Exploring Blockchain Domains: Scams & Brand Security
The concept of blockchain domain names involves storing domains on the blockchain or cryptocurrency exchanges. Which contributes to the growth of an unregulated and decentralized internet. Currently, cryptocurrency users predominantly utilize blockchain domains. However, their popularity is increasing. In 2022, the Ethereum name service recorded more than 2.2 million registrations of .eth domain names. Simultaneously, there has been a surge in crypto scams, resulting in losses totaling $3.5 billion in 2022.
In the past, there have been efforts to establish alternative systems for resolving domain names outside the conventional Domain Name System (DNS), which ICANN oversees. However, none of these initiatives have gained significant traction. One major challenge has been and continues to be the requirement for users to employ a crypto browser or a specialized plug-in to access the blockchain.
Therefore, the growing acceptance of cryptocurrencies among users may encourage the use and adoption of blockchain domains, although it is not entirely groundbreaking. At the very least, it is essential to focus on blockchain domains due to their potential to facilitate various types of scams. Their distinctive capacity to serve as both a “brand name.” The endpoint for transactions makes them particularly noteworthy as the market expands.
Exploring Blockchain and Traditional DNS: Evolving Internet Domains
The traditional internet operates on an architecture that necessitates users have unique internet addresses in order to locate one another. The domain name system (DNS) manages these unique addresses by converting internet addresses. For example, converting 220.127.116.11 into domain names such as www.google.com.
To ensure accountability for the use of internet domain names, DNS relies on an accreditation system. In this system, organizations called registrars are responsible for overseeing domain name owners. Moreover, they take action if they engage in malicious activities.
Domain name registrants are often referred to as “owners” because they possess the ability to sell or transfer their domain name assets. Sometimes fetching considerably higher prices than the initial purchase. However, ownership in this context is more akin to a long-term lease. Registrants must continue paying fees to maintain ownership with the registrar that facilitated the initial sale. The domain name itself remains subject to the registrar and hosting company, so ownership is contingent on their activities. Companies that have experienced the loss of DNS domains due to faulty transfers or fraud are well aware of this aspect.
Unique Aspects of Blockchain Domain Names
Blockchain domain names possess distinct characteristics. Firstly, they transform complex blockchain resources (comprised of lengthy alphanumeric codes) into domain names using extensions like “.bitcoin,” “.crypto,” “.nft,” and “.eth.” These domains can serve two purposes. i) Functioning as a registry for cryptocurrency wallet addresses. ii) Directing to content hosted on the blockchain, such as websites.
The Challenges and Concerns Associated with Blockchain Domains
Blockchain domains present several challenges, particularly for companies with valuable brand names, from the standpoint of online security and defense.
Firstly, there are no defined rules regarding what is permissible when purchasing a blockchain domain. While certain companies claim to have screening measures in place for registering branded domains, there is no guarantee or established system to address infringements. The absence of accountability and a central authority exacerbates the issue.
Furthermore, multiple registrars are offering blockchain domains alongside traditional domains, causing confusion among consumers. ICANN has issued a warning, clarifying that alternative or non-DNS domains may not function as expected. Users attempting to access such domains would need to install specific browsers, plug-ins, or configure their systems with a particular DNS resolver to connect to the Handshake blockchain world.
Lastly, the potential popularity of blockchain domains among consumers is likely to follow the trajectory of cryptocurrencies. If cryptocurrencies gain widespread acceptance as a user-friendly means of buying and selling, blockchain domain names could become highly sought-after and valuable assets for both legitimate brands and criminals, similar to traditional domain names.
Guidance for Companies and Organizations Regarding Blockchain Domains
As the landscape of blockchain domain names is still evolving and the stability of different cryptocurrencies remains uncertain. Hence, it is important for companies and organizations to stay informed about the space. As well as assess how blockchain domains may affect their business in terms of growth and liability. Here are a few key points to consider:
- Stay aware of the legal aspects: Despite the decentralized nature of blockchain domains, the law still applies. Similar to tracking a domain name registrant in the traditional DNS system, it is possible to trace ownership via the blockchain. In fact, tracking can be easier since blockchain transactions are transparent. While anonymity is feasible, the absence of a central authority or repository for blockchain domain names should not hinder tracking efforts.
- Understand domain naming company policies: Companies involved in domain naming have internal rules to ensure that brand names are not indiscriminately assigned. Some branded domain names may even be reserved and available for a claim without charge. Familiarize yourself with the practices of these companies and explore potential opportunities for your business within the marketplace.
- Consult Intellectual Property Counsel and Brand Managers: Engage with your intellectual property counsel and brand managers to discuss blockchain domains and evaluate if there are any advantageous prospects for your business. Additionally, it is advisable to investigate whether your business or users have been impacted by scams that exploit your brand name and are associated with cryptocurrency or blockchain domains.
By staying informed, seeking legal counsel, and actively monitoring the impact of blockchain domains on your brand, you can navigate the evolving landscape and safeguard your online presence effectively.