Sunday, June 3, 2018

Bitcoin, domain names, and other surprise valuables

Bitcoin is a cryptocurrency that, in retrospect, is actually a relatively recent invention. It was invented and implemented in 2009.

Back then it started with the idea that 1 bitcoin had the value of 1 US dollar.

Most people back then didn't think much of it. What a funny idea and experiment, but surely it will never become a thing. And, in fact, during its first years the value of the bitcoin dropped quite dramatically, going at one point as low as 30 cents per bitcoin.

Who could have predicted that it would become such a phenomenon? People who bought a few bitcoins back in 2009 for the equivalent amount of dollars, have become millionaires. If you had spent $100 back in 2009 to buy bitcoin, and sold them for USD at their height some time in the late 2017's, you would be a millionaire now. The value of 1 bitcoin was well over $10000. Even right now the value is over $6000. (I don't know if any person or institution would be willing to just outright hand you literal cash for that much bitcoin, but failing anything else, at the very least you could buy valuable property and then sell that for actual US dollars. At a loss, of course, but still.)

Another example of something rather simple and innocuous-sounding that almost nobody predicted would become so valuable, are internet domain names.

Back in the 80's and largely in the 90's, nobody predicted how astonishingly huge part of society the internet would become. And they predicted even less how valuable domain names would become.

In the 80's and largely in the 90's, domain names (at least those in the .com top-level domain) were handed for free to whoever thought to claim them. Pretty much no matter who you were, if you were to claim a particular domain name, pretty much no matter what it was, you would get it, free of charge. If you wanted "thisismywebsite.com" as your domain name, they would give it to you, if nobody else had taken it. Just like that. No questions asked, free of charge.

Needless to say, many people who just claimed domain names back in the early 90's for fun, or just because they could, have sometimes become millionaires by selling those domain names to big corporations in the late 2000's. For example the domain name "hotel.com" (which was taken some time in the 90's, for completely free) was sold for $11 million in 2011. Likewise "beer.com" was sold for $7 million in 2004.

Domain names, especially those using generic words, or somehow related to products or product names, have become extraordinarily valuable. Corporations will often pay millions for them. Nobody predicted this back in the 90's, when they were just handed out like candy, completely for free.

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