What Are Blockchain Domain NFTs? A Full IntroductionMar 01, 2021
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Blockchain domain NFTs are the latest arrival in the block(chain) party. Part URL, part collectible, these fascinating assets are becoming the hottest new crypto in town. In this introductory article, we’ll walk you through the basics of blockchain domain NFTs.
What are Non-Fungible Tokens (NFTs)?
Before we get into the nitty-gritty of NFTs, you need to understand the blockchain. Since its conceptual introduction in 2008 by Satoshi Nakamoto, the blockchain has perplexed the world. This decentralized ledger uses cryptography to permanently string together blocks of data.
Blockchain is the technology that powers Bitcoin, Ethereum, and every other cryptocurrency in the world. It leveraged this decentralized public ledger to solve a theoretical riddle for digital currencies, the “double-spend” problem.
Cryptocurrencies are what’s known as fungible tokens. Much like with two separate dollar bills, there’s no difference between one Bitcoin and another. They’re completely identical in every way. Cryptocurrencies aren’t the only thing that blockchains are capable of, though.
Non-fungible tokens exist at the opposite end of the spectrum. Like cryptocurrencies, they’re cryptographic tokens registered on a specific blockchain. However, they’re each entirely unique (and therefore, not mutually interchangeable) — like serialized collectibles of the digital world.
There are multiple types of NFTs out there. Digital art can be registered on a blockchain, for example, as a way to certify authenticity and ownership. The result would be digital art NFTs that represent ownership of original, authentic artworks.
Understanding Blockchain Domains
Now that you have a better grasp of what non-fungible tokens are, we need to talk about blockchain domains. However, before we do that, you should know how domain names work.
How Domain Names Work
Computers connected to the internet have an IP address. These unique addresses allow individual devices to be identified on networks. However, they’re long and hard to remember. For example, Google.com’s IP address is 18.104.22.168. Not particularly memorable, is it?
Domain names provide an easier alternative. Instead of typing “22.214.171.124” in your browser’s address bar, you simply type “Google.com” and hit enter. Your browser automatically figures out that the website “Google.com” is hosted at the aforementioned IP address.
For that to happen, domain names need to be registered in the Domain Name System. DNS servers are spread all over the world, and help browsers resolve domain names to IP addresses. Internet service providers then connect users to the appropriate IP address.
The DNS network is administered by the Internet Corporation for Assigned Names and Numbers (ICANN). They oversee the development and architecture of the overall system at the top level. Up until recently, ICANN and DNS were the only methods to obtain a working domain name.
Blockchain Domain Names
Blockchain domain names are one of the most interesting usage cases for blockchain protocols. A blockchain domain system allows domain owners to control their domains using private keys. Unlike traditional domain names, no oversight organization oversees these domains.
How Domain Names Work
This has a number of practical applications. While DNS servers are spread all over the world, the system itself is centralized and controlled by ICANN. It’s therefore possible for ICANN to censor individuals, or cooperate with authorities to achieve the same result.
In contrast, blockchain domain names are permanently etched into a public registry. They can’t be purged, modified, or censored by any third parties. As such, they provide an avenue for websites to fight back against censorship, effectively protecting freedom of speech.
Accessing blockchain domain names has historically required special software but is becoming easier to access. Users of popular browsers like Chrome or Firefox can now resolve blockchain domains directly through their browser with one small DNS change.
Another feature of blockchain domain names is that they can link to cryptocurrency wallets instead of websites. Asking for payments via “yourname.crypto” is more convenient and easier to remember than “1NVWiyvVLAuCoxzQ6Ujy4UDpkgRwe8VPwW.”
Blockchain Domain Non-Fungible Tokens
Enter blockchain domain non-fungible tokens (NFTs). They combine the easy trading of NFTs with customizable domain names built on blockchain. In the past few months, they’ve also seen a sudden rise in consumer and investor interest — for several reasons.
Companies such as Unstoppable Domains and protocols like Namecoin allow users to purchase blockchain domains, and even entire domain namespaces. The latter allows users to rent or sell individual domain NFTs down the road.
For example, the owner of “.crypto” domains on a specific blockchain protocol can rent or sell individual “name.crypto” domains. This can pose a unique opportunity for early investors. Some, like Mark Cuban, are already looking towards this new, booming market.
Cuban has already launched several lines of collectibles, figurines, and digital art powered by NFTs. Still, he believes that these novelties are mere proofs-of-concept. “The real growth comes when corporate [intellectual property] goes [to NFTs],” tweeted Cuban in late February 2021.