Forget Bitcoins, Domain Name Investing as Commodities Has Arrived
Bitcoin took a major hit when news broke about its use for the now defunct Silk Road trading. However, this virtual currency’s most popular use was always as a speculative asset. The inventor of Bitcoin described his invention as an electronic payment system because it allows a person to give a token of value to another securely, without traditional intermediaries like banks. The transaction is then authenticated and recorded by a peer-to-peer network.
When columnists like John Dapper began to muse upon whether people could gain ownership rights to digital goods similar to physical ones through the use Bitcoin and other tokens, it was the right way to start assessing the new virtual currencies. Their real value is not in their inherent use as a substitute for traditional payment for goods and services, or even currency swaps, but rather what they allow: effective transfer of ownership. Giving a Bitcoin to someone else takes it out of circulation. The original holder of the token cannot longer ‘spend’ it again because it belongs to another.
Domain names can and do work similarly. With Chinese investors looking to diversify, certain categories of domain names have now become a commodity, with a strong floor values in each category, giving domain name investors the ability to buy and sell these virtual assets daily. Such categories include* LL .com, LLL .com, LLLL .com, NN .com, NNN .com, NNNN .com, NNNNN. com, Chinese Premium letters, just to name a few. Domain names are more like gemstones than diamonds. Although all domain names have similarities, each is also unique and has to be inspected thoroughly to understand its value. Using reliable money transfer services such as Escrow.com, Domain names can be traded securely and are portable throughout the world. There are no customs inspections or cash declarations to disclose to authorities other than taking care of your taxes. However, unlike Bitcoins and its ilk, the domain name space and domain name trading is an established trade going back over two decades now. Regulators are not looking at domain names with a jaundiced eye because it does not have the same potential to disrupt traditional banking systems. While math-based currencies may be in our future, domain name trading has been happening for decades, happening today more than ever, and with recent trading, in particular with liquid domain categories that are already treated as commodities, expected to grow exponentially.
* L = Letter, N = Number.
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