Internationalized Domain Names: A Primer

An investment case for IDNs, profiles of notable sales, and announcing a special TLD to be included in the upcoming IDN auction.

The public blockchain Handshake carries the potential to undergird a revolution in communication, commerce, and technology as decentralization reshapes the architecture of modern life. The vibrant ecosystem surrounding Handshake (HNS) includes thoughtful engineers and developers, many of whom share their perspectives elegantly via blogs, podcasts, and essays. Though blockdomains/ appreciates and supports these efforts, readers did not subscribe to this particular blog for technical commentary, but rather for market analysis and, at least for some, techniques that might be applied to profitably trade in HNS domains.  

Internationalized domain names (IDNs) include one or more element outside of the Roman alphanumeric system, including Chinese, Arabic, Korean, Persian, or Japanese characters. Accent marks or other glyphs of the Latin alphabet are also IDNs, but emoji and other non-language symbols are not. Shakestats co-founder Robert Raichici’s article “Will HNS revitalize Internationalized domain names?” is recommended reading to understand the history of IDNs, as well as the unique opportunity facilitated by the widespread availability of new top-level domains (TLDs) that HNS makes possible.

It is the belief of the blockdomains/ team that IDN TLDs are poised at the crossroads of significant technological & societal developments and economic opportunity. For that reason and many more, blockdomains/ is honored to co-host the upcoming Shakestats x blockdomains/ IDN auction – please register today!

For casual and serious TLD investors alike, a major appeal of HNS is the ability to acquire domains that are unavailable in the .com or even most secondary or tertiary extensions, despite increased risk due to the experimental nature of the protocol. The author had never even dabbled in traditional domaining before HNS, but upon further research found the capital-intensity of that pursuit daunting. Though low-priced domains exist and a select few succeed through hand-registrations, traditional domaining requires a deep wallet to play in the blue-chip end of the pool. In contrast, Handshake auctions are a bootstrapper’s delight: rather than purchase an investment-grade domain for ten thousand dollars or spend hours searching every haystack for a needle, it is possible to acquire dictionary words with high commercial value or cultural resonance, sometimes for the cost of a meal or less. The green fields of 2020-era TLD auctions might be a fond memory, but both the primary and secondary TLD markets still offer incredible value.

Many categories of TLD have had moments or even seasons in the sun thus far. Beyond single-character domains, the evergreen first pick of any domaining context, categories such as crypto keywords, single emoji, “PG-13”-oriented terms, locations, or most recently multi-emoji have all enjoyed significant popularity, even if not sustained in each case. It is the blockdomains/ belief, as reflected by TLD portfolio allocation, the IDNs represent the most significant investment potential among a field of worthy contenders in the Handshake ecosystem. Offsetting the risks associated with Handshake’s experimental status, the potential growth associated with the ability to meet the needs of populations underserved by ICANN in their own languages is incalculable. Given the high likelihood of proliferation of domain names across all uses, the global growth in internet access, and the increasing primacy of smartphone keyboards (see Rob’s article), there are many scenarios in which demand for native-language domains increases worldwide. Though beyond the scope of this post, the relevance of censorship resistance in certain locales and climates is undeniable.

The below profiles of high-value primary and secondary IDN sales are offered as a brief introduction to the existing vitality and future potential of the IDN market.

Though limited in number, IDN TLDs do exist within the traditional (i.e., ICANN) domain system. HNS reserved existing TLDs to ensure backwards compatibility; one of those reserved TLDs is 公司, which translates to company in simplified Chinese. An alternate word for company, 会社, was not reserved, a point which was not lost on certain auction bidders. At 15,000 HNS, this auction reflects the top price paid for a Chinese-language TLD in either the primary or secondary market.

Though it occurred only weeks after the first Handshake block was mined, this auction was a precursor to elevated IDN demand as it attracted nine bids, a top bid above 25k HNS, and over 200k HNS in open interest (total HNS locked).

Being both a platform for market analysis and a provider of white-glove transactional services for premium TLDs, it can be a struggle here at blockdomains/ to balance journalistic ideals with commercial practicalities. Said differently, we try not to talk about our own domains too much. However, an introduction to the potential of IDN TLDs would be incomplete without mention of the highest known secondary (and overall) IDN sale to date. Of that crime, blockdomains/ is guilty as charged as the seller of россия, which is Russia in the mother tongue.

Certain details of this transaction must be withheld to protect the buyer’s anonymity. It can be disclosed that this domain was part of an arms-length transaction for approximately one dozen TLDs, including both IDN and emoji. Critically, both buyer and seller agreed that the price paid for this particular TLD reflected fair-market value at the time of the sale, without any material premium or discount applied due to the portfolio nature of the deal.

Similar to 会社, nine bidders (assuming no duplicates) showed up for the россия auction; however, bid amounts were significantly lower and the author paid 500 HNS for the TLD in February 2021. Though the sale of россия, at 27k HNS, currently exceeds the second-highest IDN sale by 17k HNS, that aberration is likely to soon be revealed as one of timing and not quantum.

Departing from the highest end of the price spectrum, the final TLD profiled in this post highlights the potential associated with what is, for now, a less competitive dynamic in the IDN marketplace compared to English-language and emoji domains. Soup is a dish enjoyed across cultures and around the world, including in Korea, where the author was once lucky to experience the warming magic of dak gomtang during a chilly December visit to Seoul. It does not appear that many TLD bidders were contemplating Korean soup in June 2020, because the TLD corresponding to the word soup in Korean, , went unchallenged after the initial bidder’s total lockup of 10 HNS. Subsequently the TLD sold for 999 HNS in October.

Clearly 100x in four months is notable, even if the proceeds are not retirement-sustaining. Even more notable is the opportunity this sequence reflects for market participants with an appreciation for IDNs. Awareness has increased to the point that acquisitions like this (both the original auction and secondary sale) are unlikely to be replicable. In spite of that, competition relative to growth potential in this category remains more enticing than in any other part of the HNS ecosystem.

This post does not address technical nuances of IDNs, some of which may pose additional risks for adoption compared to other domain types. A great place to begin exploring such topics in greater detail is this FAQ from Unicode. Although blockdomains/ believes that the benefits of thoughtful trading in IDN domains outweighs the risks, it is critical to understand challenges and threats to that opportunity.

Please continue to support blockdomains/ and the Handshake ecosystem by registering for and spreading the word about the upcoming Shakestats x blockdomains/ auction. To help raise awareness for IDNs and fund future growth, blockdomains/ is donating 扑克, poker in simplified Chinese, as an auction lot with all net proceeds going to the HNS Development Fund. Stay tuned for subsequent posts that will continue to explore trends in the IDN market as it evolves in real time.  

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DISCLAIMER AND DISCLOSURE

This commentary is not intended to be investment advice. Please consult appropriate investment, financial planning, legal and tax professionals prior to making any investment decisions. The author owns, has sold and acquired, and may sell and/or acquire in the future various Handshake TLDs, including IDN TLDs in addition to those disclosed in this post. All translations are believed to be accurate but have not been verified by a professional translator.