Gold versus fiat currency applied to domain names
Day: Wednesday October 24, 2012

Fiat currency and domain names on the Internet have a remarkably similar structure.  In both cases ownership is replace with rental and what should be one-time transactions becomes a continual complex maze that is making a lot of money for a few.  In both cases this continues due to policy and in both cases it can be stopped through fairly simple technologies of gold or digital signatures.

Gold versus fiat currency

If I make a purchase of a product or service and pay with gold or a gold backed currency, the transaction is complete and no other party is involved.  I fully owned the gold and now the full value of what I paid is in the hands of the seller.

If the same transaction is done with my debit or credit card, the transaction is only complete when multiple third parties, the banks, agree that it is complete.  These third parties charge a small but ever present handling fee for the transaction.  Most, but not all of the value I pay goes to the seller.  Because of this the seller must raise his price to cover the addition expense or lose some of his profit to the banks.

The banks are not using gold backed currency but fiat currency or currency back by policy.  The banks, using the fractional reserve system given to them by the privately held Federal Reserve since 1913, can now make a profit for everyone’s financial transactions using money that they don’t really have, backed by policy only.

The banks clearly have something to gain when transactions use their services.  They will do what they can, via marketing or promoting public policies, which encourage the expanded use of their services.

Banks can now market free checking accounts, which just like a free lunch, aren’t really free.  Typically they require a minimum usage of some kind, like your debit card.  Using your debit card, as described above, is losing some of the value of your funds to pay the bank for the alleged free service.

Convenience is promoted since “you don’t have to carry cash”, no one has to count out change, no coins are lining your pocket, and it is just simply cool to use the card.  Of course it is much safer to carry your card rather than cash because you can cancel your card if it is stolen, but you would lose all the cash.  However, you now have additional risks due to identity theft, but you can guard against that with additional fees.  All of this is more middle-man fees and fewer products for the dollar.

Promoting complex policies and laws give a mix of an aura to outright requirements to use the banking services.

Apply this model to the Internet

The beauty of the Internet is the almost total lack of a central authority like a central bank.  However, this doesn’t mean that there aren’t those who want to be a central bank of the Internet.  In reality there is a central authority that, like the Federal Reserve, keeps its position by their marketing aura and policy.  And just like using gold for financial transactions gives autonomy to the parties involved, using technology can bypass the perceived central authority of the Internet.

The central authority is IANA, a part of ICANN.  IANA runs the root servers for domain names and controls who can operate a Top Level Domain or TLD.  They are the ones who decide that Network Solutions can operate “.com” and PIR can operate “.org”.  They are now poised to make hundreds of millions of dollars on the new TLDs they are sanctioning in 2013.

Just as the Federal Reserve has many allies in the banks that profit greatly from the system, IANA has many allies in TLD operators and registrars, the people that rent domain names, that make billions of dollars per year renting domain names.  This is done because it is policy and they maintain an aura that their way is the only way.  But there is gold, there is technology that maintains compatibility with what exists and opens the Internet to autonomous TLD operators that don’t require the central bank.

Just like the banks that make their billions on services based on fiat currency, TLD operators and registrars make their billions based on the policy of IANA.  When we go to a registrar, like GoDaddy, or Network Solutions, we are given the idea that we are buying a domain name.  However, when you buy something, you own it.  Domain names are rented year by year.  You don’t pay your rent, you lose your domain.  This is policy.

The gold standard would be to actually own domains, so that once you buy it, it is yours to keep, resell, or like cash, lose.  The design of domain names dates back to the 1970s which is also when the technology of digital signatures was developed.  Combining the two gives us the ability to deliver the technology to own rather than rent domains.  Clearly IANA and their minions do not want gold based ownership to replace the billions they make on fiat base domain rental.

Who could gain from the gold standard in Internet domains?

The new breed of TLD operators don’t have to deal with registrars any longer, nor pay a third party for the right to operate their TLD.  Their income is solely their income.

Registrars can become TLD operators, but otherwise have no market.

ISPs can offer their customers domains at effectively no cost and offer an advantage compared to their competitors.

Web hosting companies can offer domains bundled with their services to augment their offerings.

Domain speculators can accumulate an inventory that does not have a year by year cost to maintain.

Most importantly smaller players, from low budget operations to high school kids with an idea can enter the market that is otherwise dominated by the cash rich.

Is there a catch?  Of course!  Currently IANA’s aura is keeping the availability of alternative TLDs to about 6% of the world’s Internet users.  It will take time, perhaps years, to make this virtually universal.  This is not unprecedented as we have seen this happen several times with PDF files, Flash, various audio and video codecs, and the growing feature set in HTML and CSS.  It just takes the first step to catch on and the rest comes naturally.

Where is the gold?

ShofarDomain.com is where the technology for this gold standard for the Internet is being developed.  The goal is to be ready long before IANA’s 2013 introduction of a vast array of new TLDs that larger organizations have been required to pay $185,000 just to apply. 

Can this really succeed?  One ISP, web hosting company, or a service provider with a unique product is all the seed that is necessary to see this being.  As new software comes online that makes use of the gold TLDs the reach will expand.  Simple software tools loaded on client machines expand the market further without a dependency on ISPs.  Then the marketing advantage of being a part will become apparent the majority of ISPs.

You can learn more about the technology behind ShofarDomain’s domain model at http://ShofarDomain.com.

ShofarNexus™ ● ShofarNexus.com

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2015

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2012

         

Surveillance

Domain names are rented by policy and FUD

The decline of the aura of “.com”

Gold versus fiat currency applied to domain names

ICANN’s corruption can be cured by the free market

UN taking control of the Internet

Death, Taxes, Perpetual Domain Fees

Domain price regulation versus the free market

“Excess funds” should be a red flag about ICANN

Big bucks no longer a stability requirement for TLDs

An Open Letter to the Alternative Roots

Is WCIT suggesting states regulate alternative roots?

Second Amendment for Domain Names