Why are domain names so expensive?
This article correctly analyzes the game theory and incentives behind domain &quot;&quot;&quot;investors&quot;&quot;&quot;, but I would give it a different conclusion.<p>Domain investors are <i>speculators</i> -- producing nothing, merely throwing up a gate in front of something that already exists (the domain namespace) and charging others for access. This is about as close to the platonic ideal of a rentier as you can possibly get.<p>- They produce absolutely nothing, neither good nor service<p>- They reduce the available supply of an existing good<p>- They increase its price<p>The fact that they&#x27;re incurring a risk for themselves does not absolve them of this fact.<p>The root cause of this speculative incentive is that the holding fee for domain names is too low. If it was higher (and even better, was made to be somewhat relative to the demand for the domain) we would see MUCH more efficient allocation of domain names, and lower prices across the board.<p>When something is necessary for production but very cheap to hold, it will be in short supply and expensive to buy.<p>When something is necessary for production but incurs a reasonable cost to hold, only those who actually plan on doing something productive with it will choose to hold it, increasing the available supply and making it much cheaper to buy.<p>Intriguingly, Vitalik Buterin wrote an essay about redesigning the economics of domain name allocation in this sort of manner (and note: does not require any blockchain&#x2F;crypto tech to pull off)
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