growth in these charts is compelling, and is reminiscent of the dot-com bubble in the 90s. ENS has been growing through booming cycles, but of course it is dependent on the success of Ethereum. If Ethereum does continue its path as the largest smart contract network, there is a good chance ENS could outperform its own network in the short term.
USDC overtaking USDT (Tether) in circulating supply. This competition is good. It establishes legitimacy of demand and allows us to not be dependent on any single system. Soon the United States digital dollar will be on this list.
Its hilarious to look at the angle on this chart. NFTs are surely the story of 2021. This is the growth people expect when they come to cryptos, but I bet most of you missed these gains in one way or another. Maybe you were busy right click saving lol. You got to stay plugged in and keep your awareness up.
I have seen a lot of FUD (fear, uncertainty, doubt) on Cardano recently. People are disappointed that this top 5 layer 1 coin has not made them rich. Cardano has been quietly developing faster than any other top layer 1 which bodes well in this time of inefficiency and crude architectures.
Interesting article criticizing the inefficiency of cryptos, specifically BTC and ETH. These are legitimate concerns that will prevent these systems from reaching the goals we have. I believe that we are very early in this industry and these problems are being solved. If you can’t handle the FUD (Fear, Uncertainty, Doubt), then you don’t deserve the gains.
Ethereum Name System has been slept on for long enough. This is an alternative to traditional Domain Name Servers like Google DNS or GoDaddy where you can register a website name like twitter.com. The difference between a .eth and a .com is the level of ownership and connectivity. ETH domains are connected to crypto wallets, NFTs, and your digital identity online. They are highly programable and I believe they will be a necessity for any person or company in a crypto future.
Here is an extensive comparison of the Layer 1 Networks published by The Block Research and funded by Algorand. This report is a deep dive into the competition of Layer 1 network, the problems that the leader Ethereum is facing, and how other networks are addressing these problems.