NFT Domains Explained
NFT domains, powered by blockchain technology, will play an essential role in the decentralized web. Did you know that you can already mint your own blockchain-based Web3 domain as we speak? Providers like Unstoppable Domains offer you to register NFT domain names that pack much more utility beyond simply pointing to a decentralized website.
Last Updated: May 16, 2023
Do you still need to figure out what you can do with an NFT domain, and why would you create one? Let’s look at what NFT domains are and what kind of perks you get from owning an Unstoppable Domain.
What is an NFT Domain?
NFT domains are blockchain-based domains for hosting decentralized websites in Web3 that double as cryptocurrency wallet addresses. They can simplify crypto transactions by eliminating the need to use the hexadecimal addresses of your different crypto wallets. To better explain Web3 domains, it’s essential to understand how traditional domains work and what NFTs are.
Every website has a unique address. While a website’s actual online address is the string of numbers that forms the IP (Internet Protocol) address, it would be complicated to rely on IPs to access websites in daily use. Therefore, developers created the Domain Name System (DNS) to make web addresses easily memorable for end users.
Besides acting as a nickname for a website’s IP address and enabling users easier access to websites, domains initially aimed also to serve other purposes. Imagine using them for services like making payments or sending emails. Unfortunately, such use cases never materialized for traditional domains, which remained limited to displaying websites.
So, how do NFTs tie in with web domains?
NFT stands for Non-Fungible Token, a digital file with an assigned certificate confirming its authenticity and uniqueness. Buying an NFT token means that you’re purchasing the ownership rights for a digital or physical asset. Unlike other crypto tokens powered by blockchain technology, NFTs are non-interchangeable: each separate NFT packs unique value.
You’re probably starting to notice the similarities and why domain names have become a use case for NFTs. Like with NFT tokens, an NFT domain guarantees full ownership and control over the domain name. They enable users to host digital content on the blockchain and harness the power of this technology.
NFT Domains vs. Regular Domains
An NFT domain name ends with different suffixes than the top-level domains (TLD) in Web 2.0, like .com. You can get exciting domain extensions ending with .crypto, .blockchain, or .nft, to name a few. This sets them apart on the outside, but the two differ fundamentally. Let’s look at the advantages of NFT domains over regular domains.
Did you know that the Internet Corporation for Assigned Names and Numbers (ICANN), a US-based nonprofit, is the central authority that manages traditional domain names? When you want to get a conventional domain, you must turn to ICANN-approved domain registrars. Domain registrars like NameCheap are private companies that act as middlemen, registering and selling domain names to end users. Web 3.0 domains, on the other hand, reshape the way the DNS works and provide for a fully decentralized system.
Since they live on a public blockchain like Ethereum, NFT domains reap all the benefits of the underlying technology, including full transparency and better security compared to the centralized Web 2.0 alternatives. You’re in full control of your data stored on blockchain domains, and only you can make changes. The risk of your domain falling victim to a cyber attack is minimal.
No Renewal Fees
If you’ve ever purchased a regular domain, you know that you never really own a domain name despite having paid for it. Instead, you pay a domain provider for the right to use that domain name for a set period. It’s more like a lease agreement. If you forget to make the renewal payment when it’s due, the domain name goes back on the market.
When you purchase an NFT domain, on the other hand, you become the full owner of that address. In other words, your ownership will never expire, and you don’t have to pay any renewal fees.
How to Create an NFT Domain with Unstoppable Domains?
The easiest way to create your own NFT-based domain is to use an already-established provider like Unstoppable Domains. To do this, head over to unstoppabledomains.com and choose your preferred domain. The price depends on the TLD, with .x being the most expensive price tier, followed by .crypto and .bitcoin.
To mint your NFT domain, you must open an account and purchase the domain using USD. You can then mint your domain name and connect it to your wallet address. The NFT will be stored on Polygon.
Important: To use your domain with browsers like Google Chrome or Opera, you need to change your browser settings. Update the DNS resolver to enable .crypto blockchain domains or install the Unstoppable extension for Chrome to get support for all Unstoppable top-level domains.
Easily Import Wallets into Accointing with Your Unstoppable Domain
An Unstoppable Domain can help you import your crypto wallets into our platform faster than importing them separately. Adding your Unstoppable Domain is simple. Search for “Unstoppable Domains” when adding a new wallet, enter your domain into the “automatic” section, and select the blockchains you’d like to import. You can also go to our support page article for a more detailed tutorial on how to import your Unstoppable Domain.
What can I Use my NFT Domain for?
An NFT domain can serve different functions. You can use your NFT domain to host a decentralized website and share the domain name with the public as your web address. Type it in a compatible browser to display the website you created under the domain name. For example, you can build a gallery to showcase your NFT collectibles. Content creators and companies can also mint an NFT domain to host their digital content and professional websites.
There’s more to it, though.
You can use your NFT domain name as a crypto wallet to send and receive cryptocurrencies. Using a blockchain domain as a wallet simplifies crypto transactions as the easy-to-remember domain name replaces all your wallet addresses. Unstoppable Domains currently supports 300+ crypto assets across different blockchains.
The NFT domain can become your universal username in the decentralized web that you can use to log into different DeFi applications. In the current iteration of the Internet, your online presence is spread across hundreds of websites and apps that all require a separate username and password from you. A blockchain domain allows users a unified online identity in Web3 and a seamless user experience without compromising security!
And yes, you can buy and sell NFT domains. You can HODL and trade them on the blockchain similarly to regular NFTs and other digital assets.
NFT Domain Taxation
Buying, owning, or selling an NFT domain may mean that you’re liable to pay tax. Just like any other crypto asset, NFTs are subject to tax in most jurisdictions. In the US, for instance, NFTs are taxed as property, and every different NFT is viewed as a separate asset for tax purposes. Purchasing an NFT with fiat money is a non-taxable event. However, if you purchase your NFT using crypto, or if you sell or trade NFTs, you’ll likely incur a tax liability.
The information contained in this article, including any supplemental materials, is for general information purposes and does not constitute financial, investment, legal, or tax advice. The present content is not intended as a thorough, in-depth analysis, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Please consult your tax advisor.