Is the hype around Bitcoin domain name BNS just using old tricks or is it a unique innovation?

Original author: Xiyu

On May 28th, a screenshot of the 001.btc domain name being sold for 0.3 BTC (about 81 million US dollars) circulated in various cryptocurrency communities. According to the seller of the domain name, he engraved the domain name in February and spent about $10. The profit from this transaction was more than 800 times. This transaction has completely ignited the enthusiasm of bitcoin domain name players.

Actually, the 001.btc domain name is a text inscription (Text) that users engraved based on the Bitcoin Ordinal protocol. Although it looked like a domain name with the .btc suffix in the early days, it did not have the so-called domain name function and did not support Bitcoin address resolution. Users only held text NFTs.

With the completion of the 001.btc transaction, text domain names based on the Ordinal protocol began to attract the attention of users and related service providers, and they were truly domainized to provide related functions.

Domain names have become another new hotspot in the Bitcoin ecosystem after BRC 20 and NFT. Domain name players are working hard to engrave new domain names, afraid of missing the wealth train. Some applications on the Bitcoin chain also began to support Bitcoin domain name services. On May 30th, the Bitcoin inscription transaction and wallet service platform Ordinals Wallet announced support for domain name resolution such as .btc and .sats. Now users can use domain names to send and receive bitcoins and inscriptions, etc.; on May 31st, the Bitcoin wallet Unisat launched a domain name trading market, supporting the trading of .sats and .unisat suffix domain names.

The text inscription of the Ordinal protocol can be engraved by anyone, which means that users can engrave any text with an .xxx character suffix similar to a domain name. Currently, the consensus domain names formed in the Bitcoin text domain name market include a series of suffix character domain names such as .btc, .sat, .sats, and .ord.

In addition, some domain name service providers have also begun to provide domain name services, but the ecology is very chaotic. Among them, there are 3 .btc domain names, including text .btc domain names, BTC.US .btc domain names based on the Stacks chain, and Jason-format .btc domain names launched by decentralized domain name service provider BTCDomain based on Ordinals. Although they seem to be .btc, there are three different domain name merchants and operation systems behind them.

Currently, according to the domain name payment mechanism, products in the Bitcoin domain name (BNS) market can be roughly divided into two categories: one is a lease payment domain name led by a domain name service provider, which requires payment of an annual service fee, representing products such as BTC Domain and BTC.US; the other is Ordinals text domain names (.sats, .sat, etc.), which only require the on-chain Gas fee at the time of engraving and are valid for life.

So, what are the differences between these domain names? What are their functions? How do we choose? This article will try to provide some answers.

About Bitcoin BNS

BNS (Bitcoin Name Service) is the general term for Bitcoin domain name services, which refers to domain name services established on the Bitcoin blockchain network. The function of BNS is similar to the Ethereum domain name service ENS. It can convert Bitcoin addresses into characters that are easy for humans to remember and recognize, forming Bitcoin domain names ending in “.btc”, “.sats”, “.sat”, etc.

BNS is a converter for addresses on the Bitcoin chain, which can convert Bitcoin’s address strings, which do not start with “bc 1 p”, to domain name characters that are easy to recognize, similar to Twitter or Weibo usernames. When a user binds a Bitcoin address to a domain name, they can use the domain name to send and receive on-chain assets such as BTC, without copying or entering complex Bitcoin addresses. At the same time, BNS domain names are also the identity credentials for users to travel in the Bitcoin chain world. In the future, users can log in to Web3 applications with their BNS, which will be displayed as their username, and users can manage corresponding wallet addresses and data, etc.

In addition, some social accounts, email accounts, and other Internet accounts can also support users to bind BNS domain names. NFTs held by users can be recorded on the domain name or set as the domain name avatar. For example, the decentralized social application Damus supports users to use .sats domain names as usernames.

What are BNS domain names? How to choose?

Today, in the Bitcoin ecosystem, according to different payment methods, there are mainly two ways for users to obtain domain names: one is a paid leasing domain name provided by a domain name service provider, representing projects such as BTC.US and BTCDomain; the other is a text domain name (Text) generated based on the Ordinals (sequence) protocol.

Due to the fact that text domain names (Text) belong to the engraving wallet address for life once they are engraved, and no subsequent payments are required, and there is no project issuer, everyone is equal, and anyone can engrave the domain name they want according to their own preferences, therefore, text domain names are the most sought-after and popular in the current Bitcoin domain name market.

However, before the popularity of text-based domains, developers had already deployed Bitcoin domain-related products, such as BTC.US and BTCDomain. Among them, the .btc suffix has the most types of domain names. BTC.US and BTCDomain both provide domain name services with a .btc suffix, and users can also generate text-based .btc domain names spontaneously through Ordinals. In other words, there are currently three types of .btc domains in the Bitcoin ecosystem. This is mainly because .btc is the symbol of BTC, which is easier for users to identify and propagate, and has become the preferred suffix character in the minds of domain name service providers.

So, what are the differences between these three .btc domain names? How should users choose?

1. Ordinals Text-based Domain Names: Only Need to Pay Gas Fees, Equal Issuance

Text-based domain names mainly refer to character content similar to domain names issued based on the Bitcoin Ordinals protocol. Users only need to pay on-chain gas fees to inscribe them, and once inscribed, they are valid for life and have no subsequent fees. Main representatives include “.btc”, “.sat”, “.sats”, “.ord”, “.unisat”, etc.

The Ordinals protocol makes each satoshi (sats) unique by inscribing inscriptions on the smallest unit of Bitcoin. This generates the Ordinals NFT. Using the Ordinals protocol to issue domain names is essentially to inscribe domain name strings (text-based inscriptions) on satoshis, which is why domain names have always been referred to as Text-based.

Since the domain name is a text-based inscription, it follows the rules of inscriptions: it supports any user to inscribe any suffix of the domain name through code and is first-come, first-served. The former can be understood as anyone can deploy domain names with any character suffix, such as .uniswap, .bank, .pepe, etc.; the latter rule is that for the same domain name, the one registered first is valid, and the rest are invalid domain names. This means that it does not limit users from registering domain names with the same characters, but once the inscription of the domain name is registered, even if later registrants register the same one, it is invalid and not recognized and accepted by the market. For example, someone registered 001.btc for the first time in February, and others can also register 001.btc later, but the later 001.btc is an invalid inscription.

The process of inscribing a domain name inscription is similar to deploying a BRC 20 token, except that the inscription on the BRC 20 token is unified Jason data, while the inscription on the domain name is a unique string. Therefore, each inscription domain name is also an Ordinals NFT asset.

In addition, in the current Bitcoin text domain names, there is no distinction between uppercase and lowercase letters in domain names, and there is no difference in engraving and recognition when it comes to case sensitivity. This means that if someone has already forged SUSHI.btc, you do not need to forge SUshi.BTC/sushi.btc because this domain name has already been taken, and anything after that is invalid.

Although Ordinals supports the engraving of domain names with any suffix characters, it does not mean that domain name characters with any suffix can necessarily become domain names with value. If it does not have the functions of a domain name (such as not supporting the binding of a Bitcoin wallet address) or there is no consensus, it can only be a text-based NFT.

In other words, whether text engravings similar to domain names such as .btc, .sat, .sats, .stas, .ibx, .gm can become so-called domain names depends on whether everyone has consensus on them and whether wallet or related service providers provide domain name-related functional services, such as supporting address resolution, which can be used to receive assets or log in to decentralized applications. Only if it supports the relevant functions of a domain name, can these text-based domain names have domain name value.

Using the .btc, .sat, .stas, .sats, .ibx, .gm domain names as an example, currently, the Unisat wallet supports resolving .sats, so users can use .sats domain names to receive and send Bitcoin assets. The decentralized social application Damus also supports setting a username as .sats, so users can use .sats as their identity representative. At this time, .sats has already had the function of a domain name, while other .xxx suffix text domain names are just text-based NFTs because they do not have wallet applications that support address resolution or other domain name functions.

How to obtain a text-based domain name?

If the domain name has been registered, users can purchase it in the Bitcoin NFT trading market or through over-the-counter peer-to-peer transactions, and the price depends on the seller’s asking price. If the domain name has not been registered, users can engrave it directly on a platform that supports Bitcoin text engraving or use code to do so, and only need to pay the Gas fee on the Bitcoin chain (currently about $3 per transaction), with no additional fees later.

Using the Unisat platform as an example, to engrave a new domain name:

Step 1: Before registering, you need to check whether the domain name has already been taken.

Use the platform’s search function (Search) to enter the desired domain name and see if it already exists. If it already exists, any subsequent registration attempts will be invalid. It should be noted that during the duplication checking process, there may be some reasons that cause the data to not be very accurate, so users need to check for duplication on multiple platforms for cross-validation.

Step 2: Once the domain name has been confirmed as unregistered, use the platform’s Inscribe feature to register the inscription. Since Unisat supports .sats and .unisat, users only need to click on the relevant domain name suffix and enter the desired characters to mass-produce multiple domain names.

If there are no relevant suffix domain names on Unisat, users can input the desired character suffix domain name through the Text (Text) dialog box, which supports mass production of domain names with different suffixes.

What are some well-known text domain names?

  • Bitcoin Name Service(.btc) – a community of users spontaneously organized domain names with the .btc suffix, and donated satoshi.btc to the Bitcoin Foundation. As of May 31, according to Unisat’s retrieval, 100,000 registered .btc domain names.
  • sat.names(.sat) – sat is the abbreviation of Satoshi, and the number of registered domain names is 307,000.
  • sats.names(.sats) – sats is the abbreviation of Satoshi, and the number of registered domain names is 298,000.
  • .unisat – launched by the Unisat wallet, users with .unisat can enjoy platform fee discounts.
  • .ord- pays homage to the first token of BRC 20, ORDI.

Text-domain related tools

Duplicate checking and inscription of new domain names

  • iDclub – used for domain name de-duplication, batch registration, and charging a certain fee.
  • Unisat – supports domain name de-duplication and registration. On May 31, it launched the .sats and .unisat domain name transaction markets, and can also resolve its domain names to Bitcoin wallet addresses, so users can receive Bitcoin assets and inscriptions using .sats and .unisat domain names.
  • Best in Slot – aggregates various assets of the Ordinals protocol, including NFTs, domain names, inscriptions, etc., which users can use to check for duplicates and view holding address information for each inscription.
  • Domain secondary market
  • Ordinals Wallet – similar to Unisat, it combines wallet and Ordinals asset trading functions, announced on May 30 that it has launched support for .sats, .btc, .unisat, .xbt domains, and supports domain name resolution to Bitcoin wallet addresses, that is, users can bind these domain names to Ordinals Wallet Bitcoin addresses to receive and transfer assets using domain names.
  • Ordswap – a platform that combines wallet and Ordinals asset trading functions, supports text domain name listing and trading.
  • Magic Eden – added a Bitcoin NFT market and supports .btc and other domain name transactions.

2.BTC.US: .btc Domain Name Issued on Stacks Network

BTC.US is a domain name service system with the suffix “.btc” built on smart contracts based on Stacks. Stacks is a Bitcoin smart contract chain that provides smart contract functionality support for Bitcoin, helping to deploy DeFi, NFT and various decentralized applications.

Currently, in order to obtain a domain name on BTC.US, users need to apply for registration with wallets such as Hiro or Xverse on their official website, and pay with STX native tokens on the Stacks platform. Each registration requires a one-time payment of 2 STX tokens for a 5-year annual fee (about $1.3), which will be automatically deducted when it expires.

BTC.US domain name provided

The .btc domain name provided by BTC.US supports users to bind Stacks chain addresses and lightning network addresses, so that users can receive and send Stacks ecosystem assets and lightning network assets through their .btc.

From this perspective, the .btc domain name of BTC.US is generated based on the Stacks chain, and the data is stored in Stacks. Its main function is as an identity pass for circulation in the Stacks network and its ecosystem.

3.BTCDomain: Paid .btc Domain Name Provided by Ordinals

BTC Domain provides .btc domain name services based on the Bitcoin Ordinals protocol. It is more like a comprehensive domain name service platform, not only providing domain name registration, but also domain name resolution and other related services. It is committed to providing a user-friendly domain name service platform for the Bitcoin community, and its product operation mode is similar to ENS on Ethereum.

If users want to obtain a domain name on BTC Domain, they first need to have an Ordinals wallet address. In the registration process, they need to pay additional annual service fees in addition to paying gas fees on the Bitcoin chain, and can choose to pay up to 5 years.

When registering a domain name on the BTC Domain platform, the annual service fee varies depending on the length of the domain name. The annual service fee for a 4-character domain name is 0.01 BTC (about $280); for a 5-character domain name, it is 0.004 BTC (about $112); and for 6 or more characters, the annual service fee is 0.001 BTC (about $28). Currently, there is a 50% discount on the annual service fee for registration.

BTC Domain Charging Situation

The .btc and text domains provided by BTC Domain are both Ordinals-based domains, but the two operating systems are completely different. According to the official statement, BTC Domain’s .btc has a design for deduplication and anti-counterfeiting signature in Json format at the initial design stage, so the registration of .btc domain names through BTC Domain has been deduplicated to ensure uniqueness.

Compared with BTC.US’s .btc, the .btc domain name data provided by BTC Domain is completely stored on the Bitcoin chain, which is a native domain name of Bitcoin and can be bound to Bitcoin wallet addresses. Users can receive and send Bitcoin and inscription assets through their .btc domain names.

In addition, the .btc domain name resolved by BTC Domain is not only the Bitcoin wallet address, but also web content. This is a convenient solution for companies, charities, and individuals who want to create identifiable identities for their Bitcoin transactions. Currently, BTC Domain’s .btc has supported the resolution of Tokenview, TP Wallet, Foxwallet Wallet, etc.

However, some users have expressed that because the BTCDomain official exists, it is not as decentralized as text domains, and the fees paid by users using the leasing model are too high. In response, the official stated that it is precisely because of the existence of the BTCDomain team that more resources will be invested in the development of .btc, supporting domain name development and management, and making its .btc domain names have more application scenarios.

The wild growth of the Bitcoin domain name market is difficult to unify

Although Bitcoin domain names have brought convenience to users in managing on-chain addresses, the domain name service system is not yet sound due to its early development stage. Since anyone can engrave the .xxx suffix for text domains, there are multiple suffix characters in the current Bitcoin domain name market for text domains alone (.btc, .sat, .sats, .ord, .xbt, etc.), and there may be .uniswap, .xen, and so on in the future. In a short period of time, it is difficult to achieve uniformity in domain name suffix characters, domain name resolution methods, and registration format requirements within the Bitcoin ecology.

Taking .btc domain names as an example, although the btc characters of the suffix are easy for users to recognize and spread, there are three different service providers and operating systems behind them. Although BTC.US’s .btc uses the btc suffix, its functions and usage scenarios are more biased towards domain names in the Stacks ecology; BTC Domain’s .btc is a native domain name of Bitcoin that supports multiple wallet resolutions, but it is criticized by users for its fees, domain name registration restrictions, and centralization issues. The text type .btc is popular with users because of its lack of follow-up fees and relatively fair issuance, but because it requires community organization and operation, the application scenarios and resolution of text domains in the later period are still problems, and currently only Ordinals Wallet addresses support .btc text domain name resolution. Although these 3 .btc have differences in product design and operation mode, they are easily confused by most users.

Moreover, even though they all belong to the same class of domain names (such as .sats, .ord, .unisat, etc.), the registration rules are not uniform. For example, some domain names support spaces or special characters and emojis, while others do not.

Text-based domain name format differences, image source: .btcdao

In terms of domain name usage scenarios, especially address resolution, they are also divided into various schools of thought. For example, some wallets only support partial text domain name resolution. In addition, domain name resolution rules and types are not uniform among wallets.

For example, Ordinal Wallet supports .sats, .btc, .unisat, .xbt domain name resolution services; Unisat supports .sats, .unisat domain name resolution, and the domain name market it launched currently supports the trading of .sats, .unisat and other suffix domain names; TP wallet supports the resolution of .btc for BTC Domain. This means that users can only use the same wallet to transfer and receive assets using domain names. For example, Xiao Ming’s .btc domain name in Ordinal Wallet does not support btc transfer using TP Wallet’s .btc domain name address, etc.

In addition, the speculative component of text-based domain names is greater than their actual application. Although text-based domain names are valid for life and have no additional fees once registered, their current application scenarios are narrow. Most suffix characters do not have wallet support for address resolution, and do not have domain name functionality. The trading of these domain name characters is more about gambling on future expectations, and the price will rise once they are supported and resolved by wallets.

Also, although text-based domain names seem to be equal opportunities for all, the reality is not so. Some users have already engraved a large number of 3D (3-character) and 4D (4-character) premium domain names before promoting certain suffix domain names, and then come out to boost the domain name price and profit from it. Therefore, when investing in text-based domain names, users need to understand the risks.

In addition to the chaos of the Bitcoin domain name market itself, the development of the decentralized domain name ecosystem itself is controversial. Many people question whether domain names are a good business in the Web3 world. Taking the decentralized domain name leader ENS as an example, according to Dune data, there were only 15,702 registrations in May, the lowest since June last year, while the monthly registration number reached as high as 400,000 during the peak period in September 2022. Since September last year, the monthly registration quantity for ENS has been decreasing. SBlockingce ID, the .bnb domain name project on the Binance Chain, has seen a significant drop in attention after the airdrop fever. The Bonfida (.sol) domain name project on Solana has only had 716 registrations in the past seven days.

Will Bitcoin domain names follow in its footsteps and become a flash in the pan? Although from the current popularity, it is still in the early stage of barbaric growth, community organizations such as .btc, .sats, and .sat are spontaneously and actively exploring the market, attracting more wallet support for domain name resolution to expand more application scenarios. There may even be dedicated text-based domain name resolution services in the future. As for which suffix character will ultimately become the king of Bitcoin ecological domain names, it still requires time and the community to choose together.

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