An emerging NFT trading trend where names can be bought and sold for staggering sums is offering a multi-million dollar lifeline to crypto winter speculators. “Domain” names like coin.crypto (which sold for $100,000) or beer.eth (39,000) are the latest NFTs that owners can use to replace the 16 random numbers and letters that make up their digital wallet addresses.
Although it might seem like a lot for a crypto-equivalent of a custom car license plate, backers believe these names could be valuable real estate in years to come. This is because of Web3, which is a highly anticipated vision of an internet future built on blockchain.
The trading market for alternative assets is offering rich and risky pickings to some investors. They are buying up domains that have potential to make a profit on the secondary market on NFT platforms such as OpenSea. In this way, they can sell them for a profit.
Matthew Gould, CEO of Unstoppable Domains said, “We have domains starting at \$5 and some that sell for as high as \$100,000.
“The range exists because there is a distinct perceived value difference between different lengths and words.”
There have been some big deals for the company recently: wallet.crypto was sold for $250,000, and earn.crypto was sold for $100,000 in April.
The.eth domains generated by the Ethereum Number Service (ENS), the largest domain seller, were fourth on OpenSea’s most traded NFT type in September with total volumes increasing 75% to \$12.5 million from a month earlier.
Only NFTs (nonfungible tokens), which topped ENS domain names, were from well-known collections like CryptoPunks or Bored Ape Yacht Club. Even though the crypto winter has hampered the NFT market , trading in these relatively new assets has been booming.
According to Dune Analytics, September saw a jump of over 433,000 monthly registrations for.eth domain name names.
This is the highest level in the past 12 months and a 5,000% increase from one year ago.
Experts say that domain names with short and simple English words are more valuable than those with complex terms, terms referencing pop culture and Web3, or number sequences such as 000.eth or crypto.nft.
Although crypto domains are still very young, they have a lot to offer. They, and Web3, are still in their infancy. The highly volatile nature of cryptocurrency and NFT markets makes them difficult for novice traders.
Block Intelligence reported that there are still questions about the technology’s scalability and potential confusion caused by competing domain providers releasing similar names. This could lead to misrouting funds.
Sasha Fleyshman is a portfolio manager at Arca, an investment firm in Los Angeles. She said that domain names are likely to increase in popularity as crypto becomes more mainstream.
He said that 16-character alphanumeric addresses are not user-friendly, particularly for non-crypto natives.
The ENS project’s crypto token soared almost 90% to \$15.92 in the third quarter, indicating some investor confidence in digital assets linked with.eth domains. However, this is still a significant difference from the $40 it traded at the start of the year. The quarter ended with Bitcoin trading flat and struggling to remain above \$20,000.
Many market players warn, however, that domain names are difficult to value as they are speculative bets on future demand.
Fleyshman stated that this weakens institutional investment.
He said that it was difficult for a fund to make a fundamental investment in specific domain names. It’s not in our hands to predict which domains will be valuable and which won’t.
