Crypto IPO launched for domain trading business
Friday 30 May 2014
Domain trading has been a core business on the internet ever since it was possible to register a domain name. Now, two entrepreneurs are hoping to harness the advantages offered by cryptocurrencies to take a chunk of that multi-million-dollar annual trade.
Their new company, DotsforBits.com, recently launched its virtual Initial Public Offering (VIPO), seeking funding solely through the cryptocurrency community in return for a share of future profits. BitScan catches up with David Sønstebø and Eugeniu Borchers, both long-term cryptocurrency advocates, about their business plans.
‘If you look at the major domain trading sites, you will see the immense volume of business that is carried out weekly,’ notes Borchers. ‘Take Sedo.com. They are typically doing a million, two million dollars of business a week.’ That’s not a year – it’s a week. Add together the top players, and you get a figure of anywhere between two and eight million dollars per week.’
This is a big pie, to be sure – two to eight million dollars a week works out at a cool $100 to $400 million per year. And that’s just now. A raft of new general Top Level Domains (gTLDs) have been approved – extensions like .education, .shoes, .repair and over a thousand more – so it’s fair to assume the pie is going to get a lot bigger in the near future, too. But just how easy will it be to grab a slice of it?
The secret, the pair say, lies in the unique advantages that cryptocurrencies offer over traditional payment methods.
Whereas the major domain trading site currently in operation take a commission of 15-20 percent,
crypto allows this to be cut to the order of 10 percent
– as well as offering effectively instant transactions to take place.
This alone is a powerful incentive to draw in the holders of big domain names who want to cash in their valuable assets and make sure they get the right price for them.
‘We’re hoping to bring together the two communities – domaining and crypto,’ says Borchers. The business will find a natural home among crypto enthusiasts, who are by nature tech-savvy and entrepreneurial.
At the eleventh hour, DotsforBits revealed a major coup: their partnership with Tomer Krisi, a world famous software developer and domain enthusiast. The first person in the world to change his name to .com (later advising Kim dotcom on his name change), Krisi has been working on a revolutionary domain analysis software platform that promises to bring the new company to the attention of all existing domain traders at a stroke.
Shares in the business will be traded on the NXT Asset Exchange due to the functionality it offers, but the IPO is open to users of all of the major forms of cryptocurrency. The hybrid move is a smart one: although trading shares is key to creating an attractive business, there simply isn’t the funding available in NXT alone. Bitcoin has a market cap of some $7 billion, and is likely to prove by far the largest source of investment. Litecoin comes in at just a 20th of that amount, at $330 million. The next biggest altcoin is Darkcoin, with a current (and fluctuating) market cap of around $55 million. Like the IPO itself, DotsforBits will accept all of the chief cryptocurrencies in its day-to-day business, as well as fiat money.
The nature of the business means that it is likely to start earning money almost as soon as it launches – the very first sale will bring in revenue. Borchers and Sonstebo are hoping to raise in the region of $235,000 in various different cryptocurrencies, and their business document makes the case for being self-sufficient in three months. A minimum of $80,000 is needed to get started and implement an initial programme of marketing. (If less than the full amount of $235,000 is raised, investors will be rewarded with proportionally more shares.)
2014: the year of the crypto-business
DotsforBits, and other companies like it that are just starting to emerge, herald a new era for cryptocurrency. A year ago, there was little that you could actually do with a bitcoin, other than hold it or speculate with it. Since then, VC money has been flooding into the ecosystem and real-world applications have been developing apace. 2014 always was going to be the year that bitcoin went mainstream. But more than that, it looks set to be the year that cryptocurrencies as a whole not only come to the forefront of public consciousness, but do so in a way that proves they are here to stay. The business model underpinning DotsforBits has genuine advantages over fiat systems. ‘None of the major domain-trading sites accept cryptocurrencies at the moment. We spotted a gap in the market and it offers genuine advantages in terms of cost and speed,’ Borchers states.
And he has a point. When the biggest domain names can easily sell for millions of dollars, and five-figure sales are commonplace, what customer would ignore an additional 5-10 percent of the price?
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