Everyone is talking about NFTs. Is it the next big thing in the world of Crypto? Or is it just a fad that will fade away soon? We spoke with Joe Politzer, Strategic Business Development at ParkLogic, and CEO at DN.BIZ, to explain what NFTs are, how they work, and the role of new domain extensions to power Ethereum online wallets to trade NFTs. 

Read on!

Can you briefly explain what NFTs are? How do they work? What are they used for, and why are people spending millions of dollars on them?

NFTs are non-fungible tokens. I like to think of them as Pokémon trading cards meet Kickstarter. Although an NFT can take many forms, such as art, music, concert tickets, and so much more, the formats presently taking up most of the spotlight are art and collectibles.

While neither art, collectibles, nor the concept of raising money is a new idea, merging them all under the decentralized umbrella of cryptocurrency is the latest innovation of our time. What this translates to is that you can invest in an idea now by purchasing a one of a kind rare collectible (some rarer than others) which both has its own intrinsic value as a position in the concept for which it is attached to, but may also have additional value based on its rarity.

These NFTs can be bought and sold very similar to a stock certificate on an open market, and what’s even more interesting is it’s a very open market in that all transactions and who are making them are all public on the blockchain.

Last but not least often these NFTs have utility, much like the valuable Charizard Pokémon card has utility to the card game, many NFTs have a utility of their own ranging from doubling as a membership card to an elite social club to serving as your own personal character in a new online game or simply virtual art to hang on your virtual wall in the metaverse.

How do NFTs work with the Ethereum Blockchain?

Since the blockchain is an immutable public ledger of transactions, Etherum adds a layer to that called smart contracts, which extends the functionality of the blockchain. This enables smart contracts to act as a secure and immutable registry which essentially is impossible to be tampered with by any party even governments at the extreme. Essentially the blockchain acts as a living breathing registry or database for each NFT, it keeps track of the chain of ownership for each NFT from its minting to the end of time.

How are NFT collections different from NFT collectibles?

A collectible is anything that can be collected. An NFT collection is exactly what it sounds like, a collection of related, typically digital, collectibles. But unlike traditional collectibles, an NFT collection typically has many facets to it aside from being unique and having rarity.

Marvel launched its NFT on VeVe; Is this whole concept becoming mainstream? What are your thoughts about it becoming mainstream?

I don’t know if I’d consider it “mainstream” just yet, but it’s certainly moving in that direction at what seems like a record pace. The outward expansion of the space is a challenge on its own to keep up with. NFTs are not limited to the Etherum blockchain; several other chains are becoming more and more popular by the day.

To name just a few examples are Flow, Solana, Tezos. VeVe is running on another chain called Immutable-X, which happens to operate within the Etherum chain. This is one of many examples of NFTs colliding with the mainstream. NBA Top Shot is also a mainstream and extremely popular, and game-changing NFT launched in 2020. Since then, several celebrities and major companies have bought and displayed their NFTs.

How can new domain extensions add value and utility to NFTs?

In a few ways, really. For starters, it seems each new NFT collection, for which there is seemingly an infinite number of new ones per day, tends to have its own website explaining the offering. While most of these websites seem to be on .com and .io, I often see them on a new domain extension relevant to their brand or cause. For example, you will see some of the more art-focused projects operating on a .art domain, and you may find a fashion or design-based NFT on a .cfd domain.

But that is just the beginning, just like your website has an address on the internet in the form of an IP address which is in practicality impossible to remember, and thus why we have domain names to solve that problem, your NFT lives on a blockchain at a wallet address which is even more challenging (almost completely impossible) for a typical human to remember.

And that is where new domain extensions can come in and serve their exact same purpose but with a different type of address. Just like the World Wide Web has a DNS system to translate domain names into IP addresses, the Etherum blockchain supports a technology called ENS which similarly exists to translate your ENS domain name to the wallet address where your NFT lives.

Until recently, the only type of domains you could register which supported ENS were .eth domains which are not part of the internet we often call “The World Wide Web” which ICANN controls. Therefore these .eth domains in practicality can only be used to resolve your Etherum wallet address, but not your website address. However, recently the ShortDot registry has become the first registry in the World Wide Web to integrate ENS naming services. Now your exact same domain can point to both your website and all of your NFTs or Etherum wallet on the Etherum blockchain.

How are regular new domain extensions different or better in terms of value proposition than .eth domains? Could you highlight the differences between the two?

It’s hard to say one is better than the other as they both have their pros and cons. A big pro to an .eth domain is that it’s fully decentralized. In layman’s terms that means that no one party on the planet singularly controls or has jurisdiction over it, or in other words, no person, corporation, or government can really do anything about your .eth domain registration.

Some people might find that an attractive feature, however, there are a lot of things impractical with the nature of decentralized domain names that would have many favor the use of good old-fashioned centralized domain names. For the most simple example, there is no way to enable automatic renewals for your .eth domain name. You must remember to manually renew it on time or it may be gone forever and there is nothing you can do about it, no customer service agent to tell a sad story to, gone and instantly.

Crypto anything is very unforgiving by nature. Furthermore, your .eth domain has what’s called a private key associated with it, if you lose that you’ve lost access to your domain registration forever, and again no one can help you get it back for any amount of money or begging in the world. Decentralized means you’re on your own, literally, there is no “I forgot my password”.

Suddenly you start to reminisce about the old-fashioned bank that could help you get your money back if something goes wrong or your old-fashioned domain registry or dare I say ICANN. And while on the surface it seems great that nobody can mess with your domain an even darker problem for decentralized domains like .eth exists since once your decentralized domain is active it can’t be stopped until it expires, this means terrorists, child pornography, and all sorts of unpleasant things are free to operate and roam unregulated.

On the other hand, all of these problems have largely already been solved by traditional centralized domain names, but at the cost of centralization. While it may not be possible or even make sense for your NFT to live in a centralized environment there are a lot of benefits to your domain name doing so.

You can have your auto-renewal so you’ll have no lapse in service nor lose your domain due to an omission on your part, if your domain gets stolen you’ll probably eventually be able to get it back, and it works on a 25+ years proven system that is robust, fast and reliable. Sure if you want to do unpleasant things then the centralized World Wide Web might not be for you, but it doesn’t want you there either.

Lastly, of course, you can use your very same traditional domain name for all of your website, email, and wallet address whereas with your .eth domain in practicality it only serves to resolve your wallet address. ShortDot already has several domain extensions to choose from that can be used with ENS and likely in the future many more traditional domain registries will offer the same service.