The domain NFT is a unique domain represented by a single non-replaceable token (NFT) that combines two important ideas – they are digital currency packet addresses that can also be used as website domains.
Domain names have historically been some of the most valuable digital real estate on the Internet: the
If these numbers raise an eyebrow, consider that these companies did not actually "buy" the domain, but rather "rented" the rights to it from the domain registry (we'll discuss all that later). The tokenization of domains is inevitable once the technology to actually "own" digital things emerges.
Knowing some NFT basics helps to better understand how domain NFT works; Non-Fungible tokens are tokens that correspond to a single unique asset, whether it's a picture of a cool cat, ownership of a house, or in this case a domain.
Web-2 domains: .com, .org, .gov
Web-3 (NFT-based) domains: .crypto, .x, .nft, .zil
Domains NFT (also known as decentralized domains, cryptocurrency domains, or blockchain domains) offer several unique advantages to traditional domains.
In contrast to the traditional Web-2 domain business model based on annual renewal fees, domain NFT is also typically a one-time purchase.
NFT domains are also 100% user-owned, which means that centralized entities such as GoDaddy or Google Domains cannot censor or reclaim your domain at will.
What makes the domains NFT so interesting is that they can also be used as cryptocurrency public addresses, which means that the domain can send and receive other compatible cryptocurrencies and tokens as payments.
How Domain NFT works
Okay, there are two ways to go down this rabbit hole.
We'll start with the first one, which is basically all you need to know: an NFT domain is a cryptocurrency address used as a web address.
The second rabbit hole route is longer, but more interesting. It's something you can know – it will give you a fuller understanding, but you are functionally sound on the first route.
However, both require basic knowledge of traditional fields.
Prequel: Traditional or "Web-2" domain
In short, a domain name is the text you enter in your browser (Google Chrome) to access a specific website (coincentral.com). In technical terms, it is a string of text that corresponds to a numeric IP address.
At any given moment, there are billions of devices on the Internet, and IP ("Internet Protocol") is a set of rules that allow devices to communicate over the Internet.
When you enter a domain name (for example, coincentral.com) into your web browser, you are making a request to CoinCentral's web server to provide you with content (the content of our home page). This request contains the IP address of your computer. Once our web server receives the request, it sends the response back to your computer, and then you will see the content (or an error message).
The Domain Name System (or DNS) is basically the phone book of the Internet; it makes accessing the site a human endeavor – the actual IP address of coincentral.com is a complex numeric IP address, such as 184.108.40.206.
Okay, so let's take a breath from all the definitions. If you think about how everything clicks together on this huge, amazing Internet, it's fascinating – all this detailed stuff is actually pretty concise, but let's get into the more practical stuff.
So where do all these domains come from? Who owns them? Well, there is a whole hierarchy of
Most domain names are managed by domain name registries, companies you've probably never heard of. For example, a Virginia company called Verisign is the definitive registry for .com and .net domains and other Internet infrastructure assets – and they generate more than $1 billion in revenue each year from them.
Registration authorities "manage" domains by maintaining a record of who each domain belongs to.
However, these registries are managed by a division called the Internet Assigned Numbers Authority (IANA), which is located within a global organization called the Internet Corporation for Assigned Names and Numbers (ICANN). ICANN coordinates many of the processes and databases that keep the Web-2 Internet running.
With over 300 million registered domain names, registries have their hands full. As a result, registries like Verisign delegate the commercial sale of domain name registrations to registry service providers, such as GoDaddy. Registry service providers essentially act as front-line salespeople, getting paid for each registration but also paying registrants – all of which is factored into the price charged to end users price.
But wait, after I buy a domain name, it's mine, right?
That's the kicker – you don't actually buy it, it's not actually yours. When you buy a Web-2 domain, you're actually "renting" it for up to ten years at a time through a complex back-end hierarchy. You can extend the registration by paying an annual fee, but if you forget, the domain will be put back on the market.
There are even some discredited registrars who prey on expiring domain names by automatically buying them as they expire and then trying to sell them back to the original registrar (or to the open market) at a high price.
NFT Domain Explanation: Putting together decentralized domains
The problem Web-3 companies want to solve typically revolves around granting ownership directly to the end user and moving away from a vague chain of command and middlemen.
With the explosion of blockchain innovation in recent years, a myriad of applications have emerged, and the domain NFT is one of the most exciting but rarely talked about – certainly the ape images sold for millions of dollars make better headlines.
Similar to DNS above, companies like ENS or Ether Name Service turn complex digital currency package addresses (0xb6060BFb836897EAECa521A7C2BE728D9BB5CE92) into something more user-friendly, like coincentral.eth.
Now, just like you can send $20 to a digital currency package address with complex letters and numbers, you can send it to something like coincentral.eth.
Also, you can actually link your ENS domain to a website address (as in DNS), so when you type something like coincentral.eth into Google Chrome, you'll open a fully functional website that could theoretically be the same as coincentral.com.
Unstoppable Domains is another cryptocurrency domain provider that offers some distinct advantages.
How to buy a domain name NFT
You may be familiar with the traditional process of purchasing a domain name from a domain registrar such as GoDaddy or Google Domains – you visit the domain registrar's website, search for a specific name, and if available, purchase it using a credit card or other acceptable payment method.
For most intensive purposes, buying a domain NFT is very similar; behind the scenes it is unique.
First, go to a domain name NFT marketplace like Unstoppable Domains (basically the same as the registrar) and search for the domain name you want.
The marketplace will launch with various extensions such as .crypto, .dao, .nft, etc.
Add the extensions you want to your cart and proceed to checkout. Unstoppable Domains will ask you to create an account. It also offers a variety of purchase options, including Web-2 options such as credit cards and PayPal, as well as Web-3 payments such as cryptocurrency and through the Crypto.com app (which can also be used as a wallet).
To complete a purchase, you are essentially "minting" a token that corresponds to a domain on the blockchain; this is what tells the blockchain that you own the domain. This process may take a few minutes waiting for network activity.
When you are done, you are 100% owner of the domain. Well, the token is the domain, so be sure to store it carefully. Marketplaces like Unstoppable Domains can also serve as wallets for domains, but theoretically you could put a domain NFT on a hardware wallet like the Ledger Nano S, a software wallet like MetaMask, or even sell it on OpenSea.
Final Thoughts: Why Domain NFT is Important
The NFT domain combines cryptocurrency, digital identity and Internet infrastructure, which could be an early wave in the era of the new Internet metaverse.
For casual web surfers, NFT domains are hardly ever registered as cosmetic upgrades – using .crypto domains instead of .com isn't necessarily exciting.
However, what happens behind the scenes is enough to lift most technicians and entrepreneurs up to new possibilities.
For the first time ever, a decentralized domain can serve as a wallet address with its own functional, decentralized financial infrastructure.
In a broad slant, domain NFT eliminates the need for an esoteric hierarchy of Internet infrastructure monopolies and payment processors (such as PayPal and Stripe) that have traditionally connected websites and their visitors in some proportion.
However, domain NFT is not without risk.
As with all cryptocurrency coins and tokens, domain NFTs require additional precautions that centralized domains do not. Admittedly, if you don't take preventative security measures, an experienced hacker can break into your Google Domains account and steal your domain just as easily as they could on something like ENS or Unstoppable Domains. However, when a token is stolen, you have essentially zero recourse.
There are some limitations stemming from the novelty of the domain NFT worth considering.
On the one hand, most popular browsers (such as Google Chrome) do not support domains such as .crypto or .zil because they are not standard. Why? People running ICANN don't necessarily support domains like .crypto or .zil because they get some of their sales from traditional web-2 domains like .com or .org.
New cryptocurrency-friendly browsers like Brave support NFT domains, but there are more steps to take than the natural process of surfing the web.
Accessing NFT domains with Brave Browser
Admittedly, the sudden pace of development of cryptocurrencies is unfathomable to most people, and as understandably and methodically slow as the influential organizations that run the pillars of the Internet can be.
The "decentralized Internet" involves reinventing, or at least rethinking, the various modular components that make up the mixture of interconnection protocols and software we call the Internet – of which the domain NFT is only one part.
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