discuss Domain names as a store of wealth

[Kuffy]

The majority of members don't seem to invest in domain names, but purchase/acquire them as trading speculations. 2018 is going to be an interesting year, and I wonder if domain names will become an alternative to stocks and bonds as a store of wealth. Gold, silver, copper and crypto-currencies are obvious alternatives, but I believe that usable domain names should be added to the list.

 

[domeen]

Happy new year, I suggest less weed this year.

 

[Kuffy]

Happy new year, I suggest less weed this year.

Sounds like a good plan for you - I don't smoke anything, or take any drugs, pharma or recreational. This gives me a clearer perception of life it seems.

 

[garptrader]

In recent months there has been considerable interest in cryptocurrencies and prices in that space have skyrocketed. Yet other than speculation, for most individuals in developed countries what is the real value of a bitcoin account for the purpose of making everyday purchases - paying rent, making car payments, your utility bills, etc? Some online retailers accept Bitcoin but very few accept any of the other hundreds of cryptocurrencies - despite their multi-billion dollar market caps Transaction processing time for Bitcoin transactions does not even compare to the VISA network and Bitcoin fees are a hurdle that could result in it being surpassed by other cryptos with lower fees .

Is this a sign that finally digital assets are beginning to gain some traction? As domain investors we are often faced with the end user who chooses to brand a business with millions in annual revenue on a reg fee domain because they cannot comprehend why they should spend more than $xx on a domain - even though it will help promote their business' products and services for years to come. Businesses don't question spending on attorneys, IT professionals, business travel, managerial incentive bonuses, and perks to improve employee morale / productivity. But often they refuse to spend on an aftermarket domain name. It is illogical but perhaps we will soon see the tide begin to turn in our favor.

 

[LeDomain]

Godaddy the biggest player in the market now offering appraisals - this may have a positive impact on domain names in general. Still early to say, but even though appraisals are still very approximate and sometimes not even close, the concept to appraising domain names for higher than registration prices is still very foreign to many end users.

 

[Kuffy]

Thanks for the encouraging replies guys.

I'm hoping that as retailers and services move onto the net, they will start to think of domains/web sites as "real estate", and the old adage of "location, location, location" will be considered. Another hope is that they will realise that specialist branches can be set up on their own sites. For example - one of the names I picked up today is "night plumber". It could attract people looking for an emergency service to a general plumbing business, the trick will be in persuading a plumber that it will earn him some extra money.

If a name can earn enough to cover renewal and admin fees, it becomes a great investment.

 

[BaileyUK]

Lets accept it domains have always been seen as Digital Assets, However, they never did or will appeal to the general public, there is a lot of work involved in getting a good return. So with the difference of work and effort they're NOT anything like a digital currency.

It's actually always been our problem that the public perception is anyone can do it, If their simple greed is strong enough

 

[Ategy]

Good discussion topic ... but I think the problem with the question lies in the fact that each domain is unique.

Some are really good strong domains that will hold or even increase in value ..

While MOST domains will bleed renewal fees year after year.

I think that for most domainers who have a grasp on the concept, have a portfolio of good domains that shouldn't go down in value .. but that being said .. domainers shouldn't be buying domains with the goal of maintaining value. Because even the best domains take time to sell at reasonable value we need to buy domains at a fraction of retail value.

Plus it's a little hard to judge whether something holds wealth if the potential valuation can range quite widely depending on who you ask.

The real key is building a portfolio with an average quality of domains that more than pays for itself over time.


So to answer your question ..
Yes .. a very tiny minority of very strong to premium domains can definitely hold value
.. but also and mostly ..
No .. for the vast majority of domains below a certain high quality that bleeds out renewal fees.


Again though .. it all falls back to purchase price .. as if you buy well .. your domains should always be worth more than you paid for them. But if you're talking about a domain purchased 10 years ago and whether it's worth the same in 2017 as 2018 .. the answer for the majority of domains is that it's worth the same minus renewals .. where "the same" unfortunately also is an over-inflated number arbitrarily given by a hopeful domainer .. lol.


So yeah .. kinda hard to answer the question as it hinges fully on specific quality and probabilities of selling at specific multiples.

It's the type of question to ask very large portfolio owners where their volume is so big it takes "chance" out of the equation (or at least reduces the random variation) .. much like an individual gambler could never tell you if his technique is good or bad over a single short session ... but at the same time an actual casino could give you very precise answers based on millions of hands.

 

[DBurn]

Unfortunately domainers still have a reputation as squatters ... hard to see domain names as a "store of wealth" to most people. But some of us have some nice portfolios which over time could very well make us wealthy!

 

[urlurl]

i think this was tried with the CHIP domain craze... looks they have moved on

 

[Kuffy]

Thanks for all the replies, they are helping me to decide on an investment strategy for this year.
@garptrader - you've touched on one of the problems. Many end users seem to thing the value of a domain name is the same as its registration fee. Somehow we have to presuade them that values are similar to real property prices. You don't value a house at the cost of a land registry filing fee for example.

My problem is in deciding on an investment plan for the new year. If I can give a hypothetical example.

I acquire 5 domain names for a combined cost of $50, and I receive offers totalling $1,000 for the names. This is not unrealistic, and has happened to me. I may hope for more for the names, but lets say I am happy with a 20 fold increase in the current market. Now I have a number of options assuming that I don't have an immediate need for the money. I can assume that I'm not going to see an equivalent increase in the value of those names over the next couple of years, and accept the offers. This puts the money into my registrar account. Now comes the difficult part, as I'm not going to transfer the money into the fiat banking system. I can withdraw the money as Bitcoin and "hodl" it. I can save the money, and use it to renew other domains to retain as investments. I can use the money to buy more domain names.

What is your policy in this situation? Just a bit of clarification - in the context of this thread, I am referring to domain names that I consider to be "usable", and not premium names. An example would be one of my recent reg's from the drop lists - NightPlumber.com. This is probably not a name you would use to create a business, but a useful name to promote a service within an established business. It's rather like opening a branch shop in a town close to your main retail centre.

 

[gotasale]

Domain names with today's value over 10,000$ are of course store of value and most owners are holding for end users good offers.

Domains less than 1000$ value are only speculation and they are changing hands very frequently and it is difficult to own 100 names worth 500$ each and you say store of value because every year you pay 1000$ to renew them which equal the cost of buying 2 of them!

Store of value domains are already stored and not for sale

 

[Haykay2005]

Quality portfolio is definitely a store of wealth.

 

[Kate]

Domain names are fundamentally illiquid.
So unlike stocks (or gold) they cannot be easily traded for cash.
Very few domains would truly qualify as investment vehicles, for example LLL.com or LL.com. Any LLL.com has an immediate resale value of $$,$$$ to a reseller but could potentially sell for 6 figures to an end user if the timing is right.
So the other difficulty is the lack of baseline. The value depends very much on the urgency to sell: to a reseller for fast cash (underselling), or to an end user to maximize value but that could take 20 years. After all so many great names remain unsold to this day.

Picasso paintings (or even those from lesser-known artists) are much more liquid than domain names. Because there are people willing to pay good money for unique paintings, and there are established (and regulated) venues for auctioning them.
Pieces of artwork are as unique as domain names, thus they are also hard to appraise accurately. But there is a market and they sell.

On the other hand, domain names are not perceived in the same light. Maybe it is because investors do not have the confidence that domain names will last long enough. I think they could easily survive for the next 30 years and beyond. Maybe they will prove as lasting as the phone numbering system. But that is not certain. At some point, non-tangible assets will lose value.

 

[GoKaizen]

For most domains are a drain on wealth.

Death by a thousand cuts... slowly... with renewals.

The majority of members don't seem to invest in domain names, but purchase/acquire them as trading speculations. 2018 is going to be an interesting year, and I wonder if domain names will become an alternative to stocks and bonds as a store of wealth. Gold, silver, copper and crypto-currencies are obvious alternatives, but I believe that usable domain names should be added to the list.

 

[Kuffy]

For most domains are a drain on wealth.

Death by a thousand cuts... slowly... with renewals.

So is real estate with property taxes, maintenance, and other associated expenses.
Gold needs secure storage, and other safeguards.
Share prices are now manipulated by the banks and the globalists, and not related to p/e.
Bonds show negative returns and are vulnerable to government predation.
Bank deposits are eroded by inflation, and at risk from bail-ins.

A decent domain name that earns a bit of revenue seems to be a much better bet than any of the above "investments". This assumes that some organisation doesn't manage to seize control of the registry of course.

 

[DanielN]

Domain names are fundamentally different than Stocks or cryptocurrency as these have a singular collective price decided by the market. Domain names on the other hand only trade between individuals and whats worse each domain name is unique.
This makes this asset more speculative by default.
If there was an objective way to appraise domains it would be great. But I never have seen one that works well.

 

[Kuffy]

Cryptocurrencies don't have a single collective price. Each exchange service sets its own price, and there are arbitragers who are making a living by switching Bitcoin and other crypto between exchanges. Stock prices are no longer decided by the market - JP Morgan, the fed, the banks etc. completely overide investor demand influences.

Domain names are closer to antiques for valuations. You know that certain group are more sought after and worth more. Keyword scarcity and demand can also allow sellers to hold out for higher prices. In the end though, the price is determined by buyer/seller negotiation on an individual basis.

 

[Smiles76]

So is real estate with property taxes, maintenance, and other associated expenses.
Gold needs secure storage, and other safeguards.
Share prices are now manipulated by the banks and the globalists, and not related to p/e.
Bonds show negative returns and are vulnerable to government predation.
Bank deposits are eroded by inflation, and at risk from bail-ins.

A decent domain name that earns a bit of revenue seems to be a much better bet than any of the above "investments". This assumes that some organisation doesn't manage to seize control of the registry of course.

You're spending far too much around other domainers. Nobody outside of domainers consider domains to be the same as real estate.

 

[Kuffy]

You're spending far too much around other domainers. Nobody outside of domainers consider domains to be the same as real estate.

That's part of the problem ( the consideration not the associations ). Bitcoin was not considered as currency at first, but that is changing gradually. People are starting to realise that virtual assets can have real values.