How NFT Domains Work (And What They Bring To The Table)
Non-fungible tokens (NFTs) can be used to represent physical or digital items in a trustless environment. They can also act as virtual certificates of ownership for physical items (phygital) and even intellectual property.
By leveraging the immutability of blockchain technology, these tokens have redefined how we view ownership in both the virtual and physical realms. They have allowed certain industries to be created, improved, and reshaped, creating an array of use cases that were not imaginable before.
While NFTs are usually associated with digital art, game items or land, and sports memorabilia, there are other applications for the technology. Decentralized websites and domain names are one of the said applications. Decentralized domain names have garnered considerable traction in the last few years, with Unstoppable Domains achieving unicorn status with a $65 billion investment round.
Within the legacy web2 paradigm, domains have been used largely one-dimensionally. NFT domain names allow users to represent decentralized websites, wallet addresses, and an all-in-one digital identity across the internet. Today, we’ll take a closer look at NFT domain names, how they work, and their advantages over traditional domain names.
What Are NFT Domains and How Do They Work
While traditional domains have many potential applications like email and online payments, they have been solely used to display websites across the traditional internet.
The lack of innovation in the domain name system can be largely attributed to its centralized nature. Domain names are owned and controlled by third parties, making it harder for developers to build on the technology. They have also increased the costs associated with building on the web2 “read-and-write” internet.
NFT domains, on the other hand, are not controlled by any entity but rather live in a public decentralized ledger, the blockchain. They give users full ownership of their online data. Furthermore, this data can be looked at and verified by anyone at any time, giving them a trustless, open, and transparent nature.
There are also other benefits besides full ownership and transparency. NFT domains provide better security for the domain owner since only he or she can update the data displayed by their domain NFT. This reduces hack vectors found in the legacy domain system. These names are also as immutable as the blockchain they are built on.
When it comes to privacy, NFT domains also play a key role in the improvement of online data control. Most web2 platforms will keep user data in exchange for their services or tools. This data can later be sold to advertisers, allowing companies to profit from your data and exposing it to leaks.
Although there have been improvements when it comes to allowing users to know and choose whether or which information they want to be shared and how it is used, NFT domains give the user full control of their data. Users linking to NFT domains will need to give permission to any decentralized applications (dApps) to use their data.
With all of these benefits, NFT domains have garnered massive interaction from developers and have opened up a new full suite of applications for domain names on the web3 environment.
What Can You do With NFT Domains
Practically speaking, there are multiple applications for NFT domains, both existing or in development. One of the most popular applications for NFT domains has been in the realm of online payments.
Users can replace their long and complicated wallet addresses with their NFT domain names and use them as a single source for payments across hundreds of blockchain networks.
Multiple services, like wallets and payment service providers, allow you to send and receive payments with your NFT domain, replacing complicated wallet addresses with simple and easy-to-read names. This makes it so much easier to send and receive crypto or NFTs from friends and business associates.
Another obvious and popular use case for NFT domains is easily hosting, creating, and accessing decentralized or traditional websites, including static content or dApps. Web3 websites are typically hosted in decentralized systems like the Inter-Planetary File System (IPFS) or Filecoin.
Create your decentralized, universal identity with NFT domains using them as your universal web3 username across the internet. This is known as your Digital Identity or DID, and allows you to log into apps with the same username safely. Everything you need to interact with the web can be associated with your decentralized domain name, a true cyber identity.
NFT Domains, a Bridge to Web3
NFT domains are an important piece in the puzzle when it comes to the evolution of the internet, which is now between the web2 (read-and-write) and web3 (read-write-trust) stages. While NFT domains connect to decentralized websites, they can also connect to web2 platforms for off-chain data.
Decentralized domains can access both types of websites and connect to them through our web3 identities, allowing web2 and web3 to interact. For example, users can link their social media profiles to a decentralized identity. The connection between the old and the new webs is key to their evolution.
NFT Domains are likely to play a huge role in ushering mass adoption of this new and improved internet as well as blockchain technology itself. Everything we do on the internet may, in the future, be done from behind a decentralized domain name, be it interacting with decentralized applications, websites, or online payments.
If you haven’t already, you may want to acquire an NFT domain name yourself which will grant you full ownership of said domain name with a one-time fee. This purchase will allow you to secure your digital identity and space on the web3 internet. You can acquire a decentralized domain name with services like Unstoppable Domains.