The Domain Industry 101 for Crypto Investors w/ Mike Carson of Park.io

Subscribe: Apple Podcasts | Spotify | Stitcher | Overcast

Quotes

"I didn't fit in with the corporate thing. I lucked out and found what I wanted to do, which is launch projects, make things that people find useful, and just put 'em out there." ~@ca98am79, founder @io_domains Click To Tweet "@HNS opens the floodgates to the TLD space… I feel like a lot of great innovation comes from regular people… I'm really excited to see the TLD space open up." ~@ca98am79, founder @io_domains Click To Tweet “Domainers say domain names are internet real estate. I think it's true. And I think TLDs are almost like neighborhoods. Communities can form around TLDs. It'll be interesting to see how it develops.” ~@ca98am79, founder @io_domains Click To Tweet

Table Of Contents

Quotes
Description
Topics Discussed In This Episode
Links Relevant To This Episode
Transcript

Description

Welcome to this conversation with Mike Carson, founder of Park.io, which lets users backorder expiring domain names, and Gateway.io, which facilitates the sale of second-level domains off of Handshake top-level domains or TLDs. Handshake (HNS) is a blockchain-based protocol that enables anyone to own a TLD. As Mike explains, it “opens the floodgates to the TLD space.”

The conversation is split into 3 chapters:

Chapter 1: The domain name industry
Chapter 2: Business opportunities for owners of Handshake TLDs
Chapter 3: TLD security, Gateway.io, and Mike’s hopes for the future of the space

Topics Discussed In This Episode

Mike’s journey from working in tech support to launching WizeHive
ICANN’s role in managing the TLD system
How the current system stifles innovation
How Handshake “opens the floodgates to the TLD space”
The story behind .io
The difference between domain registrars and resellers
How Gateway.io facilitates the sale of domains off of Handshake TLDs
How TLD owners make money
Gateway.io’s plans for TLDs beyond .txt and .js
How Namebase secures TLDs
How top-level domains are like neighborhoods
The exciting possibilities advanced by Handshake

Links Relevant To This Episode

Transcript

Clay: Welcome to Flippening, the first and original podcast for full time, professional, and institutional crypto investors. I’m your host, Clay Collins. Each week, we discuss the cryptocurrency economy, new investment strategies for maximizing returns, and stories from the frontlines of financial disruption. Go to flippening.com to join our newsletter for cryptocurrency investors, and find out just why this podcast is called Flippening.

Clay Collins is the CEO of Nomics. All opinions expressed by Clay and podcast guests are solely their own opinion, [00:00:30] and do not reflect the opinion of Nomics or any other company. This podcast is for informational and entertainment purposes only and should not be relied upon as the basis for investment decisions.

Mike K: Hi, this is Mike, producer of the Flippening podcast. I’d like to welcome you to this conversation between Clay Collins and Mike Carson, founder of park.io, which lets users backorder expiring domain names, and gateway.io, which allows owners of Handshake Network top-level domains to sell second-level domains. For example, [00:01:00] if you owned the .zen top-level domain on the Handshake network, you could use gateway.io to sell yoga.zen, juice.zen and unlimited other domain names.

If you’re unfamiliar, a top-level domain or TLD is the part of the name that follows the dot—like .com and .io. Handshake is a decentralized blockchain-based protocol that democratizes TLD ownership by enabling anyone to own a top-level domain. Clay and Mike spend a lot of time discussing business opportunities that exist for owners of Handshake TLDs.

[00:01:30] The conversation is split into 3 chapters. Chapter 1 is an overview of the domain name industry. Chapter 2 considers the new domain business opportunities made available by Handshake TLD owners. Chapter 3 covers several topics including TLD security, gateway.io’s “bridge” function, Handshake, and Mike’s hopes for the future of the space.

Transcript and show notes for this episode are available at flippening.com/mike. That’s flippening.com/mike.

I should also [00:02:00] mention that if you’d like to learn more about the fundamentals of the Handshake Network, how it works, and the process of buying top-level domains, please listen to episodes 72 and 73 with Namebase founder Tieshun Roquerre. Those episodes can be found at flippening.com/namebase.

And now, before we get started, here’s Clay with a word from our friends and sponsors.

Clay: This episode is brought to you by a really cool product that I love and endorse called Uphold. I use Uphold every day, so I’m reading you my ad, [00:02:30] not theirs.

So here are 6 things I think you should know about Uphold. First, if you’re using the Brave browser, you’re probably already using Uphold every day, as it’s their default wallet for holding your earned BAT tokens.

Second, Uphold lets you hold and trade between cryptoassets, national currencies, metals and more in one easy step. In fact, you can instantly swap between 27 fiat currencies, 30 cryptocurrencies and utility tokens, 6 stable coins, and [00:03:00] 4 metals, all from your wallet. Need to go from Gold to Bitcoin in one trade? That’s no problem. Want to send BAT to your Euro bank account? Also no problem.

Third, Uphold has 0% trading commissions and 0% bank and crypto withdrawal fees. Fourth, Uphold lets you buy cryptocurrencies directly with a credit or debit card allowing you to lock in prices sooner than your ACH transfer can process.

Fifth, Uphold allows for direct bank connectivity in almost [00:03:30] 40 countries using ACH, SEPA, and SWIFT. Uphold recently added countries include the UK, Canada, Poland, Czech Republic, Romania, Hungary, and Croatia. And of course, they already support the United States and USD.

Sixth and finally, you can open an account in 1 minute and start trading in 10 seconds.

We’re big fans of Uphold here and as a product person, I think what they’ve done and what they’ve made seamless, is pretty incredible so I encourage you to [00:04:00] try them out. To get started, just go to uphold.com/clay today. Again that’s uphold.com/clay spelled C L A Y, and that’s my first name. You can also download Uphold from literally any app store.

This episode is also brought to you by the good folks at Nexo.io. Here’s a word from them.

Nexo is the only lender offering instant crypto credit lines, which let you use digital assets as collateral to get cash in 45 fiat currencies and stablecoins. You might remember Nexo from Episode 64, where we spoke with their co-founder, Antoni Trenchev. If you haven’t heard this episode, I highly recommend checking [00:04:30] them out as it’s one of our most popular episodes to date.

And Nexo has a big announcement related to credit lines. Their annual interest rates for credit lines are now starting at just 5.9%, which may very well be the lowest borrowing rate in the whole industry.

Nexo is also a strategic partner of exchanges, OTC desks, and crypto funds, through its portfolio of structured financial products. Institutional counterparties can earn up to 8% annually on their idle stablecoins, enter into asset swap agreements, or directly borrow crypto. Individuals can [00:05:00] also park their cash and stablecoins at Nexo’s interest-earning account to get an annual return of 8%. What’s more, interest is paid out daily and you can add or withdraw funds at literally any time.

If you are looking to borrow, lend, or swap digital assets, Nexo is your go-to partner. Definitely explore nexo.io, and if you’re an institution reach out to them at institutions@nexo.io.

Finally, this episode is also brought to you by the Nomics API and CSV Data Export Service. If you need an enterprise-grade [00:05:30] crypto market data API for your fund, smart contract, or app, or if you need historical CSV dumps of trading data or crypto market cap data from top exchanges (or even obscure ones), then consider trying out the Nomics API or our historical data export service.

Our cryptocurrency API enables programmatic access to clean, normalized, and gapless primary source trade data across a number of cryptocurrency exchanges. Instead of having to integrate with multiple exchange APIs of varying quality, you can get everything through one screaming fast fire hose. And [00:06:00] if you’d like to order historical cryptocurrency market data as CSV exports from top exchanges, then email us at sales@nomics.com.

Mike K: Okay, back to our regularly scheduled program. Here’s Clay’s conversation with Mike Carson, founder of park.io and gateway.io. Enjoy.

Clay: Can you [00:06:30] walk us through your entrepreneurial background? From the outside, you seem like you have achieved this dream of being a solo founder who’s also an engineer and building pretty highly profitable bootstrapped businesses from scratch. There’s a lot of people that aspire to that. It seems like you’ve done that. Do I have all of this right, or have you been venture-backed? Do you have co-founders? What’s your entrepreneurial journey, and what’s been the arc of your progress been like over the years?

Mike C: I’ve always been [00:07:00] a programmer. I knew that’s what I wanted to do since I was in middle school or so. It was just lucky that that’s something that you could make money doing. I knew I wanted to do that. I didn’t know I like the entrepreneurial stuff. I didn’t know that’s something I was interested in. I was confused. After college, a lot of people I knew—friends, were like getting jobs and [00:07:30] moving up the ladder. I wasn’t doing that. In some ways, I felt like a failure for a while. I had a job. I worked at universities just doing either some support stuff. I did technical support. Then I did some programming at a few different universities.

I never thought about the entrepreneurial stuff until later on. [00:08:00] Once I started doing that, I realized this was kind of a way for me to—it felt right. It just felt right because I didn’t feel like I fit in with doing the corporate thing or trying to move up into better positions or management. I didn’t want to do that really. I lucked out and found what I wanted to do. It seems like that fits well with what I wanted to do, which is launch projects, make things that [00:08:30] people find useful, and just put them out there.

After working at university, I did some stock trading, day trading. I had a blog about that. This entrepreneur in Philadelphia connected with me because he was doing stock trading too. He was older. It was like a mentor type of thing, but we did a startup together—WizeHive, wizehive.com. [00:09:00] We did that for like eight years or so and built that up to, I think there’s like 50 full-time employees now. It’s doing pretty well.

In my spare time, I just got interested in domain names because we need them to launch projects. I got interested and I started looking into how they expire, and what the process was [00:09:30] with that. I started park.io and it did pretty well. That was six years ago I think, 2014. Six years ago I started park.io. Just recently, this year, I’ve gotten really into Handshake.

Clay: It seems like there’s a number of other projects in there as well. I see file.io, there’s humbly.com, [00:10:00] and a few others. Would you say that to date, WizeHive and probably park.io are the biggest wins?

Mike C: For a while, I’ve tried to launch things, and a lot of times they just didn’t take off. With park.io it just took off right away. It was really clear that it was different. It was way different than other projects. A lot of projects I would launch, they [00:10:30] might even get on the front page of Hacker News and people might be interested in them, but then it would die out over time or there wouldn’t be enough customers paying for it. But with park.io, I didn’t even advertise it. The first day I launched it I got a few orders and then it just never stopped. The orders never stopped. It was a clear difference.

File.io, it’s interesting. I launched file.io— [00:11:00] I forget when that was. A few years ago. After park.io, sometime, I think. But it gets a lot of use. A lot of people are using it. But it’s not making money. In fact, it’s losing money. I’m actually trying to figure out what to do with that now.

Clay: Was my initial description of you accurate? At least at the very beginning, was park.io a bootstrapped solo developer founder [00:11:30] project that you just did by yourself and that ended up taking off? Is that right?

Mike C: Yeah, yeah. Just built it. I was just interested in how everything expired, so I wrote some scripts for that. I was like, this might be interesting to sell as a service—a drop catching service. I just launched it. I did it myself for the first five years. A year ago, I brought on a partner, Steve Webb, who’s been helping me.

Clay: [00:12:00] For everyone who hasn’t used park.io, it’s a service that allows you to secure .io domain names that are about to drop. One of my favorite things to do is to look at the list of domain names that are about to drop sorted by when they were first registered. I’d like to view the list of domain names that are about to become available and look at the earliest registered domain names because they’re often, at least for me, domain names that are just better, right? [00:12:30] They’re one word. They’re the domain names that were available before people really started using .io domain names at scale and before they became trendy with startups and such.

Can you share any ballpark revenue figures for park.io or anything related to the scope and scale of a project? It’s the kind of project that when I first saw what you were doing, I saw the auctions, I saw how many domain names were being sold each month, then considered your renewal business, and then considered the fact that you were accepting [00:13:00] Bitcoin pretty early on, it just kind of struck me that this was at least a seven-figure business that was being run by one person. Is that a false statement or a true statement?

Mike C: It did get to over a million in revenue. It stayed around a little over a million in revenue.

Clay: That’s incredibly impressive for a business that, up until recently, was run by one person. Congratulations.

Mike C: Thanks.

Clay: You are [00:13:30] living the dream. Let’s transition to chapter one, which is about the domain name industry. In an earlier episode, we talked with Tieshun Roquerre from Namebase about HNS. It was a very Handshake focused conversation, but I’d like to expand the scope a little bit and learn a little bit about the broader industry. Maybe the first place to start would be to [00:14:00] ask you who are the players within the domain name industry?

Mike C: To start at the top, ICANN. They manage pretty much all of DNS. I don’t know that much about all of it, but all I know is they’re a nonprofit organization that is really [00:14:30] regulated. We have to be an ICANN registrar. We pay our dues, we do all the paperwork, and all of the other things that we have to do to make sure that we’re following all the rules of ICANN and stuff. There’s ICANN who sets all the rules and all that stuff. I guess ICANN works with governments. [00:15:00] I think they were set up because, at first, the United States government was controlling .com and stuff that.

I think they set up this nonprofit international nonprofit organization ICANN to manage it. But there’s been questions about how it’s doing. For example, the .org sale that didn’t go through but was approved by ICANN. The way that they handled that, people were upset by that. Also, [00:15:30] with .com price increases with VeriSign, people were unhappy with that. There are people who think that it’s not doing a great job basically.

Below them there are TLD owners. There are registry operators who provide the [00:16:00] infrastructure to run the TLDs. Then registrars like GoDaddy, Namecheap, and stuff. They have accounts with the registry operators in order to sell the domains under the top-level domains.

Clay: You’ve got ICANN at the top, they’re a nonprofit, kind of multi-stakeholder entity, formed in the US, and they’re based in Los Angeles. It seems like they’re really at the top of the food chain. [00:16:30] They control basically the ecosystem. I used to work for an arbitration company that handled domain name disputes. They handled them on behalf of ICANN. If people had trademark disputes or wanted to make the claim that someone could be using their domain name, they would lodge a complaint with ICANN, and ICANN, at the end of the day, would rule on what would happen. Everyone had to fall in line.

You mentioned top-level domain owners. I guess [00:17:00] within the legacy domain system, who are the top-level domain owners? What does it take to own a top-level domain? What does that process look like? Is there any sort of notable corporation that owns a number of top-level domains?

Mike C: All I know is it’s really expensive. I think there’s a $185,000 nonrefundable application fee. Then there’s a lot of other fees and a lot of other paperwork and stuff that you have to do. [00:17:30] From what I have heard, it takes like $1 million and stuff to get a top-level domain.

Clay: And the application fee just to apply to get one is six figures, right? It’s like $150,000, $200,000, something like that.

Mike C: It’s big companies that own them or that can get them. I think Amazon has a lot and Google has a lot. That’s one thing that I love about Handshake. [00:18:00] I didn’t realize this when I first started getting into Handshake is that it opens the floodgates to the TLD space, which is really awesome. Having it just so these big companies and having it costs so much money to get a TLD really stifles innovation because there’s only certain types of people and basically companies that will get these. Is that what you [00:18:30] want to innovate? I feel like a lot of great innovation comes from regular people.

A lot of great companies were formed, not by huge companies, they were formed by people really working hard and innovating. I’m really excited to see the TLD space open up to those people.

Clay: Absolutely. Who owns .com, .org, and .net—some of [00:19:00] these original ones? Are they owned by network solutions? Is there an owner of .com? There has to be.

Mike C: I don’t know. That’s a really good question. I know VeriSign manages it. I know that they’re making all the money off of it. I don’t know. Either nobody owns it but they get to manage it, so they make the money from it or they own it. That would be my guess, but I don’t know for sure. For other TLDs like .org, [00:19:30] I guess that was owned by a nonprofit but then they were going to sell it to a for-profit.

Clay: They were going to sell to a hedge fund right or a private equity? It was a private equity firm I believe was going to purchase it.

Mike C: Yeah.

Clay: It sounds like the .com, what I’m seeing here is that it’s operated by VeriSign, but it isn’t owned by anyone but it’s under the jurisdiction of the US government. [00:20:00] It sounds like .com is a very complicated case, but .io, do you know who owns .io?

Mike C: Yeah, .io is interesting. Anything that’s dot two characters is a country code, so it’s owned by a country. .Ai is Anguilla and .oi is Libya. Basically, it’s owned by the government of that country. With that .io though it’s [00:20:30] interesting because that stands for the Indian Ocean. There are some issues with that because there are islands there but it’s not inhabited by anybody. It used to be but they were all kicked out. There are these natives to that place. There’s a small population of these who are native to the islands in the Indian Ocean who are not there any longer but they feel they have rights to the [00:21:00] .io name. It ended up it was owned by a UK-based company, a UK company. They sold it to Afilias for $70 million.

Clay: I was looking at the history of the .tv extension. It was the Island of Tuvalu, but they eventually sold it to VeriSign for $10 million. One question about [00:21:30] TLDs, do you have a hypothesis or a theory on why some TLDs tend to take off? I find it really interesting that maybe .biz or .us never really took off and maybe became used by a lot of scammy, sketchy sites. But .io somehow, rose to prominence perhaps because of the developer community and the relationship between input/output, but really, a lot of these domain names that end in .io have nothing to do with input/output. What are your [00:22:00] thoughts on why some of these TLDs take-off and other ones don’t?

Mike C: It’s really complex dynamics of the internet. .Io, as far as I know, I think that some developers they couldn’t get .com anymore because all the good .coms were gone or they were really expensive. They were looking at other extensions. .Io is a tech term—input/output. Some good developers created some really [00:22:30] cool projects on .io, which inspired others to do the same. A lot of high-quality stuff came out on .io at the beginning. It created this culture around it. That’s something that it’s kind of just random. It’s not like anybody orchestrated that, I don’t think. It just happened on its own. I expect more [00:23:00] things like that will happen in the future.

Clay: We’ve got ICANN, we’ve got TLD owners, and then you said registrar operators, which are different from registrars. What’s the difference between a registrar like GoDaddy and Namecheap and a registrar operator?

Mike C: Registry operator, they basically run the registry for the TLD owner. Sometimes they are also the TLD owner. VeriSign, Afilias, and some others. [00:23:30] Actually GoDaddy, I think they bought Neustar, which was a registry operator, so it looks like they’re going to be a registry operator. They also bought Uniregistry. A registry operator runs the registry for the TLD. Usually, they have an EPP system, which is the standard protocol for managing domains.

Clay: The registry operator is the single source of truth about [00:24:00] who owns which domains, where they point to, and things like that, is that correct?

Mike C: Yeah.

Clay: Then you’ve got registrars GoDaddy and Namecheap. There are some of these registrars like iwantmyname .com, they offer 100 plus, 200 plus, I don’t even know how many there are now. There are definitely hundreds of TLDs that are available today. How does [00:24:30] iwantmyname go about selling these top-level domains, and how does the TLD owner end up getting paid? What are the sets of agreements and sorts of contracts and operations happening behind the scene that allow a registrar to sell a TLD or to sell a second-level domain on a TLD? Let’s start with registrars and registry operators. How do they work together?

Mike C: [00:25:00] Usually, there’s a registrar-registry agreement you sign. It’s a contract between the two companies. The registry will set up a registrar account on the registry system. You as a registrar access the EPP system with your registrar account. Usually, you prepay or there are different ways to do it but you can prepay your account. The registry charges a certain amount per domain [00:25:30] name. Every time you register, renew, or transfer a domain, you get charged. A fee is deducted from your balance. You can sell it for whatever you want. You can price it higher and try to make money that way.

In the case actually of iwantmyname.com, I think they’re a reseller. As far as I am aware, they were not a registrar themselves, they were just a reseller, so they probably worked with another registrar that provided all that for them and then [00:26:00] they just resold domain. They were a reseller for that registrar.

Clay: What’s the difference between a registrar and a reseller? To consumers, it would seem the same, right?

Mike C: A registrar you actually have an account on the registry system. You have a login to the registry system. Actually, if you want to become an ICANN registrar, you have to do all this stuff. You have to pay all these fees, you have to do all this paperwork, and do all these things.

Clay: Hey! I wanted to pause [00:26:30] for a second to let you know that this episode of the Flippening podcast is brought to you by our longtime and trusted partner, nexo.io. As someone who personally uses Nexo, I want to point out a few things that I especially like about their crypto-backed loans.

First, when the price of your collateral grows, so does your credit line. Let’s say you borrow against your Bitcoin when each Bitcoin is worth $5000, but over the course of your loan, the price grows to $10,000 per Bitcoin. This means that the size of your credit line just doubled as well. I personally haven’t seen anyone else doing this.

[00:27:00] A second thing I really like about Nexo is that you only pay interest on the amount that you borrow. I’ve seen Nexo competitors require you to take out loans and force you to withdraw the entire amount. With Nexo, you get a credit line, can borrow only the funds you need (and not a cent more), paying them back whenever you want, with interest assessed daily. Again, this isn’t something I’ve seen other providers do.

The final aspect of Nexo I’d like to highlight is that they give you the ability to borrow against a basket of crypto assets. For example, if you post [00:27:30] BTC, ETH, and BNB as collateral to your Nexo account, the Nexo Oracle calculates the real-time market value of those assets and adjusts your credit line accordingly. Again, to my knowledge, other providers in this space only allow you to borrow against one asset per loan.

This episode is also brought to you by Uphold. As I said before, we’re big fans of Uphold over here. In fact, there are several members of the Nomics team that use Uphold. It’s the only app that lets you go from anything to anything in one trade. Bitcoin to Gold. No problem.

[00:28:00] Want to send Euros to your sister using your XRP stash? That’s easy to do. Just one trade and two clicks to get this done. Trade instantly between cryptos, stablecoins, national currencies metals, and more.

It’s seamless, it’s instant, and it’s cost-effective. You can fund with a debit or credit card, trade with 0% commissions, and withdraw to your bank account or external blockchain network instantly and with no additional fees. You can even send BAT to your bank account.

When you have an Uphold account you really can [00:28:30] send anything to anything.

To get started, just go to uphold.com/clay today. Again that’s uphold.com/clay spelled C L A Y, and that’s my first name. You can also download Uphold from literally any app store.

Finally, this episode is brought to you by the startup that produces it, nomics.com. Nomics is a crypto market cap website and aggregator going head to head with CoinMarketCap. We stand as a transparent alternative to many of the sketchy market cap websites out there. We won’t name names, but I think you know who we’re referring to.

Anyway, if you haven’t been to nomics.com in a while, I encourage you to visit our website. We offer [00:29:00] transparent volume statistics for nearly every cryptocurrency and crypto exchange in the space, and I believe we have the only credible crypto exchange index in the space at the time of this reading. If you’re sick of scammy ads, bad design, and manipulated data provided by companies whose founders hide from public view, then check us out at nomics.com.

Okay, let’s return back to the show.

Mike C: It’s kind of complicated and there’s not that many ICANN accredited registrars because of the whole process, fees, and everything, [00:29:30] but you don’t need to be an ICANN accredited registrar to access all of the registries. For example, .ai, you don’t need to be an ICANN accredited registrar, or you didn’t need to be with .io at first but now you do need to be.

Clay: You’re allowing people to sort of catch drop domains, but then if they want to renew, they pay you. Are you guys the registrar or you are a reseller for another registrar?

Mike C: Yeah, we are a registrar.

Clay: [00:30:00] There’s a lot to unpack here. Could you explain a bit about what EPP is?

Mike C: It’s just the standard XML protocol to manage domain names. They have all this command—to register [00:30:30] domain. It has to be formatted in a certain way. The command to renew a domain has to be formatted in this way. It’s all laid out exactly how it should be done, but it’s a standard that’s been used, I don’t know for how long, for a while. It’s on most of the big TLDs like .com. I think all the new gTLDs. Sometimes it’s not in some of these country codes. .Ai, [00:31:00] when we first started working with them, they were not using EPP, but we helped get them set up on EPP.

Clay: Is it fair to say that EPP is a protocol that allows registrars and registry operators to communicate? EPP is how a registrar would submit to a registry operator sort of the creation of the new domain name, the renewal of that domain name, or things like that? Is that fair?

Mike C: Yeah.

Clay: Is EPP [00:31:30] baked into Handshake

Mike C: Handshake, it can be used to replace the root zone of the internet. You just manage the DNS for the TLDs and that’s it. Under that, that’s what Gateway, that’s what we set up. We set up EPP registry operator for Handshake TLDs. That’s what [00:32:00] gateway.io is a registrar using that.

Clay: I was wondering what the relationship was between gateway.io and Namebase. It seems to me like Namebase is the registry operator and gateway.io is the registrar, is that correct?

Mike C: Yup. Park.io is partnered with namebase.io to set up the registry operator for [00:32:30] Handshake domain. Yeah, Namebase is acting as the registry operator.

Clay: That’s really cool. In particular, it’s neat that this all happened in a permissionless fashion. You didn’t have to go get approval, you didn’t have to go through a long process. You and Namebase just decided to do this together.

Mike C: We got the ex-CTO of the .io registry to help us with this. He’s basically [00:33:00] helping us to run it. It’s as robust as .io was. It’s solid. The cool thing is that it’s all EPP so it’s really simple for existing registrars to plug into it. We have another registrar who’s signing up now. They thought they might have to ENS because I guess they used ENS. They thought they might have to do everything [00:33:30] differently than they’re used to doing with managing keys and stuff like that, but once we told them that it’s EPP they were like oh it’s going to be really easy.

We wanted to make it really easy for existing registrars to just plugin and start selling domains as they do now.

Mike K: Hi, this is Mike cutting in from the editor’s booth to bring another voice into the conversation. Here’s Namebase CEO Tieshun Roquerre with his take on offering second-level Handshake domains through the existing system.

Tieshun: The purpose of the registry, in this [00:34:00] current manifestation, is really to enable economic access to the domains allowing TLD owners to actually sell domains, which is something that is normally prohibited because ICANN is kind of a gatekeeper here. They’re not allowing new people to register gTLDs and then when they do, there’s like a $250,000 application. The existing TLD owners like VeriSign and some of these other TLD owners, they basically get to collect rent because they’re in a very coveted position of just having a monopoly [00:34:30] on those names.

In terms of the registry in this current manifestation, it’s really about empowering individuals to become their own entrepreneurs enabling economic access.

Mike K: Okay, back to the show.

Clay: I saw that 101domain is either going to or has already started selling Handshake domains. It sounds like you’re actually happy that 101domain is selling these. Why is it that they are ostensibly a [00:35:00] competitor to gateway.io? Is that accurate or is that not correct?

Mike C: Gateway.io is basically set up as the first registrar, just to allow a way for people to register domains on Handshake TLD. At park.io, we have a registrar system set up. We just set it up so people could buy domains. [00:35:30] I don’t feel like I’m competing with these other registrars. I think it’s exciting to get as many registrars as possible. It will be awesome if more and more registrars can sell Handshake domains.

Clay: Is that because you own some TLDs and are probably more invested in the price of HNS and reselling second-level domains on your top-level domains than you are about gateway.io, in [00:36:00] particular, being successful?

Mike C: I’m really excited about Handshake. My company’s invested. I’ve invested in TLDs and also the Handshake coin. I’ve learned to trust my intuition and my intuition is telling me this is a good investment. But beyond that, more important to me is I think Handshake is the right way for DNS to go. I enjoy [00:36:30] working on it. I’m invested in it, but I also just want it to do well and get out there. I think it’s going to be really good for the internet.

Clay: When it comes to resolving these domain names, I know there’s NextDNS. That’s the only one I can really think of. I’m sure there’s going to be Chrome extensions and lots of things coming in the future, but do you have to essentially pick a side [00:37:00] when it comes to the root zone? Do you have to decide that you’re either going to use Handshake for your root zone or you’re going to use ICANN? Does one have to be primary and the other one secondary, or can they kind of both coexist at the same level?

Mike C: It depends on how the resolver is set up. If you use the Handshake resolver it just defaults to Handshake. [00:37:30] All of the existing ICANN TLDs are grandfathered in. You can browse the internet as you normally would using a Handshake resolver. I think it kind of depends. I don’t know how NextDNS was set up. I think they’re set up the same way where if you use the setting to use a Handshake resolver it just resolves all the Handshake stuff.

Clay: Let’s transition then to chapter two, which is about investment [00:38:00] opportunities in the domain space. What do you see as the range of investment opportunities that exist for folks that are interested in generating a return in this space?

Mike C: You mean not talking about Handshake, just the traditional domain?

Clay: There just seems to be a whole host of ways to make money within the space, which is a multi-billion dollar plus per year business. I think we covered most of them. It’s fine for us to drill down on being a TLD owner and what the opportunity [00:38:30] looks like there. To me, it seems if you can own a successful TLD, it seems like one of the best investment opportunities that I can even think of, right? You’ve got people paying you, recurring revenue for these domains, it’s fairly passive, and the domains are being sold by an army of registrars. Maybe let’s just sort of drill down into the TLD opportunity.

Let’s say you sell a domain name for $10, all right? Let’s say a [00:39:00] Handshake operator comes to you. They =allow for their top-level domains to be sold on gateway.io, and let’s say they sell one domain for $10. Where does that $10 go? How much does the TLD owner get? How much does the registry operator get? How much does the registrar get? Are there standards around the economics here, or does it completely vary from situation to situation?

Mike C: In the existing [00:39:30] ICANN way, it does definitely vary. Some TLDs like .car or something like that costs $3000 to register your name. The way that it works I guess is the TLD, they work out a deal with the registry operator. The registry operator sets up [00:40:00] the registry system—the EPP system. They charge a fee, probably per domain. Currently, ICANN, takes a fee for every single domain sold. The registrars, they basically get a price per domain.

For example, I don’t know what it is with .com, but [00:40:30] let’s say it’s $5 for a .com, that’s what the registrar pays. They mark it up and sell it for more sometimes. Sometimes they don’t just because they try to upsell their customers in other ways and they just want to get as many customers as possible.

With Handshake, it’ll be similar. I don’t know the exact details but I think Namebase will charge a percentage commission to offer [00:41:00] the registry operator service to TLD owners and put it in so that all the registrars can sell domains on the TLDs. The registrars will have a quoted price like $10 for .js and $10 for .txt. and then they can mark it up from there to try to make some money from that.

Clay: For $10 per domain per year, how much of that [00:41:30] do you think the TLD owner would get?

Mike C: You’d have to check with Namebase, but I think it will be something 70% of that so $7.

Clay: And .txt and .js, do you own those personally or does park.io own those?

Mike C: Park.io owns .txt, we don’t own .js. That’s actually owned by Namebase.

Clay: You guys kind of went in 50/50, we’ll do one of yours and you’ll do one of ours.

Mike C: Yeah. We wanted to do ours just to [00:42:00] pilot it, work out the kinks, figure out how it works, and then start bringing in other people as we feel more confident about it.

Clay: How close do you think you are to being able to bring on additional TLDs?

Mike C: I think it’s a matter of weeks

Clay: That’s incredibly exciting. Maybe let’s transition to our next chapter, which is about kind of what safeguards have to be in place for [00:42:30] all of this to work. Let’s say there’s eventually millions of domain names on .txt or .js, hopefully that’s the case. Are all the owners of those second-level domains, on top of .js or .txt, vulnerable to a scenario where the TLD owner loses their private keys, forgets to renew, and then now [00:43:00] all of these businesses and domain names that are indexed by Google, is all of that value lost or are there things that can be done to make the whole process a lot safer for people buying second-level domains on top of these Handshake TLDs?

Mike C: That’s one of the reasons we wanted to partner with Namebase on this. They’re securing the key, they’re securing [00:43:30] the TLD and making sure that it’s renewed and stuff that. I think part of the agreement with Namebase, you as a TLD owner, will be that they can’t transfer it once they start selling names. The TLD owner probably won’t want to either, so I think it works out. [00:44:00] A lot of this revenue is almost like it’s free money coming to them. I don’t see a reason why they would want to.

Maybe one thing is if they sold their TLD to another owner because it’s like a business. There’s recurring revenue so maybe they would want to sell it. I think they could transfer it probably to another Namebase account. I don’t know. You would have to talk to Namebase, but [00:44:30] I think they would be able to transfer it but they would have the same restrictions. They couldn’t transfer it out of Namebase and things like that.

Clay: If I were going to buy a domain name on top of a Handshake TLD, I would want to know that the owner does not have the right to just shut all the second-level domains down. I’d want an institution Namebase or someone who I trust. I’d want there to be contracts in place to ensure that actually my domain name could never be taken [00:45:00] down. It seems to me like you’re providing peace of mind to customers. It does require centralized solutions. You need to know that Namebase has the TLD locked up. But with that centralization, it seems you’re also susceptible to a lot of the types of things that HNS is backlashed to.

The second there’s [00:45:30] a registry operator who has control of the TLD and there’s a registrar, that means the government could come in and just say we need to take down this website, there’s a copyright violation happening here, or a whole variety of things. It seems like it’s almost exactly the same as the older system in terms of censorship resistance or the lack thereof. Does that seem accurate or do you know something else to be true?

Mike C: Handshake provides [00:46:00] a lot of awesome things like being able to really own a domain with your keys—a lot of great things that. This doesn’t take away from all that stuff, you can still do all that. That’s why we named it Gateway. It’s like a gateway between the current system of domains and Handshake. It’s kind of a [00:46:30] bridge. It kind of makes all the existing registrars and stuff like that will understand how to sell Handshake domains this way. There are points of failure, there are centralized points of failure and things like that with registrars.

There are some good things. With gateway.io you don’t have to enter any personal information if you don’t want to. You can register [00:47:00] and not even enter an email address and pay with Bitcoin. It can be completely anonymous and private. There are trade-offs, I guess. Gateway, it’s kind of a way for people to get domains on other TLDs that aren’t currently available and open up the [00:47:30] TLD space so people can buy domains on those I guess is the way that it’s doing it. There’s a lot of different ways to do it. It might be more a compromise with the way that the current system is set up in order to help ease the transition maybe or something that.

Like I said before, the thing I’m really excited about is just opening up the TLD space and to see what happens. You said it was interesting how [00:48:00] .io took off while some others didn’t. I’m really interested to see how that happens here because a lot of domainers talk about domain names as internet real estate. I think it’s kind of true. I think TLDs are almost like neighborhoods or something. It’s like .io is the neighborhood where you know what you’re getting [00:48:30] when you go to a .io domain. It changes but I think something that could happen like a community form. Communities could form around some of these TLDs and it’ll be interesting to see how it develops.

Clay: Indeed. I guess at the same time, the United States government could go to Namebase and say we need to shut down this domain and they’d probably just have to comply. I’m a huge fan of Handshake. I’m very inspired by the project. I wish there was a way [00:49:00] for second-level domains to be as decentralized as top-level domains are on top of Handshake. It seems when it comes to second-level domains, almost everything is exactly the previous system even though TLDs are not.

Mike C: It can be. If you own the TLD, you can set up whatever domains you want under that TLD, and then you own the keys so you can make it completely isolated [00:49:30] and different that way. But you’d have to own the TLD. I think it was mentioned in the white paper, there might be potential ways to create sidechains liquid or something that you could make sure that you own the second-level domain—using this cryptographically, you could make sure that you own it.

Clay: I’m sure that will come over time. [00:50:00] We’re on version—I don’t even know what version we are on of HNS. The innovation has just started. I’m sure there’s going to be solutions to these problems in the years to come. I hope there are.

Mike C: First of all, I’ve been looking for a blockchain-based DNS system for a long time. A lot of these ones like Namecoin, ENS, and things, there were some problems [00:50:30] with these that I couldn’t get fully on board with them. But with Handshake, it’s solid and it’s good. Beyond that, opening up the TLD space was a huge thing that I hadn’t even been thinking of, which I am so excited about. Because to be able to own a TLD and to have no cost for creating domains under it suddenly [00:51:00] opens up unique applications that you can’t do now on the internet like building an application on a TLD and things like that.

That’s what I’m really excited about is these applications built on TLDs that you can’t do with current DNS. I think it’s going to be really cool.

Clay: Thoughts on the future. What do you see is coming down the road? What are you most excited about? What do you think the future looks [00:51:30] like for Handshake and Gateway?

Mike C: It’s nice when there’s something that’s just really interesting, fun, and you can work on a lot. I’m just really excited about this. It’s kind of a combination of two things for me. I’ve been into Bitcoin. I think Bitcoin is just a revolutionary invention. I’m [00:52:00] really looking forward to seeing how Bitcoin continues to change the financial world. I’ve been interested in domain names because of park.io and stuff. Combining these two together is really cool.

The cool thing about Bitcoin is it opens up all the things they say. [00:52:30] It takes the money away from the government control, and it really creates a scarce digital asset. Being able to transfer value over the internet, it’s awesome. With having DNS on the blockchain I think it’s going to do a lot of the same similar things. I think Handshake has the opportunity to [00:53:00] really change the internet in a good way, really make it more free, bring it back to the people, and just much more free and creative.

Domains, they’re a digital asset. It should be on a blockchain. It’ll open up a lot of cool things like being able to transfer—a lot of things that right now you have to trust [00:53:30] a lot of people in between. I’m really excited to see all of the stuff that comes. I hope I can help contribute to a lot of the stuff that happens with Handshake.

Clay: The last question is a question that I ask everyone. That is if you could wave a magic wand and immediately and altruistically do anything for the space, what would you do?

Mike C: I would love it if Handshake takes over, [00:54:00] takes control away from ICANN, and just opens up the internet to everybody. I would love it if everybody could have a TLD just to see what happens.

Mike K: That concludes Clay’s conversation with Mike [00:54:30] Carson. I hope you enjoyed it. Before you go, I want to invite you to subscribe to our fully customizable daily crypto newsletter. It’s the first of its kind in the industry: you choose the delivery time and cryptocurrencies, we ship tailored pricing data and market news—seven days a week. It’s a great way to cut through the noise and drill down to the crypto market info that matters most to you.

To subscribe, go to news.nomics.com. Again, that’s news.nomics.com All right, that’s all for this week. Stay tuned for next week’s episode. Until then, [00:55:00] take care.

Clay: That’s it for this week. To sign-up for our free crypto investing newsletter, listen to other episodes, or get the show notes from this episode, please visit flippening.com. I also invite you to check out the startup that funds this podcast, Nomics at nomics.com. Finally, if you got value from the show, the biggest thing you can do to help us out is to leave a five-star review with some comments and feedback on iTunes, Stitcher, or wherever you listen to podcasts. [00:55:30] Thanks for listening and see you next week.