discuss How would a US dollar or euro devaluation affect domain aftermarket?

[garptrader]

One of the drivers of Chinese interest in domaining has been concerns about its currency and stock markets.

While the US dollar has traditionally been viewed as the world's reserve currency, the US government has been running deficits for years and now has a debt of some $18 trillion - larger than its GDP. I am not an economist but what might happen to the domain market if the US dollar or euro were to be devalued as has happened in some emerging market countries?

https://en.wikipedia.org/wiki/National_debt_of_the_United_States

One thought I have is that maybe we should not be setting fixed prices in US dollars...

 

[Enwych]

It is highly unlikely that the USD will get devalued because the gov't will not intervene to directly manipulate the value of the currency as some other countries do. However, the gov't may take measures to weaken the dollar, such as through the adjustment of interest rates, in order to keep U.S. export goods competitive. Right now U.S. exporters are getting clobbered by the strong dollar. As the dollar becomes stronger, you need more of another country's currency to buy US goods.

Therefore, if the dollar gets stronger, all else being equal, the price of a domain priced in USD would need to be adjusted down. If the dollar weakens, the price would go up. For example if a domain is worth 20 GBP today that would be $28 (at an exchange rate of 1.40). If the dollar weakened against the pound to 1.50 next week, then you would need $30 to buy that same domain. So a weaker dollar would benefit sellers who price in USD.

It also depends on which currency is involved in the trade. Also, prices have to be set in some currencies and all currencies fluctuate, though some more than others. The dollar is good standard because it is fairly stable.

 

[DanSanchez]

I try to hedge this risk by offering a 10% discount for anyone paying in Bitcoin, in fact, you can fund your NameSilo account with bitcoin in about 2 hours. I'm a huge proponent for alternative currencies for the exact concerns you brought up.

Should hyper-inflation set in, or worse, negative interest rates, you would be stuck holding worthless digital fiat money. Given that most "dollars" are simply in people's accounts and not in paper money anyway.

Sure Bitcoin is volatile, but you don't have to hold them for long term and companies like CoinBase make it easy to liquidate your holdings into dollars.

 

[JayT]

Dollar has been devalued and will continue to be, probably at exponential pace too. This will hardly have an effect on domains because domains are more global, any individual currency won't have too much to do with the value of domains. Granted, the USA is a big consumer of domains and if people can't afford to spend as much, it would do harm. However, for the dollar to go 'DOWN', as you suggest, another currency usually goes UP. That isn't always the case though, ALL the currencies can, and do, go down in relation to other assets. This is bad, but inevitable with our current system. In any case, domains are a good investment in that situation, as long as we don't devolve into some great depression where everyone's basic needs are hard to meet, IE: struggling to feed self.

 

[Kiko]

us dollar devaluation?? r u kiiding me? the dollar is a strong as ever right now, the problem might come if it comes to strong mean overvaluation..

 

[JayT]

us dollar devaluation?? r u kiiding me? the dollar is a strong as ever right now, the problem might come if it comes to strong mean overvaluation..

Heh, don't be fooled, look at some real charts. Dollar has lost 98% of it's purchasing power over the last 100 years...how are you defining valuation?

 

[Kiko]

just for note
whatever happens in the global economy it does affect the value, offer, or demand of domains,
obviously I rather eat then buying a digital asset...

 

[garptrader]

Perhaps this might explain a little...

 

[TheLegendaryJP]

No doubt the USD is a joke, nothing to back it and the train is rolling toward a cliff but...

Will they be honest and let the dollar die, no and IF that reality happened one day we have much larger problems in the world then the price of domains.

Enjoy the ride...

 

[Kiko]

ok, I only watch 1 minute, is old news and speculation, the us national debt is around 19 trillion right now, he still talking about the interest rates being to low, we are passed this....the debt can still hold up to more than 30 trillion in any eventuality, more than 70% of us debt stays here.....

 

[Kiko]

the only way the us dollar collapse is if a comet strikes Manhattan, and that's not going to happen any time soon

 

[JayT]

the only way the us dollar collapse is if a comet strikes Manhattan, and that's not going to happen any time soon

You don't know what you're talking about lol 'only a comet'...right and is that what every other civilization that fell since time thought too?

"The debt can still hold up to more than 30 trillion"...really? How do you figure? There's no basis here, what is going to hold the debt up? itself?

 

[Manik]

No offense but if dollar depreciates hen so does my currency so in that case putting a BIN in dollars isn't an issue for me.

Also if such a thing happens there will be signs and speculations, right now it is just a thought.

 

[garptrader]

Now if my domains are priced in some emerging market currency and that country devalues its currency 50%, then I might find some fixed price domains selling cheap. But domains are justified based on economic activity - a business which finds them useful for promoting a business' products and services. If a severe recession results from a crisis such as what faced the US in 2008/2009, perhaps the only things of value would be food, water and shelter.

 

[JayT]

The money you know is debt, you are paying with 'Debt, Bills, Notes'. Is all backwards! It works until the debt cannot be paid (it will paid at the cost of inflation, but in the end, the principle can never be repaid). Once someone cannot pay their debt, they lose creditably, no one wants to do business with that entity anymore. The 'value' is derived by nothing except perception and the ability to fulfill promises.The problem is that governments can continue to create inflation, and let people like us, the individual suffer, or end the farce and establish a sound monetary system. The sooner the better. The Federal Reserve issues the money and loans it to the government for a small interest charge. Theoretically, those that get the money first assume the most power. Eventually it trickles to you, but by then many middle men loaned it out at higher and higher rates. You are stuck with IOU's that have more debt attached to them than face value! It's a self-destructing system at the very root. The longer it stays the harder it will be to recover from, believe it.

You guys are all in the wrong mindset. There are 'signs and speculations' They're here right now! This is a long time coming, it happens slow at first than very quickly at the end. The longer they try and grasp at the old system while it implodes, the worse. Our monetary system was designed by bankers to extract real assets from the populous, which is on going. As an individual, you can profit from it too, if you understand, but for humanities sake, it is very bad. I hate to be doom and gloom but it's reality.

 

[Enwych]

The only way the U.S. would not be able to pay on its debt is if other countries stop lending to it which will not happen because all economies are tied to the U.S. economy. In other words, as the U.S. economy goes, so goes the rest. Same is true of China which is why there's concern about its market and the devaluation of the currency. With globalization all economies are tied more than ever. Now Chinese investors are buying domains because domains keep their value. There are a finite number of 4N domains in any currency. They will always be valuable as long as business exists. Domains are their own currency.

 

[JayT]

Domains are not currency! Domains have very few qualities of a good currency. Domains are more of an asset. I don't feel like getting into all the best investments during hyperinflation, but domains are pretty safe, imo. In other words, I feel that Domains are really immune to whatever happens to currencies, the only wild card will be the demand in such event. I think we are safe there too. I think people will still be able to afford electricity and internet. I think more people will be at home, jobless, trying to make new money, which is conducive to us domainers.

 

[Kate]

the us national debt is around 19 trillion right now....the debt can still hold up to more than 30 trillion in any eventuality, more than 70% of us debt stays here.....

Spoken like a true politician This is real scary. The debt will never be repaid. Who truly believes otherwise ?

The US currency will crash like other countries before, this is just history repeating itself over and over but people have short memories (over the last 2 centuries Greece has gone bankrupt 5 or 6 times I think).

The US has been able to sustain a huge, persistent deficit as long as the dollar was the world's reserve currency. But this is the old (pre-1945) world. Americans are clinging to the vestiges of their Cold War glory, but the world has changed a lot while the US is now the shadow of its former self.

Now it depends on the situation, a total crash or devaluation. When the euro was strong, I was buying more domains priced in USD. For me a weak USD is not a bad thing.
I price some domains in EUR (especially European extensions), others in USD. I maintain accounts in multiple currencies. If the dollar is weak, this could boost aftermarket sales.
In case of a big crash, canned food, toilet paper and firearms will become more valuable than domain names, so: diversify.

The only way the U.S. would not be able to pay on its debt is if other countries stop lending to it which will not happen because all economies are tied to the U.S. economy.

With globalization all economies are tied more than ever.

Dangerous thinking. In 1914 Germany and the UK were each other's biggest trading partner and they still went to war.
Globalization and intertwined economies doesn't guarantee peace, at some point I would say it's the opposite. Competition and commercial tensions are the origin of many wars. Wars usually have economic stakes. Now the US has a huge deficit toward China, China owns a big portion of US debt which can be used a leverage. Don't think anything could go wrong here ?
I'm sorry for Americans citizens, but your country was sold away and is no longer yours.

 

[korganian]

I am selling a domain to a Canadian citizen. I wanted $500 for it. He complained that his currency had depreciated against the USD. The Canadian dollar used to buy 1.2 USD but now it only buys .75 USD.

The effect this had was that He was only willing to pay me $400 for the domain because $400 was equal to $533 Canadian dollars. When the Canadian dollar purchased 1.2 USD, $500 would have only cost him $416 Canadian dollars, so He would have gladly paid me my full asking price of $500.

 

[JayT]

I am selling a domain to a Canadian citizen. I wanted $500 for it. He complained that his currency had depreciated against the USD. The Canadian dollar used to buy 1.2 USD but now it only buys .75 USD.

The effect this had was that He was only willing to pay me $400 for the domain because $400 was equal to $533 Canadian dollars. When the Canadian dollar purchased 1.2 USD, $500 would have only cost him $416 Canadian dollars, so He would have gladly paid me my full asking price of $500.

LOL sure...and he would have gladly offered more than you were asking if it were the other way around? The price is the price, you took pity is all. Take a look at a chart, 2009 it was the same as it is now. This is a USD/CAD chart since 1990, no mercy for this guy, the exchange rate is on par with the last 25 years: