Useful for identifying cryptocurrency wallets and for facilitating crypto transactions in the metaverse, a blockchain domain is an easy-to-remember address for sending and receiving cryptocurrency, making transactions as easy as sending an email.
They are an asset generally on a permissionless or public blockchain, which anyone can join pseudo-anonymously and are secured through a smart contract, just like an NFT.
In layman’s terms, blockchain domains aren’t stored on a server. Instead, they’re held in a public ledger or public registry which is accessible to anyone. Additionally, once a blockchain domain is minted, they live in your crypto wallet forever. No one can take them away as there are no renewal fees.
How do blockchain domains work?
Just like how domain names were invented because people found remembering long strings of IP numbers difficult, blockchain domains provide a human-readable name for crypto-wallets.
For example, Ethereum Blockchain developers created the Ethereum Naming Service (ENS) to allow the registration of .eth names on the Ethereum Blockchain. So why would people register a blockchain domain? Well, a key reason is that it converts a hexadecimal number into a much easier to remember name. Want proof, which one of the below addresses is easier to remember?
0x78743110A1B17c86cH43g09853c0vb2836c205 or Comlaude.eth.
Where do blockchain domains exist?
In theory, every permissionless blockchain can support blockchain domains, but there are three types of blockchain domains today, which together have almost seven million combined registrations – Ethereum, Handshake and Unstoppable.
The Ethereum Naming Service allows the registration of .eth names on the Ethereum blockchain and .hns names can be registered on the Handshake blockchain.
However, it’s important to note that because there are many competing blockchains, each blockchain works independently of the other. For example, .eth names do not work on the Handshake blockchain and vice versa, while traditional DNS domains work seamlessly across different browsers.
How to register a blockchain domain
The process varies from blockchain to blockchain, however, the registration process isn’t the easiest, especially if we compare it to the world of DNS. For example, if you want a .HNS domain, you open a crypto wallet and fill it with HNS coins, place a bid, and then secure the domain.
Sometimes you have to take part in an auction, and once you have secured the domain, you then need to mint it in order to use it. This can mean buying volatile gas fees (payments made by users to perform a function on a network), which is complicated – and you will also need to work out how you’re going to store the keys to the wallets.
Blockchain domains are a bull market in which prices are rising and aren’t showing signs of slowing down. For some brand owners, buying a blockchain domain is a complex experience, and this is exactly why we are helping brand owners coordinate strategies across the metaverse, cloud gaming, NFT platforms, and blockchains.
Blockchain domains growing in popularity
Unlike traditional domains that are purchased through internet registrars operating through the ICANN-regulated DNS system, blockchain domains are not governed by any centralized body.
They are regarded as being free from regulation, oversight and government control. This means there are no harmonized technical standards, and with many competing blockchains, there is no uniform architecture.
In addition to this, they are useful for identifying crypto wallets, and for facilitating crypto transactions and identifying property in the metaverse.
They are popular among enthusiastic inhabitants of the metaverse as they are seen to be outside the establishment and can be used to identify an NFT investment – making it real because you can attach a blockchain domain to an NFT.
Blockchain domains as a potential threat
Blockchain domains are an emerging threat outside of regulation and are likely to open the doors to bad actors willing to take advantage of a space that is unregulated.
The threat landscape is constantly shifting, and cybercriminals are always looking to avoid detection. Many of them have started using blockchain domains as part of their infrastructure because the majority of blockchain domains are registered pseudo-anonymously, making registrants impossible to find unless they want to be to be found.
Despite advocates for blockchain domains citing the importance of freedom from government oversight or regulatory control, some commentators in law enforcement say this philosophy is irresponsible.
When attached to a crypto wallet, blockchain domains are the perfect conduit for tax avoidance and moving the proceeds of crime around. Registrants should be discoverable in order to mitigate bad actors from using blockchain domains as part of their criminal operations.
Strategies to consider in the next 12 months
Thousands of brand names have already been reserved in the blockchain world, and brands looking to get in on the action are finding that their names have been snapped up by cyber squatters.
Because registrants are anonymous, and without a formal reclaim process, brands are left wondering how to negotiate with an owner. As a result, we are asked daily about blockchain domains and the threat they pose. A blockchain domain matching a famous brand name, attached to an unauthorised wallet is a risk. Therefore, in the short term, securing just key brands in the major blockchain is a good and affordable strategy.
However, a sense of perspective is vital. The majority of Web2 users can’t access true metaverses or see blockchain domains without downloading a plugin unless they use an esoteric browser like Brave. This means there is still time to put in place strategic registrations or reclaim domains from third parties.
In the longer term, when Web3 utility is valued and marketed by brands seamlessly alongside Web2, and we are all comfortable occasionally venturing “inside” the internet, the rule of law will be stronger. For now, a proactive strategy is needed. We offer our clients a Recon Report so they know where they feature across the component parts of Web3 (true metaverses, cloud games, NFT platforms and blockchain domains). Then we undertake programs to reclaim or register blockchain domains and put in place NFT monitoring.
Investors in Web3 value a decentralized, permissionless environment, but they also want their world to succeed. Having key brands in major blockchains will add legitimacy and legitimacy.