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Crypto: Claiming .eth domain names – 'gold rush' or just web3 hype?

Watch: Is .eth the new .com? — The Crypto Mile

Paris Hilton, Jimmy Fallon, Anthony Hopkins and Shaquille O'Neal are all celebrity names that have embraced the rising tide of web3's latest "gold rush" for .eth domains.

In the margins of the crypto-ecosystem, a frenzy is brewing to snap up .eth domain names before they go mainstream.

But are we seeing a replay of the .com bubble, and if they are the most under-valued crypto asset class, what should we look out for when registering an ENS domain? Find out in this week's The Crypto Mile.

The Ethereum Name Service (ENS) is a distributed naming system that goes by the suffix .eth and is for web3 applications based on the Ethereum blockchain.

Read more: Crypto: How to set up a .eth doman

On this week's The Crypto Mile, leading developer in the ENS domains space Sasha Dordevic discusses .eth domains, which have been dubbed the replacement for .com for Web3.

Dordevic is bullish on ENS domains and said: "My forecast for the next five to 10 years is that .eth will be more valuable than .com names.

"As .com names were mostly used by businesses, whereas a .eth name is a private identifier, a personal domain name that most people will need to use to navigate web3. It will outlast .com and be with us for a much longer time."

Paris Hilton, Chairwoman and CEO of global media content company and platform 11:11 Media, attends a conference at the Cannes Lions International Festival of Creativity in Cannes, France, June 21, 2022.    REUTERS/Eric Gaillard
Media personality and businesswoman Paris Hilton has acquired the parishilton.eth domain name. Photo: Eric Gaillard/Reuters

How to pick a valuable .eth domain name

BC Bloom, founder of DomainPlug.io, told Yahoo Finance UK: "This isn’t much different than old school (.com) domain practices.

"The names that are the shortest, broad, and niche can have a lot of potential and be desirable for businesses and companies, such as words like NFT, Loan, Poker, Wine.

"Another way to check if you may have a grail name is by typing the word on google. Anything over 800,000,000+ search results could hint that you're sitting on something valuable."

There is a growing market for ENS domain names and the total amount of names registered has hit 2 million in August, up from 1 million a month before.

There are more than half a million unique wallets connected to the ENS domains registry.

One of the core developers behind ENS, Makoto Inoue, told Yahoo Finance UK: "That current pattern of adoption of ENS domains is really strong. It is always not gradual with these sectors.

Read more: Web3: Is .eth the new .com?

"The monthly registration for May was 365,000, in June it went down to 100,000. It depends on the hype surrounding the ENS domain name trend."

Dordevic said: "If you cannot find a domain that is available, you can look for it on secondary marketplaces, such as ENS Vision, which is a tool to bulk search for available ENS domains."

ENS Vision is a page that shows which .eth names are trending and which are selling for high prices. This can help people to make more informed speculations as to which will become more valuable in the future.

The tweet from ENS Domains celebrating 2 million ENS names created
The tweet from ENS Domains celebrating 2 million ENS names created. Photo: ENS Domains

The difference between .eth and .com

The developer of ENS Vision described the difference between a .com and a .eth domain name: "A web2 .com domain name only points to a certain webpage. But, with a .eth you can upload your website and store it in a decentralised way.

"So it is decentralised throughout the Ethereum network and not located on just one server. This makes it safer from attacks, such as malware."

ENS domain names also lock and secure the identity of a user.

Read more: Crypto live prices

ENS domains can provide more than a simple link to a website or email address, which was the hallmark of the original Domain Name Service (DNS).

Proponents say that ENS domains with the .eth suffix can empower users with a tool that can bring their complete online presence under one umbrella in order to take advantage of the burgeoning web3 realm.

If blockchain technology reaches mass adoption, a .eth domain name could hold a person's medical history, insurance details, driver's licence, bank login and credit score, education qualifications and even their passport, all under one name.

Dordevic said: "Having an ENS name allows you to have a readable web3 ID, you can connect to your email, website, Twitter (TWTR), Instagram and so forth. You can even attach an NFT avatar. There are lots of options and many more are still being developed.

"In the future, you may be able to use your ENS for driving licence, for medical insurance, social insurance, travel ID, any type of ID could be connected to your ENS name in the future."

Read more: How to safely transfer your crypto to a cold storage wallet

One of the benefits of a .eth domain name is that a person can create a much more human-friendly crypto-wallet address, according to Dordevic.

So, instead of a cryptocurrency wallet address being identified by a long string of letters and numbers that could only be remembered by machines or savants, an ENS domain links this address to a more human-friendly domain name via a smart contract.

Watch: What would Karl Marx think about crypto? – The Crypto Mile episode 7

Is brand.eth the new brand.com?

Big brands have already jumped into the space and registered .eth versions of popular consumer items such as Coca-Cola.eth (KO) and Budweiser.eth (BDWBY).

Brands could issue sub-domains to loyal customers that they could then use to show they were the owner of a luxury item, according to Dordevic.

For example, if a person bought a new Ferrari (RACE), then instead of going by "name.eth", they could be given the "name.Ferarri.eth" subdomain.

This is if Ferarri became convinced that Ethereum subdomains and web3 will become widespread, and to date, the company has yet to show any signs of interest in the ENS direction.

Dordevic added: "In the future, we will see brands pay large amounts for their .eth domain. The potential is huge, and some companies have begun to take it into consideration."

Bloom said the minting of subdomains will be important to businesses in web3, allowing them to offer subdomains when purchasing a product, or season ticket for a football team, for example.

Read more: How to spot crypto scams

"You can create concert and game tickets, employee verification, security, payments, hotel check-in cards with sub-domains," he said.

"There are endless utilities that can be done with ENS domains.

"Once a domain is bought the holder can create infinite subdomains that can be assigned to a specialised task."

But, a .eth domain name could be more important to individuals navigating the web3 space rather than corporations.

Some proponents say a more appropriate term to use for .eth is “address”, rather than "domain".

Such “addresses” would be the unique location of a person’s digital persona, with everything contained therein — imagine a merge of your social media footprint, LinkedIn (MSFT) resume and bank account.

Anthony Hopkins poses on the red carpet during the Oscars arrivals at the 94th Academy Awards in Hollywood, Los Angeles, California, U.S., March 27, 2022. REUTERS/Eric Gaillard
Actor Anthony Hopkins has secured the rights to his name as a .eth. Photo: Eric Gaillard/Reuters

This could be one reason why celebrities such as Paris Hilton, Jimmy Fallon, Anthony Hopkins and Shaquille O'Neal have secured the rights to their name as a .eth.

But how secure will these .eth names be, and is the current rush to buy just a replay of the boom and bust of the .com bubble?

Bloom forecasts the market for .eth and ENS will not dramatically burst but will eclipse the legacy of DNS of the .com era.

Bloom said: "At some point, there is definitely potential to be adopted at the global scale.

"As time goes on we are finding more use cases and applications that can be applied with web2.

"It's only a matter of time till we see some major players coming in to use these names as a part of their daily work processes.

"However, I don’t think this is a situation to shadow web2 domains. As web3 grows there will naturally be a need to navigate and utilise the blockchain. Those solutions are ENS and web3 domains."

Solana SOL cryptocurrency physical coin on top of other cryptocurrencies.
There is competition from other blockchains, such as the Solana protocol, where web3 users can purchase a .sol domain name. Photo: Getty

The competition from Unstoppable Domains and .sol

Unstoppable Domains also allows web3 users to create a memorable, human-readable, domain name. They call their system the Crypto Names Service (CNS) and like the ENS alternative, they operate as "smart contracts" on the Ethereum blockchain.

Unstoppable Domains also offer users the ability to create decentralised websites that can be uploaded to the InterPlanetary File System (IPFS).

IPFS is a peer-to-peer distributed file storing and sharing system and works together with existing blockchain protocols like Ethereum.

Read more: 'Karl Marx would see bitcoin as a revolutionary tool to upend capitalism'

There is also competition from other blockchains, such as the Solana protocol, where web3 users can purchase a .sol domain name.

Dordevic said he doesn't think .eth will be threatened by .sol: "You can check the number of Ethereum wallets and the whole market capital of the Ethereum blockchain.

"You will see that Ethereum is the number two blockchain in the cryptocurrency world. If millions are using Ethereum, then they will tend to value .eth domain over say, .sol. Also .eth domains are over 90% of the market of web3 domains."

Watch: The Crypto Mile: Ethereum insider reveals consequences of 'the merge'