Comprehensive analysis of Domain Names vs Cryptocurrencies as Investment Opportunities


Being a follower of both cryptocurrency and domain name from past 1 year (domain names, a little longer), I have gathered a lot of insights  of these markets. My curiosity to learn, made me connect with big investors and discussed their strategies.  This post therefore is my attempt to provide comprehensive comparison between the Domain Names & Cryptocurrencies as virtual investments.

Market valuation

Domain names are like real estate and hence we don’t have a set market price for them . What this means is that a domain can be sold at any price regardless of the price of similar domains . Hence there is no concept of “market price” for domains. . The price is purely dependent on “Buyers need” and “Sellers greed”.

On the other hand cryptocurrencies are digital assets that always have a “Current Market Value” associated with them (anyone can sell Bitcoins for higher or lower than the current market price but it’s a very rare phenomenon ). Most of the transactions that take place in cryptocurrencies are agreed upon at some reference price. It might be of an exchange in the buyer or seller country or any other standard exchanges. Another fact is that we can always sell cryptocurrencies on exchanges at the market price of that time (provided there are enough buyers) .Thus at any given time, cryptocurrencies are traded at a fixed market price.

Growth rate

Consider an investment made in premium one word or three-letter.com domain back in 1990’s or early 2000’s . For direct comparison lets take the year 2011 when they were being traded at around $3000 , you would now be easily getting  five to six figure valuation on them for any given day.So for direct comparison $3000 to $ 30,000 or at-least $20,000 for any given LLL.com  . Which indeed is a nice ROI.
Let’s compare this with the most widely accepted crytocurrency,  Bitcoin. Bitcoin was trading around $1 at the same time in 2011 and is now being traded at around $6000 (at the time of writing this post ) . That’s a staggering 6000x ROI for 6 years hold . This ROI is a lot considering that you can liquidate anytime in between at the market price. The cryptocurrencies though are very new asset classes whereas domains have been around for a longer time.  Another fact to be considered is that Cryptocurrencies have risen in prices too quickly.  That’s alarming because there is every possibility of steep downfall as well.

Holding Cost & Liquidity

Domain names have to be registered with a registrar and the owner has to pay a minimum renewal fee per year. Therefore holding domain names is not decentralized and not free of costs as well. Another feature considering the liquidity of domain names is that they cannot be further divided into parts i.e. you cannot trade 0.1 part of a DomainName.com. This is an essential factor while considering the liquidity of domains especially the high valued ones.

Cryptocurrencies on the other hand can be stored in your private wallets or on exchanges.  There is no maintenance fee associated with holding them. They can also be further divided into small parts. This provide way better liquidity while dealing with high valued coins such as Bitcoin.

Legal Aspects

Domain names are registered with accredited registrars who comply with all standard legal procedures of the countries in which they operate.  If law enforcement agencies seek the ownership records of the domain from the registrar then registrars would have to comply. This makes Domain names a “State Friendly” investment . Of-course you cannot always get the price at which the domain was purchased or sold unless the parties involved, agree to do so.

Cryptocurrencies on the other hand are not controlled by any one authority. If only the trading takes place on licensed exchanges, can the data of transactions be available. Other than that all the transactions are anonymous.

This anonymity is good in the sense of privacy or legal obligation but they don not provide a security against fraud.

Suppose a domain name has been stolen from your account then you may seek help of registrar to recover it.  You would have to submit some sort of proof that you were not the person to login to the account ( Comparing the IP address location) ..etc.  This is where the centralized system of domain names comes to rescue. The registrars can communicate between them and after going through suitable evidence they can help the owner claim the domain.

Conversely the case with cryptocurrencies is that if someone loses his/her password or private key of the wallet and the money is transferred out of it then there is no way in which it can be recovered. No one really knows the owner of a particular currency address (apart from the case where it is an address on a legal exchange). The person who lost money cannot even register complaint with Law enforcement agencies because the crypto network is decentralized and no one can be held accountable.

Conclusion

 If you are a low risk taking investor who would want to invest in an asset that is under complete legal compliance and also appreciate in value rapidly then domain names are your best investments.  But if you can afford to take some calculated risk for high short term returns then cryptocurrencies can be a good investment opportunity.
I hope this article helps you get better understanding of Domain names and Cryptocurrencies as investment opportunities.

What's Your Reaction?

Cry Cry
0
Cry
Cute Cute
0
Cute
Damn Damn
0
Damn
Dislike Dislike
0
Dislike
Like Like
3
Like
Lol Lol
0
Lol
Love Love
0
Love
Win Win
1
Win
WTF WTF
0
WTF
Prathmesh Tokekar
I am an innovator with a passion to learn. My interests lie in technologies of future and of course the INTERNET. I invest and broker Domain Names and follow the markets of Cryptocurrency. Connect with me via Facebook or LinkedIn if you have any questions or would like to buy or sell domain names.

Comments 1

Your email address will not be published. Required fields are marked *

  1. BITCOIN – Let say, 7 years ago, 400 Bitcoins cost $1. Today, 400 Bitcoins are worth $1 million (7 years collection or increase $142,857/year average value. 1429 % increase per year.

    WORLD’S MOST EXPENSIVE DOMAIN NAME – Cars.com – Domain investor George Kirikos – $872,320,000 – registered on 1998 – sold in 2017 (19 years collection or increase $45,911,579/year average value) . 459116 % increase per year.
    Domain name is still the most profitable investment in the world.

Comprehensive analysis of Domain Names vs Cryptocurrencies as Investment Opportunities

Choose A Format
Personality quiz
Series of questions that intends to reveal something about the personality
Trivia quiz
Series of questions with right and wrong answers that intends to check knowledge
Poll
Voting to make decisions or determine opinions
Story
Formatted Text with Embeds and Visuals
List
The Classic Internet Listicles
Countdown
The Classic Internet Countdowns
Open List
Submit your own item and vote up for the best submission
Ranked List
Upvote or downvote to decide the best list item
Meme
Upload your own images to make custom memes
Video
Youtube, Vimeo or Vine Embeds
Audio
Soundcloud or Mixcloud Embeds
Image
Photo or GIF
Gif
GIF format