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Owning Versus Renting – The Circumstances of Web3 Domains

March 19, 2024

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Owning Versus Renting - The Circumstances of Web3 Domains

Last week, Charles Dray from Resonance Security organized a meeting for me with Davide Vicini, the CEO of Freename, which is a company in the Web3 domain name space.

We chatted for five minutes about the relative merits of Florence and Rome and then had a further forty-minute conversation about the decentralized future of DNS, which got quite deep and technical at times.

However, don’t worry. Although Davide would love for me to dig into all the nuances and subtleties of the products and services relating to Web3 domain names his company offers, I know that the best articles make one single clear point.

The point I want to make with this article is that Web3 has a habit of blindly walking down the same old centralized approaches that Web2 has taken, often to our disadvantage.

No more so than in the Web3 domain name space.

But first, a little sidebar about domain names, and then ownership.

Are you on the bus?

I can still remember the first time I saw a website address on the back of a bus in Cambridge, back in 2001. It was an advertisement for an estate agency, with two improbably cheerful people in suits standing in front of a house, and a URL at the bottom.

I remember thinking, “Gosh, if people like that are going to put website addresses up on buses, then they might be something significant in the future.”

Domains are the equivalent of buying land in a space of scarcity. Even so, with the universe drawing an obvious parallel in the advert (domain name = real estate), I didn’t go and look for a promising domain name to buy.

I already had my domain — registered in 2001, so it’s 23 years old. And it’s a ridiculous domain: ongar.org. At that time I could have bought vodka.org or spaceships.com, for heaven’s sake!

Back then, hardly anyone appreciated that domain names were like the island of Manhattan just before the skyscrapers started going up. We now consider domain names as significant, even though they’re a made-up concept.

Domains are big business, and even though they are virtual, good ones can change hands for millions of dollars.

About ownership

What is it about blockchain and Web3 that makes them different from databases and Web2?

When you dig into it, the answer is that blockchains allow you to create digital “objects” that you can independently own. For example, provided you are careful with your private key, the Bitcoin you own is yours, and can only be taken from by force; through torture or intimidation.

“A blockchain allows you to create a unique, unforgeable, and unalterable digital item, on a computer network, with clearly defined ownership.”

But when you think about it more deeply, you’ll realize you don’t own much, if anything, in the real world. The loaf of bread you bought from the shop this morning, or the nice-looking pine cone you found on your walk to work is probably the closest you can get to true independent ownership.

You see, although you may ‘own’ a house, (or perhaps dream of owning a house if you’re a millennial), you never really will.

Even if you’ve paid off your mortgage, in most countries you still have to pay property and land taxes or it gets taken off you. So, in a sense, you’re renting it from the government.

Similarly, the government may decide that they want to build a road or bypass through your garden, and again, most countries have laws that allow them to force you to sell your property to them for this purpose.

That doesn’t sound much like ownership to me.

The rent is too high in Web2

We live in a world where the trend has been towards renting and away from owning. Instead of buying music on vinyl or CD, we now borrow it from Spotify, at a price. A subscription to a video streaming service provider means we don’t own our copies of movies anymore.

And on the Internet, we don’t own our Web2 website address — we rent it, through a registrar that gets its authority from ICANN (that’s the Internet Corporation for Assigned Names and Numbers) or some other organization like it.

They get a yearly cut, and we get a leasehold on the domain name.

Why is there rent in Web3?

You would think that in the brave new world of blockchain, the Web3 equivalent of domain name services would respect the concept of ownership.

You’d be wrong.

I searched for companies offering their implementations of domain names in Web3 and found ten leading companies. Only two of them offered you the right to buy your domain name in perpetuity for a fixed fee — Freename and Unstoppable.

The rest use the Web2 business model.

There’s a reason why Web2 methodologies are enticing to companies — they’re highly profitable. Subscriptions make more money over time than selling a one-off license or product.

Just as Google and Facebook (sorry, Meta) were irresistibly compelled to harvest and sell our data for the vast profits this avails them, Web3 companies are drawn to offer subscription models rather than outright ownership in the original spirit of blockchain, because of the recurring stream of revenue they offer.

“But what happens if someone buys a name and then loses the keys or dies without passing them on?” is an objection that one person raised with me.

My response? “So what?”

What happens today the Web2 domain you want, yourcompanyname.com, is not available. You try your-company-name.com, or yourcompanyname.io, or some other suitable domain. You will find one because there are now many top-level domains to choose between and even more second-level domain variants to select from.

As for the number of options and companies out there when it comes to obtaining a Web3 domain?

They highlight the fact that Web3 is still a frontier industry — we still have the opportunity to stake claims and shape its future, or at least vote with our feet and our crypto.

For now.

This article was authored and contributed by Keir Finlow-Bates, a passionate blockchain enthusiast and technologist.

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