What is an NFT domain?

Non-fungible token domains are blockchain domains, i.e., domains based on blockchain tech­nol­o­gy. Unlike Web2.0 websites, the data of these domains and websites linked to them are stored in a de­cen­tral­ized manner. Anyone can register a new NFT domain name, but addresses ending with .crypto or .nft tend to carry a higher price tag.

The basics of NFT domains

To un­der­stand how NFT domains work, it’s important to un­der­stand what a non-fungible token or NFT is. An NFT is a unique, digitally protected object and is widely used for digital artworks. If an artist creates an NFT for a GIF or a video, for example, they can then sell it, including as­so­ci­at­ed rights that are in­di­vid­u­al­ly defined. In many cases, an NFT is therefore a kind of title deed for digital objects.

Blockchain tech­nol­o­gy is the basis for NFTs. Object in­for­ma­tion is stored in the blocks strung together to form a chain and is stored de­cen­tral­ly in a peer-to-peer network.

What are NFT domain names exactly?

The same tech­nol­o­gy is used for an NFT domain. The blockchain contains in­for­ma­tion about the owner of the domain as well as the content of a website or domain. The NFT domain is stored in a wallet, just like cryp­tocur­ren­cies or NFTs. For this reason, NFT domains are often referred to as crypto domains. They are in­de­pen­dent of the actual internet and any third-party providers. NFT domains are also used to fa­cil­i­tate cryp­tocur­ren­cy trading.

There are several providers that spe­cial­ize in NFT domains. A few examples of available domain ex­ten­sions are:

• .x
• .crypto
• .wallet
• .bitcoin
• .888
• .nft
• .blockchain
• .bnb
• .defi

Unlike domain endings (top level domains), which are of­fi­cial­ly released by ICANN, NFT domain endings are released and managed by the re­spec­tive providers. These can be various players of the Web3, such as Un­stop­pable Domains which spe­cial­izes in NFT domains.

The fact that NFT domains are not released by ICANN means that they are not reg­is­tered in the root directory of the Domain Name System (DNS). Therefore, they cannot be accessed across all browsers or only with the help of a plugin. Another problem could be that ICANN could, in principle, approve the same top-level domains for the official Domain Name System in the future.

How does an NFT domain work?

To un­der­stand how it all works, you first need to un­der­stand the un­der­ly­ing tech­nol­o­gy (blockchain) as well as tra­di­tion­al domains.

Tra­di­tion­al domains

Com­mu­ni­ca­tion over the internet is based on numeric IP addresses. To establish a con­nec­tion to another computer and com­mu­ni­cate via it, a computer first needs an IP address. IP addresses consist of a partially random sequence of numbers and are therefore very difficult to remember. In addition, most IP addresses change pe­ri­od­i­cal­ly. The DNS protocol was developed to make it easier for users to com­mu­ni­cate over the internet. This is where static, text-based URLs (domains) are mapped to cor­re­spond­ing IP addresses. A hi­er­ar­chi­cal directory of DNS servers is used for this purpose. This means that users only have to remember a simple URL, e.g. apple.com.

But these domains can only be managed and allocated by au­tho­rized or­ga­ni­za­tions (domain reg­is­trars and domain reg­istries), and this right is in turn granted by ICANN. So you can see that the control over the DNS as well as all domains can be traced back to a single central or­ga­ni­za­tion.

Blockchain and NFT Domains

NFT domains differ from tra­di­tion­al domains primarily in terms of ad­min­is­tra­tion. With tra­di­tion­al domains, a domain’s “ownership” (i.e. the person that is allowed to host their website under a domain name) is con­trolled by the re­spon­si­ble domain registry. In addition, the domain “lookup” (i.e. mapping to an IP address) is done via the central DNS.

For NFT domains, on the other hand, ownership is not verified by a central or­ga­ni­za­tion, but by the blockchain itself on which the domain was created. This is usually done by means of per­son­al­ized smart contracts that are fulfilled by the nodes on the blockchain. Depending on which blockchain the NFT domain was created on, this process may look different. The lookup of a domain address is also performed de­cen­tral­ly via the blockchain.

In addition to de­cen­tral­ized man­age­ment, there are a few more pos­si­bil­i­ties that NFT domains offer. First, analogous to IP addresses in tra­di­tion­al DNS, they also have an as­so­ci­at­ed address, namely a crypto wallet address that can be used for trading cryp­tocur­ren­cies. In addition, NFT domains them­selves are NFTs, and therefore can be con­sid­ered unique digital objects. NFT domains can also be traded. Both this trading and the ver­i­fi­ca­tion of cryp­tocur­ren­cy trans­ac­tions also take place via the blockchain.

Ad­van­tages of NFT domains

The fact that an NFT domain is 100 percent yours and you can host websites in­de­pen­dent­ly from the “tra­di­tion­al” internet is one of its ad­van­tages. You can also use the domain to log in to other de­cen­tral­ized ap­pli­ca­tions (DApps) and turn your wallet address for trading cryp­tocur­ren­cies into an easy-to-remember URL. Instead of a com­pli­cat­ed string, you then buy and sell via your NFT domain. Since most browsers don’t yet offer native support for NFT domains, this is probably the most common use of these domains today.

Unlike tra­di­tion­al domains, which incur an annual fee, NFT domains are reg­is­tered once and require a one-off payment. An NFT domain is yours per­ma­nent­ly, without incurring ad­di­tion­al fees (domains ending with .eth are an exception). However, the data for your domain is then stored on the blockchain. So if this blockchain should cease to exist one day, you would no longer be able to prove that your domain belongs to you.

How to register an NFT domain name

NFT domain names are often traded on NFT mar­ket­places like OpenSea and typically purchased using cryp­tocur­ren­cies. Some providers allow you to purchase the NFT domain directly and pay in cur­ren­cies like US dollars. NFT domains cannot yet be reg­is­tered with classic domain providers that act as reg­is­trars.

Buying or reg­is­ter­ing with a provider like Un­stop­pable Domains is similar to buying a “classic” domain name:

1. Simply enter the desired domain name into a search bar to view the avail­abil­i­ty and prices for the available domains. The latter can range from less than $100 to several thousand US dollars.
2. To register, you just need to link your Crypto Wallet (this must be supported by the provider). 1. After payment, the NFT domain will then be “minted” and stored in your wallet.