Dynadot

domains Why Is China Investing in Domain Names? Here's the Answer

Spaceship Spaceship
Have you ever wondered why Chinese investors have turned to buying domain names? Over the past couple of years, we've seen the market for two-letter .com, three-letter .com, four-letter .com, two-number .com, three-number.com, four-number .com, and five-number .com heating up with prices steadily rising.

Every week there are reports of rare two-letter and three-number .COM domains being sold to China, with leading domain investor George Kirikos estimating that 19.4% of all two-letter .COM domains are owned by companies or investors in China.

What has brought about this surge in acquisitions? I asked the team at DN.com if they could help us answer this question. DN.com is an international domain name escrow platform, who are also affiliates of the popular Chinese marketplace 4.CN. 4.CN's parent company are listed on the WhoIs information for many of the most valuable domains in existence.

The first question I asked was, "What has changed in recent years that made domain names a desirable investment asset?"

DN.com told us:

Everything has changed. The overall economy is much more advanced. Plus the fluctuation of the stock market caused many people to withdraw their funds from the market. They are re-investing those funds into new areas, like domain names.

Since the quantity of premium names are limited, and demand has risen, it has driven the price to a new level. We still are amazed, everything seems to be unreasonable, yet it is still going on.

This summer the Chinese stock market crashed, with markets nosediving 8.5% on 24th August. According to some analysts, around 1 in 30 people in China owns stocks of some kind, accounting for 20% of a household's wealth.

As DN.com said above, this uncertainty in the stock market has seen many investors withdrawing their money and placing their faith in domain names.

In recent weeks, we have seen a vast number of four-letter .COM sales, most fetching well over $1,000 and there have been questions - especially in threads on the NamePros forums - about how these domains are being used, and whether Chinese investors will look to sell to other investors or end users as markets rise.

DN.com told us:

I believe that only a few are targeting end-users. The IT industry has entered into a new phase, the capital market has become more and more level-headed, hence the start-ups. Even long existing IT companies are influenced by the change. I believe that most investors are investing because of the rarity and uniqueness of domain names.

Recently, a bunch of Chinese investors registered thousands of names over one night, to be honest, I don't understand the reason why.

This comment is referring to the registration of numerical, four-letter, and letter-number combination domains in various TLDs. For example, at the end of October there was a report here on NamePros by @djum stating that all English Premium LLLL.net domains have now been registered - with 5,020 being registered in one day.

DN.com's beliefs regarding investments based upon the rarity and uniqueness of domain names are backed up by the fact that two- to four- letter .COM's and two- to six- number .COM's have risen quickly in value, with domains including patterns and repeating characters being considered more valuable.

A data website I use is LLLLsales.com to track recent four-letter .COM sales. Their charts show a continuing upward trend in four-letter Chinese premium .COM, but how long will that trend last? Will Chinese investors still be investing in domains in five or ten years time?

DN.com have these comments to make:

It's hard to say, no one knows the future. From our point of view, as the value of CNY continues to decrease, people will tend to invest those funds into something that would maintain the value, i.e. gold, real estate, and to some, domain names. So I believe that investors will still be buying in the coming 2 years.



Thanks to @Eric Lyon and DN.com for helping with the creation of this article.
 
Last edited:
44
•••
The views expressed on this page by users and staff are their own, not those of NamePros.
Thanks for the explanation
 
0
•••
This summer the Chinese stock market crashed, with markets nosediving 8.5% on 24th August.
This was still a small dive compared to what happens in Europe, but as it hardly happens in China it was seen as impact. And the rationale behind the buying of stocks was behind the government's free push to the public...

So, how can we say this has not led onto a different investment attitude?...
Recently, a bunch of Chinese investors registered thousands of names over one night, to be honest, I don't understand the reason why."
 
0
•••
The suggestion that Chinese stock market investors, having been burnt by the summer's market collapse, turned to alternate investments, seems plausible. The current trends can equally be attributed to an artificial demand, created by those that acquired large blocks of such domains inexplicably.

However, one needs to be very careful making statements that constitute an endorsement involving investments: "for the time being it seems that this upward trend will continue with Chinese investors are looking for patterns, uniqueness and rarity."

As with every market, past performance is not indicative of future results.
 
7
•••
@Howie - The Chinese stock market's devaluation was estimated at $4 trillion. Not quite a small dive, eh? ;)
 
1
•••
For example, at the end of October there was a report here on NamePros by @djum stating that all Chinese Premium LLLL.net domains have now been registered

The only correction is "all English premium LLLL.net were registered" on that day.
But I'm getting ready for new report: "All 456976 LLLL.net names are registered" - coming up tomorrow.
 
1
•••
two to four letter .COMs and two to six letter .COMs have risen quickly in value

>> did you mean two to six number .coms?
 
0
•••
Thanks for this informative post.
 
1
•••
@domainerfella - yes, thanks for pointing that out. I'll get it fixed. That's what you get for writing late at night! (UK time)
 
1
•••
Article updated with a final statement from DN.com regarding the future of Chinese investment.
 
3
•••
There are so many Chinese always liked to follow the trend without mind.
They saw others purchasing stocks, so investing stock.
When stock market crashed, they find their surroundings turn to domain market, so do they.
 
4
•••
Bitcoin is also surging due to Chinese activity:
http://www.ft.com/cms/s/0/ee93bc2e-82f6-11e5-8095-ed1a37d1e096.html#axzz3qa12STQ0

The price of the cryptocurrency bitcoin surged on Wednesday to its highest in more than a year amid a wave of Chinese testimonials for a “social financial network” called MMM, which bears the hallmarks of a pyramid scheme.

New members of MMM have to buy bitcoins to join the scheme, which is the brainchild of Sergey Mavrodi, a former Russian parliamentarian since jailed for fraud.

The bitcoins are sent to other members of the network as “mutual aid”. Participants are promised a 30 per cent return per month, with bonuses for referrals or posting testimonials online.

“Today, on October 31, I received 20 per cent interest and [a bonus] as a recommender, for a total of $7,750. I truly experienced the greatness of 3M and the sincerity of all the participants,” said Wen Qiang, one of the hundreds of MMM evangelists taking to YouTube in the past 24 hours.

The bitcoin price surged by more than a fifth to above $490 on Wednesday, in the latest spike for the virtual currency created in 2008 by an anonymous mathematician.
 
0
•••
LOL, everyone who knows Russian knows this scammer - Mavrodi.
If you have Russian friends ask them and they will tell you 100+ stories about him.
He've been scamming for 25 years now, last went global lately. Last time in Russia was 2011-2012, almost got jailed again, but now he's smarter then 25 years ago, he doesn't own anything, just makes the scheme and other people run it for him. He knows how to use internet and social networks very good. Now Bitcoin, it's just ridiculous, I bet everyone in Russia is laughing so hard now. If you have Bitcoin sell it now, because when his network goes down and it's always happens BTC course will be down. This scam may live for some time but eventually will be uncovered, and since it's typical Ponzi scheme a lot of people will be burned.

I'm amazed that so many people in China and other countries have no idea about this guy already after amount of scam he committed.
I just read at Lurkmoar that Russians are banned from participating in his new pyramid, and all Russian IPs redirected to Google.
 
5
•••
0
•••
DN.com have these comments to make: "It's hard to say, no one knows the future. From our point of view, as the value of CNY continues to decrease, people will tend to invest those funds into something that would maintain the value, i.e. gold, real estate and to some, domain names. So I believe that investors will still be buying in the coming 2 years."
as long as the prices go up its all good. But if there will be a price decrese, then It will be like Chirstmas. The everyday "home stay MOM"/CHinese domainer (same as Taxi dirver investing into stock market) wants to get her funds and liquidite fast. thats when Christmas starts.
 
0
•••
They are moving money abroad, domains are just a part of it, small part... imo

http://www.bloomberg.com/news/artic...eat-cash-controls-sending-real-estate-soaring

There are some parts of China domain buying 'frenzy' are disturbingly similar to well known 'pump' phase. Nothing to worry about if you get out before the 'dump' rings the bell.

The real question investment-wise is how long will this 'trend' last, and is it capable to move the residual value of secondary market domains up, even by small % in a long run. Which can be good for a domain industry in a whole.

Then again, I can be completely wrong :)
 
3
•••
It is an amazing time to be involved in domaining!
 
2
•••
It's also a very good way to launder money.
 
9
•••
0
•••
0
•••
Bitcoin is also surging due to Chinese activity:
http://www.ft.com/cms/s/0/ee93bc2e-82f6-11e5-8095-ed1a37d1e096.html#axzz3qa12STQ0

The price of the cryptocurrency bitcoin surged on Wednesday to its highest in more than a year amid a wave of Chinese testimonials for a “social financial network” called MMM, which bears the hallmarks of a pyramid scheme.

New members of MMM have to buy bitcoins to join the scheme, which is the brainchild of Sergey Mavrodi, a former Russian parliamentarian since jailed for fraud.

The bitcoins are sent to other members of recommender, for a total of $7,750. I truly experienced the greatness of 3M and the sincerity of all the participants,” said Wen Qiang, one of the hundreds of MMM

here is it, link between bitcoin price increase and MMM classic ponzi scheme relationship.

now we must think if there is link between increase in domains price and a starter event (where even 4's and 0's were registered ! ) so can be a bubble.
 
0
•••
If anyone was involved with bitcoin/and altcoins over the last two years you will all notice similarities in the investment patterns. Its all just a way for a communist country to move money.
 
0
•••
0
•••
here is it, link between bitcoin price increase and MMM classic ponzi scheme relationship.

now we must think if there is link between increase in domains price and a starter event (where even 4's and 0's were registered ! ) so can be a bubble.
As soon as Mavrodi will start demanding people joining his new scam to buy domain and push it over to someone then we'll start talking about it. :)
 
1
•••
hooe nobody will give that evil idea to him : )
 
0
•••
Back