Crypto domains, or NFT domains, are a quiet giant in the baby deer-legged web-3 space with many noteworthy pros and cons.
The “Dot-Com era” in the early 2000s is remembered as a mania where hordes of technologists, hobbyists, and domain squatters descended on thousands of words attached to a “.com” in the hopes of striking it rich with some valuable digital real estate.
Today, the rush towards crypto domains seems quiet in the wake of a similar rush for visually appealing NFTs like Cool Cats and Deadfellaz, but it’s nonetheless a very active segment of the market.
Whether or not a crypto domain is worth it for you comes down to your specific security precautions, risk tolerances, and what you want to do with it.
The following guide will explore whether crypto domains are worth it, and a few scenarios worth considering when buying an NFT domain.
Pro: You Actually “Own” the Domain
Most cryptocurrency domain providers offer decentralized domain management.
Remember, a crypto domain is a non-fungible token, which comes with the same advantages and responsibilities of any other tokenized digital asset.
As such, an Ethereum-based domain can be kept in something like a non-custodial software wallet like MetaMask or a hardware wallet like a Ledger Nano S.
However, hosting the domain and building a website on it is a relatively untraveled territory, particularly when it comes to using alternative solutions to the domain management products on market, like Unstoppable Domains or ENS.
Decentralized domain management platforms like Unstoppable Domains aim to reduce as many single points of failure as possible. Since the domain is on the blockchain, it’s nearly impossible to modify the records of who owns what. The heart of the matter comes down to token security.
Con: “Owning” the Domain Comes with More Responsibility
There are two sides of the coin in regards to the points made above.
Since a crypto domain is a token, if you lose your private keys you may never be able to regain control over your domain, and no one else will either.
This is a fairly scary proposition for any webmaster– your site going down because of a temporary network outage is one thing, but permanently losing your domain because of poor security is another.
This is why cryptocurrency security is extremely important, and crypto domains are no exception.
This is the trade-off made:
- You get full control and ownership of your domain, and you avoid certain censorship and seizures from third parties such as domain registrars.
- However, you introduce the dangers of human error, as well as take on the responsibility to prevent hackers from stealing your stuff.
In other words, you won’t escape the third-party threat of losing your domain, at least not with mediocre cryptocurrency precautions. However, consider that when you buy a house, you have the responsibility to make sure the keys to your front door don’t get lost. Precautions can be made to minimize your downside, such as creating a duplicate key.
Similarly, you can take security measures to ensure your crypto domain is recoverable if lost.
Pro: Crypto Domain Providers Offer One-Time Payment Options
As you may be painfully familiar with, traditional domain registrars charge annual renewal fees on domains you hold. Remember, you’re basically renting this domain, and this annual charge (sometimes possible to be paid in ten-year lump sums) is your rent.
If you forget to pay your rent, domain registrars have no issue “evicting” you, and your domain goes back up on market, or in some cases, the registrar offers to sell you it back at a very high premium.
Crypto domain holders have found a way around this. A service like Unstoppable Domains supports one-time payments.
The concept is simple. You buy your domain once up-front and don’t have to worry about renewals or future payments.
Crypto domains on Unstoppable Domains
Con: Most Popular Browsers Do Not Currently Support Crypto Domains
If you try to access a crypto domain ending in .eth, .zil, or .crypto on a browser like Google Chrome or Safari, you’re not going to have much luck.
Limited to niche browsers, such as the crypto and privacy-focused Brave Browser.
Pro: Crypto Domains Can Recieve Crypto Payments
Yes, you read that correctly– a crypto domain can get directly sent crypto payments.
Suppose we switched our domain from CoinCentral.com to CoinCentral.eth.
And now, let’s say one of our readers got a ton of value from our guides ( we hope you all do!) and wanted to send a tip as a token of their appreciation. They could send Ethereum or any ERC-20 compatible token to CoinCentral.eth.
They would enter “coincentral.eth” as the receiving address, not the typical long string of cryptoaddresses like “0xb6060BFb836897EAECa521A7C2BE728D9BB5CE92”
The holder of the coincentral.eth domain would see their wallet populate with the tip, less any network fees– just like any typical crypto transaction.
Not only is this is a much cleaner, brand-friendly, and user-friendly way to accept payments, it also doesn’t require integrating with a payment processor or intermediary like PayPal or Stripe, which take a small percentage for the convenience.
Today, the example is for altruistic tipping. In the crypto future of tomorrow, we can see crypto domains being integrated as the primary payment processing option for a variety of site types, ranging from eCommerce Shopify type stores to subscription-based sites.
Con: Very Limited Data on How Social and Ranking Algorithms Will Treat Crypto Domains
Let’s say you want to turn your crypto domain into a fully-fledged website and build a business.
For Search Engine Optimization, in particular, search engines like Google extend some more credibility to established top-level domains like .com, .org, .gov, and .net.
This is more rooted in Web-2 “that’s just how things are done” tradition than a dismissal of new domain types, but the fact of the matter is that search engines (and social networks) have an enormously expansive job of policing the websites they show to millions of people.
They do so through algorithms and programs such as Google’s “web crawlers” that scan a domain, site map, and web content to make an (often imperfect, but usually more safe than sorry) judgment on a site’s context and potential utility to readers. As such, top-level domain extensions play some role in this.
For instance,
- .com refers to commercial businesses
- .net refers to network or Internet infrastructure businesses
- .gov is government
- .org is organization
So, if you’re looking to build a digital business that has the potential of ranking in search engines for traffic, crypto domains are pretty unnavigated territory, and there isn’t any data to suggest they have any inherent advantages, but plenty of information to suggest that there are many disadvantages (for now).
Suppose you go to Google right now and search “NFT domain guide” How many of the pages end in .com?
Most likely all of them.
How many end in something like “.biz”, “.io”, or “.me”?
Granted, will likely age like milk, especially as tech companies continue to embrace web-3 technology and blockchain.
However, if you’re looking at buying a crypto domain for digital marketing and SEO purposes, it’s a consideration worth making.
Final Thoughts: Are Crypto Domains Worth It?
Whatever your goal is with a crypto domain, there are many considerations you should make.
The first and foremost is whether you’re comfortable with the responsibility that comes with token ownership. If you’ve been in crypto for a while, you’ve hopefully already practiced most of the crypto security hygiene that comes with it, and this shouldn’t be too new for you.
However, if crypto domains are your first foray into the cryptocurrency space, we recommend establishing a firm understanding of cryptocurrency safety basics like safe private key storage. Also, welcome!
You should also consider that crypto domains and the cryptocurrency industry is all pretty new, and there are still kinks to work out.
That being said, crypto domains present an immense opportunity to capture what could be a significant part of the evolving web-3 “metaverse” ecosystem. Check out our guide on crypto domains, also referred to as NFT domains, to learn more.
