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The new NFT trading craze, whose names are bought and sold for eye-popping sums, is providing a multi-million dollar lifeline for speculators shivering in a harsh crypto winter.
“Domain” names such as coin.crypto (sold for $100,000) and beer.eth (sold for $39,000) are a new kind of NFT that owners can use to replace a jumble of 16 random numbers. (non-substitutable token). The characters that make up a digital wallet address.
The virtual currency equivalent of custom car plates may seem expensive, but backers believe these names are due to the emergence of Web3, a highly exaggerated vision of a future internet built on blockchain. , said it could become a valuable real estate property in the years to come. .
Currently, the trading market for these alternative assets offers a rich and risky alternative for some investors who are scooping up hot domains to profit on the secondary market for NFT platforms like OpenSea. increase.
Matthew Gould, CEO of Unstoppable Domains, which sells domain names with a $5 ending, said: .crypto, .nft When .wallet on that website.
“The range is because there are distinct perceptual differences between different words and lengths.”
The company has seen some big deals recently. For example, wallet.crypto sold for $250,000 and earn.crypto sold for $100,000 in April.
Meanwhile, .eth names generated by the largest domain seller, the Ethereum Name Service (ENS), were the fourth most traded type of NFT on OpenSea in September, with total volume up 75 from a month earlier. % increase, equivalent to $12.5. One million.
ENS domain names were surpassed only by NFTs from well-known collections such as CryptoPunks and Bored Ape Yacht Club. Despite the crypto winter hitting the NFT market, trading in the relatively new asset is growing rapidly.
According to Dune Analytics, monthly registrations for .eth domain names surpassed 433,000 in September, the highest number in 12 months and a 5,000% jump from a year ago.
According to experts, the most valuable domain names such as crypto.nft and 000.eth often contain simple, short English words, terms referring to pop culture or Web3, and numbers.
However, the encryption domain is still in its early stages. There is no guarantee that they, or Web3, will live up to that promise, but the highly volatile nature of cryptocurrencies and his NFT markets suggests danger to uneducated traders.
Block Intelligence’s report also raises many questions about the scalability of the technology and the potential for confusion and misrouting of funds from competing domain providers issuing similar names. I’m here.
Sasha Fleischmann, portfolio manager at Los Angeles investment firm Arca, said domain names are likely to become more popular as cryptocurrencies become more mainstream.
The 16-character alphanumeric addresses used for digital wallets “are not user-friendly, especially for non-crypto natives,” he added.
In a sign of investor confidence that digital assets linked to .eth domain names will grow in value, the ENS Project crypto token surged nearly 90% to $15.92 in the third quarter. beginning of the year. Bitcoin ended the quarter largely flat, struggling to hold above $20,000.
However, many market players warn that domain names are a speculative bet on future demand, making it difficult to assess their value.
Fleyshman said this undermines the claims of institutional investors.
“From a fund’s perspective, it’s pretty difficult to make a fundamental investment in a particular domain name,” he added. “It’s not in our wheelhouse to say which domains will create value and which won’t.”
