What are NFT domain names and should you invest in them?

What are NFT domain names and should you invest in them?

Web3 is fast approaching, with updates and developments happening every day, which means that the internet is about to go through a big change. While Web3 will consist of many different things, one of the biggest parts of this system will be NFTs. The public perception of NFTs currently is very low, as most people think of NFTs as just pictures that hold no value and have no usability.

While this might be true for some NFTs, there are NFTs that just hold utility and have some usability rather than simple looks. One of these types of NFTs is domain NFTs, which are NFTs of domain names, and there is speculation that these will be the future of Web3. But what are these domain NFTs and should we invest in them?

What are NFT domain names?

NFT domain names are essentially the same as regular domain names. They are used to build websites and act as passways to the website, but the difference between these two is that NFT domain names work in Web3 and they are part of the blockchain. These NFT domain names are also connected to crypto wallets, as they are just simplified and easily readable hexadecimal crypto wallet addresses. 

NFT domain names have a lot of functionality and they are not just domain names that people use to visit your website. They are used to identify the ownership of websites and also digital assets associated with that domain. Another difference between NFT and regular domain names is TLD, which is the ending of the domain name. Regular domain names end on TLDs such as .com, .net, and .org while NFT domain names end on TLDs such as .crypto, .eth, .blockchain, and so on. 

What are they used for and what benefits do they bring?

As we mentioned before, NFT domain names have a lot of functionalities. Since Web3 is still in development and is not as widespread as other blockchain technologies, their usage as domain names is not as big, but they are commonly used for other stuff. NFT domain names are shortened and simplified crypto wallet addresses and because of this, a lot of people use them as their crypto address. With this, you won’t have a very long and hard-to-read crypto address, but a simple one consisting of simple words and numbers. 

Another usage of these NFT domain names is that they can be used as usernames across different blockchain spaces, primarily in the metaverse. Just like Web3, the metaverse is developing at a rapid speed and these two are looked at as the future of the internet. 

When it comes to the benefits of these NFT domain names, there are plenty. One of the biggest benefits of NFT domain names is that they are decentralized and are not controlled by a single entity. This in itself gives many advantages and one of the biggest advantages is that there are no renewal fees. When you own a regular domain name, you have to pay monthly or yearly fees in order to keep the ownership of the domain name. But when you own an NFT domain name, you are the sole owner of the domain and don’t have to pay any fees. 

Another benefit of having an NFT domain name is that you can give multiple utilities to one address. Since these domain names are shortened crypto wallets, you can use them as crypto wallets, domain names, metaverse usernames, and conduct all sorts of activities, using just one address.

Should we invest in them?

The short answer is, if you can, yes. Since Web3 is still in development and is not super popular, there are a lot of good domain names that are still available for minting, and those that are already minted can be bought for reasonable prices. If Web3 delivers on its promises and it becomes the next iteration of the internet, the demand for these domain names is destined to go up, which will result in the prices of good domain names skyrocketing. Whenever a company that has big aspirations enters a digital space and builds their own website, they always try to have short and memorable domain names, and nowadays these companies are paying big money for regular domain names. Once the demand for these NFT domain names rises, this trend of having good domain names will also move to NFT domain names, which will most likely result in price increases. 

But this does not mean that you should spend a lot of money on these domain names, and should only invest the amount you are ready to lose. Since Web3 is still in development and is nowhere as popular as Web2, there is always a possibility that it fails to deliver on its promises, and the prices of these NFT domain names might not go up. Because of this, the best way to invest in these NFT domain names is to look for short letter or word combinations that don’t cost a lot or are still mintable for very cheap. Then simply acquire a few of them, while not damaging your financial situation. With a few NFT domain names, or even just one, you might end up making a very big profit, if you choose the right NFT domain name to invest in.

What to look for when investing in NFT domain names

If you have decided to invest in these NFT domain names, simply acquiring random ones will not be the best decision. You should look for specific characteristics that are usually in demand and acquire one based on this.

The first thing you should look for is the number of characters in these domain names. Having a small number of characters in your domain name is really good, as it makes it very easy to remember the domain name and is easily marketable. Domain names with 3-4 characters are generally considered to be great, and even if these characters don’t make any sense, they are still in high demand. If you go for a higher number of characters, such as 5-7, then it would be better for these characters to make a word or be easily pronounceable. 

This moves us to the second important thing to look for, and this is words. Having a domain name that is a straightforward word is really good, especially if your business is associated with that word. If you are unable to find a good one-word NFT domain name, then going for a 2-3 word domain name is also a good decision, but here it’s best if these words link with each other and they are not just random words put together. 

Also, domain names that are associated with blockchain or technologies are good investment opportunities. When we move into Web3, blockchain and technologies will be an integral part of the internet and demand for domain names associated with these spaces will most probably sell at high prices. But these domain names will also be really hard to find since the majority of them are already taken, but if you find one, don’t hesitate to grab it.

FAQs on NFT domain names

What is the best NFT domain name to buy?

When it comes to the best NFT domain names to buy, the shorter the better. It’s best to buy NFT domain names that have 3-4 letters as demand for short domains is always high and there are people who are willing to pay quite a bit of money for those. Another good domain name to buy is NFT domain names that are specific words or names, as it’s hard to come by domain names that are one specific word and you will be able to sell it for good profits. 

Can you sell NFT domain names?

NFT domain names are part of blockchain and they can be traded just like cryptocurrencies. These are NFTs meaning that they are tokens and because of this, anyone can transfer domain names and there are even several options. You can sell it straightaway and there are also platforms that offer auctions. If you are not using your NFT domain name, but also don’t want to sell it, there is also an option of renting it out, and you can make a passive income, while still keeping your ownership of the NFT.