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 de­cent­ral­ised 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 spe­cial­ise 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 spe­cial­ises 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 au­thor­ised or­gan­isa­tions (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 or­gan­isa­tion.

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 or­gan­isa­tion, but by the block­chain itself on which the domain was created. This is usually done by means of per­son­al­ised 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 de­cent­ral­ised 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 de­cent­ral­ised 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 and British pounds. 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 pounds.
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.