Investing in Domain Names is a fast emerging asset class and is often referred to as virtual commercial real estate
Those of us who participated in the crypto bull market of 2021 may have experienced the massive gains that were available if you were lucky enough to pick the correct shit coin/s (all coins and tokens other than bitcoin) to invest in. If you were one of the few fortunate ones who were fleet footed enough to exit near the peak of the boom then you may have experienced first hand the elusive 10x returns that many talk about but few achieve. Most of us however watched from the sidelines and believed it was all a myth.
The reality is, investing in cryptocurrencies was and still is a great way to experience massive returns on your money however, the risks as you would expect are also massive. That’s why you should always only invest risk capital into these types of investments.
Recently I came across another investment which has been sitting right in front of me for years but I hadn’t realized its true potential until now.
Investing in domain names.
I believe investing in domain names is actually a superior investment to investing in cryptocurrencies for a few reasons.
Firstly, you are buying an asset which has a resale value. Assuming of course you are buying quality names.
Secondly, there is also a secondary market to sell domain names, although it is arguably not as liquid as the crypto market, although liquidity tends to dry up fast when the crypto feeding frenzy evaporates, the same can’t be said of domain names where there are always investors for the right names at the right price.
Thirdly, your investment is not at the mercy of the market. Most shit coins have little utility and the price is driven by the crowd. In the case of domains you are buying an asset which can be sold on its own merits.
Fourthly, you can build a portfolio of quality domains and sleep peacefully at night knowing that your portfolio won’t lose 90% of its value in a few days as the crypto market tends to do now and again.
What excites me the most about domain names as an investment is the fact that each is one of a kind. They are often described as virtual commercial real estate with none of the many costs involved in holding the bricks and mortar version, apart from a small annual renewal fee.
This is by no means saying that an investment in domains is a safe investment. It isn’t. But the returns are potentially phenomenal.
You can hand register a domain or you can buy a domain from an auction which is easily accessible to the average person with some spare cash. Spare being the operative word here.
Here are a few headline grabbing examples:
- InsuranceQuotes.com: Purchased for $70 and sold for $35.6 million in 2010.
- VacationRentals.com: Originally bought for $35,000, later sold for $35 million in 2007.
- Ji.com: Purchased for $10 and sold for $1.8 million in 2013.
- CarInsurance.com: Acquired for $49.7 million in 2010 after initially being purchased for a nominal fee.
- IG.com: Originally purchased for $4,600 and sold for $4.7 million in 2013.
And here are a few recent deals:
- NFT.com: Sold for $800,000 in 2021. The domain’s value surged alongside the rise of non-fungible tokens (NFTs), which became a significant trend in the digital art and collectibles market.
- Angel.com: Acquired for $2 million in 2022. This domain likely fetched a high price due to its relevance to the startup and venture capital community, where “angel investors” provide early-stage funding to entrepreneurs.
- Jellyfish.com: Sold for $555,000 in 2023. The domain’s value could be attributed to its versatility across various industries, including marine biology, entertainment, and technology.
- BlockChain.com: Acquired for $2.5 million in 2020. This sale reflects the continued interest and investment in blockchain technology and cryptocurrency-related domains.
- Voice.ai: Sold for $500,000 in 2022. With the growing adoption of artificial intelligence (AI) voice assistants and voice-enabled technologies, domains related to voice and AI have seen increased demand and value.
Admittedly these deals are the tip of the iceberg however, bargains are out there as long as you do the legwork. There are 350 million domain names globally, and 70% of domains fail to be renewed a year after purchase. That’s a big pool of names which you can choose from. GoDaddy is the biggest player in the domain market with a market cap of $16B, revenues of $4B and importantly for our purposes sales from secondary sales of domain names of over $400m. There are other players of note including NameCheap which as the name suggests is a great place to buy domains at a lower price than many of its competitors.
The good news is, the domain name market is not a saturated one. There are likely only a few hundred people who invest in domain names for a living and a few thousand who invest in domain names as a pastime. That’s a small number compared to the stock and crypto market for example. That probably explains the over sized returns available as it is far from a perfect market.
Obviously the downside is that your domain never sells and you have to continue to pay the renewal fees. But the investment required can be minimal. You can invest anywhere from a few dollars to thousands of dollars. Many investors in this market expect to see a return of 10 to 15 times their investment.
As a domain name owner, you have various options. You can either hold onto your domain for long-term capital appreciation, a preferred strategy for many investors, or list it for resale immediately, often through the platform of purchase. Alternatively, you can generate income from your domain by parking it with a service like Sedo.com. It’s a simple investment with trusted billion dollar market participants so your money and the custody of your assets are safe, the same can’t be said for crypto.
Like everything in life you should do your own research. It is also advisable to buy into a sector you are familiar with. Of course this is a cryptocurrency focused blog so if you are thinking of dipping your toes into the domain market then perhaps a good start would be buying a few cryptocurrency related domain names which you feel have good utility, where you can identify an end user/buyer and which have a catchy name. There are many factors that determine a domain’s resale value, including the number of backlinks, search volume and the number of extensions available.
GoDaddy appraisals are only a guide to a domain’s valuation. If you pick a good name chances are if someone wants it bad enough they will pay top dollar for it with no regard to the valuation.
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Here are a few cryptocurrency based domains for sale to get your juices flowing.
CoinCenter.net
Price: $1,500
GoDaddy Appraisal: $1,996
Notes: CoinCenter.netwas born some 11 years ago. The number of potential buyers for this quality premium domain name in the crypto space is vast with the .com in use, that’s why it is valued on the reputable saw.com at $9,000. This is a perfect domain name to both buy and hold or buy and flip at a price north of $4,000.
ICOlistings.com.
Price: $450
GoDaddy Appraisal: $1,539
Notes: Catchy name, significantly less expensive than ICOHot.com at $4k and much cheaper than the GoDaddy valuation of $1,539.
CryptoPicks.net
Price: $1,150
GoDaddy Appraisal: $1,321
Notes: Big discount from the $99k wanted for the .com of the same name. .net is the second most valuable domain.
MetaverseProperty.net
Price: $750
GoDaddy Appraisal: $964
MoonshotPicks.com
Price: $950
GoDaddy Appraisal: $1,133
Notes: This is a premium name with many uses both within the crypto space and outside and is priced at 16% discount to the Godaddy valuation.
rinvst.com
Price: $395
GoDaddy Appraisal: $1,206
Notes: Perfect domain for a flip. Established 5 years ago and with a short catchy name this a great domain to start any domain portfolio with
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Mastering Domain Name Investment – Now Available on Amazon.
Probably one of the most comprehensive books available on domain investment
- Download for only $0.99
- 2024 edition
It’s all here
As a beginner to this market GoDaddy is the place to start your education. Never invest more than you can afford to lose and always do your own research. Happy hunting.
Resources
Check out this podcast, probably the most informative in the domain space.
https://podcasts.apple.com/us/podcast/domainsherpa-com/id619478599
Godaddy
NameCheap
Domain Moonshots
A listing service of some of the best quality and affordable domain names on the market.
Check the Podcast Domain Moonshots which reveals two new hidden gems in the premium domain name space every two weeks.
