Cryptoverse: Trading Names in an Astounding Crypto-Crazy

Oct 4 (Reuters) – A new NFT trading craze where names are bought and sold for eye-watering sums is providing a multimillion-dollar lifeline for speculators shivering in the bleak crypto winter.

“Domain” names like coin.crypto (which has sold for $100,000) and beer.eth (which fetched $39,000) are a new type of NFTs that owners can use to replace the jumble of 16 random numbers and letters which make up their digital wallet addresses.

That may seem like a lot of money for the crypto equivalent of a custom license plate, but supporters say those names could become valuable real estate in the coming years with the advent of Web3, a much-hyped vision of a future internet built on blockchain.

Right now, the trading market for these alternative assets is providing rich – and risky – pickings for some investors scooping up buzzy domains with the aim of flipping them for a profit in the secondary market on NFT platforms like OpenSea.

“We have domain names starting as little as $5, we’ve sold some for as much as $100,000,” said Matthew Gould, CEO of Unstoppable Domains, which sells names ending in .crypto, .nft and .wallet on its website.

“The scope is because there is a clear perceived value difference between different words and lengths.”

The company has seen some bumper deals recently: for example, wallet.crypto sold for $250,000 and earn.crypto went for $100,000, both in April.

Meanwhile, the .eth names generated by Ethereum Name Service (ENS), the largest domain seller, were the fourth most traded type of NFT on OpenSea in September, with total volumes rising 75% from a month ago to the equivalent of $12.5 million.

ENS domain names were topped by only NFTs (non-fungible tokens) from well-known collections such as CryptoPunks and Bored Ape Yacht Club. Trading in the relatively new assets has grown rapidly even as the crypto winter has hit the NFT market.

Monthly registrations for .eth domain names rose to over 433,000 in September, the highest in the past 12 months and a 5,000% increase from a year ago, according to Dune Analytics.

The domain names that have the highest value are often those with simple and short English words, terms that refer to pop culture or Web3, and number sequences, according to experts, such as crypto.nft or 000.eth.

WHAT IS A NAME WORTH?

Crypto domains are still in their infancy. There is no guarantee that they, or Web3, will live up to their promise, while the highly volatile nature of cryptocurrency and NFT markets suggests dangers for the unschooled trader.

There are also many questions about the scalability of the technology, and the potential for confusion when competing domain providers issue similar names, potentially leading to misrouting of funds, a report from Block Intelligence said.

Sasha Fleyshman, portfolio manager at investment firm Arca in Los Angeles, said domain names are likely to grow in popularity as crypto becomes more mainstream.

The 16-character alphanumeric addresses used for digital wallets “are not exactly user-friendly, especially for non-crypto native people”, he added.

In an indication that some investors have confidence that digital assets linked to .eth domain names will grow in value, the ENS project’s crypto token surged nearly 90% in the third quarter to $15.92 — though it’s still far from the 40 dollars it was traded on. beginning of the year. Bitcoin ended the quarter largely flat, struggling to stay above $20,000.

Nevertheless, many market participants warn that it is difficult to value a domain name, as it constitutes a speculative bet on what may be in demand in the future.

This weakens the case for institutional investment, Fleyshman said.

“From a fund perspective, it’s quite difficult to make a basic investment in specific domain names,” he added. “It’s just not our wheelhouse to say which domains are going to accumulate value and which aren’t.”

(1 Ether = $1330.20)

Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru; Editing by Tom Wilson and Pravin Char

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