Speculators shivering in the bitter crypto winter are receiving a multi-million dollar lifeline from a new NFT trading craze where names are bought and sold for eye-popping sums.
‘Domain’ names, such as beer.eth, which sold for $39,000, and coin.crypto, which sold for $100,000, are a new type of NFTs that owners can use in place of the 16-character jumble that makes up their digital wallet addresses.
Although the cost of the cryptocurrency equivalent of a personalised licence plate may seem high, proponents believe that if Web3, the much-anticipated vision of the next-generation internet based on blockchain, becomes a reality, these names will become valuable real estate.
The trading market for these alternative assets is currently ripe with lucrative but risky opportunities for some investors. These investors purchase well-known domain names with the goal of reselling them for a profit on NFT marketplaces like OpenSea.
The CEO of Unstoppable Domains, which sells domain names with the.crypto,.nft, and.wallet extensions on its website, Matthew Gould, said, “We have domain names starting for as little as $5, we’ve had some sell for as much as $100,000.”
The range exists because there is a clear distinction in the perceived worth of words of various lengths.
Recently, the business has seen several big sales, as on wallet. cryptocurrency made $250,000 when sold and earn.crypto sold for $100,000 in April.
.eth names, which were the fourth-most traded NFT on OpenSea in September with total transactions up 75% from a month earlier and equal to $12.5 million, are also produced by the biggest domain registrar, Ethereum Name Service (ENS). NFTs (non-fungible tokens) from well-known collections like CryptoPunks and Bored Ape Yacht Club made up the majority of the top ENS domain names.
The top ENS domain names were all NFTs (non-fungible tokens) from well-known collections like CryptoPunks and Bored Ape Yacht Club. Even while the NFT market has been severely impacted by the crypto winter, trading in the relatively young assets has rapidly increased.
In September, more than 433,000.eth domain names were registered every month, the most in the preceding 12 months and a 5,000% rise over the prior year, according to Dune Analytics.
Experts claim that numerical sequences, pop culture references, and short, basic English words—such as crypto.nft or 000.eth—often have the highest value of all domain names.
WHAT DOES A NAME MEAN?
Crypto domains are still in their infancy, nevertheless. Given the very volatile nature of cryptocurrencies and NFT markets, there is no assurance that they or Web3 will fulfil their commitment. Because of the high volatility of these markets, inexperienced traders may also be at danger.
According to a research by Block Intelligence, concerns abound about the technology’s scalability and the possibility of confusion caused by identical names used by competing domain providers, which could result in the misallocation of cash.
According to Sasha Fleyshman, portfolio manager at the Los Angeles-based investment firm Arca, domain names would grow in popularity as cryptocurrency became more widely accepted.
The 16-character alphanumeric addresses used for digital wallets are not exactly user pleasant, he noted, “especially for non-crypto native users.” The value of the cryptocurrency token for the ENS project climbed by over 90% in the third quarter to $15.92, but that is still a significant decrease from the $40 it was worth at the start of the year.
This suggests that some investors are confident that the value of digital assets linked to.eth domain names will rise. At the end of the quarter, Bitcoin was almost flat but had trouble maintaining its $20k level.
However, many market participants caution that it can be challenging to value a domain name because doing so amounts to taking a chance on future demand.
According to Fleishman, this weakens the status of institutional investments. Fleischman argues that this undermines the case for institutional investment. From a fund’s point of view, it’s very difficult to make a fundamental investment in a particular domain name, he said. Simply put, it is outside of our purview to “predict which domains will gain in value over time and which ones won’t”.
(1 ether = $1,330.20)
