How do you explain domain names and domain name investing to friends who don’t understand domain names?

Since domain names are "real estate" on the Internet, they also have "asset transfers", which is the same as buying, selling, and renting houses. Domain names are also very important to companies. Having a good domain name is like owning an office building in a commercial center, which will greatly increase the value of the company's brand and its industry influence. Therefore, companies are willing to pay a high price to purchase brand domain names related to them.

In August 2019, I met an old classmate who was a night view designer. When we met that day, we talked about our work. I told him that I worked at XX Youming.com, specializing in domain name registration, domain name transactions, and domain name purchasing. After listening to him, his expression changed subtly, probably a little confused with shock.

As soon as I saw his expression, I instantly understood that there would be an explanation meeting next. Sure enough, he asked me, "What is a domain name?" In his understanding, a domain name is a string of URLs including http, www, and two slashes. So, I told him some of the fine domain names through our platform! Although he understood what a domain name is?

But! He just didn't understand why a domain name could be sold for so much money.

At that time, I thought, what kind of method should be used to make it easier for him to understand? Domain names are like real estate on the Internet. Building a building requires land, and building a website requires a domain name. The better the location, the more expensive the property is closer to the commercial center, and the more land is developed, the more scarce it is, and the value of the property will rise accordingly. The same is true for domain names. The shorter the domain name, the better the meaning, and the higher the value.

Since the domain name is the "real estate" on the Internet, it also has "asset transfer", which is the same as buying, selling, and renting a house. Domain names are also very important to companies. Having a good domain name is like owning an office building in the commercial center, which will greatly increase the value of the company's brand and industry influence. So companies are willing to pay a high price to buy brand domain names related to it.

I also told him a few stories. The first one was about JD.com upgrading its brand domain name. At that time, JD.com used a domain name of 360buy.com, which was always misunderstood by users as an e-commerce platform under 360. This caused JD.com a lot of traffic loss, and JD.com had to spend a lot of advertising and search engine fees every year, but even so, users still couldn't remember the domain name. It was not until the acquisition of jd.com that the two were distinguished.

The second story was about the real and fake Kaixin.com. The domain name of the real Kaixin.com was kaixin001.com, but the fake Kaixin.com intercepted its traffic. Although the fake Kaixin.com lost in the court ruling, the real Kaixin.com lost much more than the compensation it received in the lawsuit.

The third story was about the Coco incident some time ago. Because this classmate is a designer, he is very knowledgeable about brand protection and copyright. After telling the three stories, he had roughly understood the importance of domain names.

Then, I told him that domain names are a scarce and non-renewable resource. There are only 100 two-digit domains, 676 two-letter domains, and more than 10,000 three-letter domains. It seems like a lot, but it is not. One less domain name is used, especially for high-quality word domain names, such as apple.com, which only has one. Scarcity makes things valuable. As the number of circulating domain names decreases, the market value will naturally rise.

When a certain type of domain name becomes less and less, there must be other types in the market to catch up and make up for the needs. In this way, the value of other domain names will naturally increase, which will drive the upward development of the entire market. Therefore, domain names have the characteristics of low investment threshold, high return ceiling, long value preservation time, clear market positioning, and obvious market appreciation, which are completely in line with the current investment trend of the Internet industry.

The reason why I wrote this story today is because the classmate in the article called me this morning. In the past few months, he has deepened his understanding of domain names through various channels. He said that domain names are very worth investing in. He just happened to have a little spare money and was very interested. He wanted me to explain it to him in detail, for example, what is the difference between domain name investment and other investments?

When I hung up the phone, it was already past one o'clock, and I was quite impressed. So I decided to write such an article to ask everyone, when you meet such friends who don't understand at all and want to learn about domain names, how do you explain it to them? Is there a different way from Xiaopang, or a simpler way?

Finally, Xiaopang saw some content about the difference between domain name investment and other investments before, so I excerpted and simplified it to share with you:

The difference between domain name investment and other investments (to be supplemented)

1. Difference from bank deposits: Bank deposits, you don't have to worry about it, it can appreciate according to the interest rate; domain names are different, if you don't renew it, it will fall, and if it falls, it is not yours. This drop does not refer to the value of the domain name, but to the ownership of the domain name, because the domain name needs to be renewed every year, even if its ownership changes, it will not affect its value and potential.

2. Difference from fund stocks: You can buy the same fund stock, and he can also buy it; domain names are different, if you buy it, others can't buy it. This is the uniqueness of the domain name, a domain name will only have one holder.

3. The difference between domain names and real estate: Real estate prices are affected by regions; domain names are different, and basically have no regional influence. Although domain names are also affected by country suffixes, top-level suffixes like .com are universal and will not have different prices because they are in China, the United States, or the United Kingdom. The only impact is the type of transaction currency and the exchange rate.

4. The difference between domain names and treasures: Treasures require a lot of money; domain names are different, and do not require particularly rich funds, because domain names are also divided into low, medium, and high-end. Of course, good domain names are already the market for capitalists.

5. The difference between antique calligraphy and paintings: Antique calligraphy and paintings are real and fake, and it is difficult for non-professionals to distinguish. Antique calligraphy and paintings will go bad, but domain names will not go bad. Domain names are a string of virtual Internet symbols, just like mobile phone numbers and QQ numbers. They are virtual and cannot be seen or touched, but they do bring rich returns to many investors. Yao Jinbo, CEO of 58.com, and Cai Wensheng of Meitu are both famous figures in the domain name industry, and their domain name asset allocation is valued at over 1 billion.

6. The difference between domain names and gold: The profits of domain names can grow exponentially, but they may also be worthless. Of course, worthless here refers to those ordinary or low-end domain names. If it is a high-quality domain name such as two-letter, two-digit, three-letter, three-digit, it is not possible to be worthless. This is very similar to antiques and jades. High-end genuine antiques will increase in value over time. In some street stalls, you may find priceless treasures, or you may spend money to buy worthless crafts. Of course, in the end, I still have to say: any investment is uncertain and risky. Otherwise, it is not called investment, it is called giving money.