Is the hype over Bitcoin domain name BNS an opportunity or a risk?

On May 28, a screenshot of the 001.btc domain name being sold for 0.3 BTC (about $8,100) was circulated in major crypto communities. According to the domain name seller, he engraved the domain name in February for about $10, and the profit from this transaction was more than 800 times. This transaction completely ignited the enthusiasm of Bitcoin domain name players.

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

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

Domain names have become another new hot spot in the Bitcoin ecosystem after BRC20 and NFT. Domain name players began to race against time to engrave new domain names, fearing that they would miss this wealth train. Some applications on the Bitcoin chain have also begun to support Bitcoin domain name services. On May 30, Ordinals Wallet, a Bitcoin inscription transaction and wallet service platform, announced support for domain name resolution such as .btc and .sats. Users can now use domain names to send and receive Bitcoin and inscriptions, etc.; on May 31, Bitcoin wallet Unisat launched the domain name trading market, supporting the trading of .sats and .unisat suffix domain names.

The inscription of the Ordinal protocol supports engraving by anyone, which means that users can engrave any text with a .xxx character suffix similar to a domain name. At present, the consensus domain names that have been 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 ecosystem is very chaotic. There are three .btc domain names, including text-based .btc domain names, BTC.US's .btc domain name based on the Stacks chain, and the Jason format .btc domain name launched by the decentralized domain name service provider BTCDomain based on Ordinals. They all seem to be .btc, but behind them are three different domain name providers and operating systems.

Currently, based on the domain name payment mechanism, products on the Bitcoin domain name (BNS) market can be roughly divided into two categories: one is a leased paid domain name dominated by domain name service providers, which requires an annual service fee, and representative products include BTC Domain and BTC.US; the other is Ordinals text domain names (.sats, .sat, etc.), which only require the payment of 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 should we choose? This article will try to give some answers.

About Bitcoin BNS

BNS (Bitcoin Name Service) is a general term for Bitcoin domain name services, which refers to domain name services built on the Bitcoin blockchain network. BNS is similar to Ethereum Domain Name Service ENS, which can convert Bitcoin addresses into characters that are easy for humans to remember and recognize, forming Bitcoin domain names ending with ".btc, .sats, .sat", etc.

BNS is a converter for Bitcoin on-chain addresses. It can convert strings on Bitcoin that do not require addresses, such as those starting with "bc1p", into easily recognizable domain name characters, similar to Twitter or Weibo usernames. Once 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 having to copy and enter complex Bitcoin addresses. At the same time, the BNS domain name is also a user's identity credential in the Bitcoin on-chain world. In the future, users can use their BNS to log in to Web3 applications, which will be displayed as a username. Users can manage corresponding wallet addresses and data, etc.

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

What are the BNS domain names? How to choose?

Nowadays, in the Bitcoin ecosystem, there are two main ways for users to obtain domain names, depending on the payment method: one is a paid rental domain name provided by a domain name service provider, represented by projects BTC.US and BTCDomain; the other is a text domain name (Text) generated based on the Ordinals protocol.

Since a text domain name (Text) once engraved belongs to the engraved wallet address for life, no subsequent payment is required, there is no project issuer, and everyone is equal, anyone can engrave the domain name they want according to their own preferences. Therefore, text domain names are the most sought after and popular among users in the current Bitcoin domain name market.

But before the popularity of text-based domain names, developers had already deployed Bitcoin domain name-related products, such as BTC.US and BTCDomain. Among them, the most types of domain names are suffixed with .btc. BTC.US and BTCDomain provide domain name services with the suffix .btc, plus the text-based .btc domain names spontaneously generated by users through Ordinals. In other words, there are currently three types of .btc domain names in the Bitcoin ecosystem. This is mainly because .btc is the symbol of BTC, which is easier for users to identify and spread, and has also become the most 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 domain name: only need to pay gas fee, equal issuance

Text domain names mainly refer to character contents similar to domain names issued based on the Bitcoin Ordinals protocol. Users only need to pay the gas fee on the chain to engrave them. Once engraved, they are valid for life and there is no subsequent fee. The main representatives are ".btc, .sat, .sats, .ord, .unisat" and so on.

The Ordinals protocol makes each satoshi unique by inscribing inscriptions on the smallest unit of Bitcoin, satoshis (sats), thereby generating Ordinals NFTs. The essence of issuing domain names using the Ordinals protocol is to inscribe the domain name string (text inscriptions) on the satoshis, which is why domain names have always been called text-based.

Since the domain name is a text inscription, it complies with the rules of inscription: it supports any user to engrave any domain name with any suffix through code and first come first served. The former can be understood as anyone can deploy any domain name with the character suffix .XXX, such as .uniswap, .bank, .pepe, etc.; the latter rule is that for the same domain name, according to the registration time, the first one is valid, and the rest are invalid domain names. In other words, it does not restrict users from registering domain names with the same characters, but once the domain name inscription is registered, even if the later ones register the same one, it is invalid and will not be recognized and accepted by the market. For example, someone registered 001.btc for the first time in February, and the later people can also register 001.btc, but the later 001.btc is an invalid inscription.

The process of engraving a domain name inscription is similar to deploying a BRC20 token, except that the inscription on the BRC20 token is a unified Jason data, while the inscription of the domain name is a unique string, so each inscribed 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, and there is no difference between uppercase and lowercase when engraving and identifying. That is to say, if someone has minted SUSHI.btc, then you do not need to mint SUshi.BTC/sushi.btc, etc., because this domain name has been occupied and the subsequent ones are invalid.

Although Ordinals supports domain name inscriptions with any suffix characters, it does not mean that any domain name characters with a suffix can become a domain name and have value. If it does not have the function of a domain name (such as not being able to support binding a Bitcoin wallet address) or there is no consensus, it can only be a text-based inscription NFT.

In other words, whether .xxx and other text inscriptions similar to domain names, such as .btc, .sat, .sats, .stas, .ibx, .gm, etc., can become so-called domain names depends on whether everyone has a consensus on it, and whether there are wallets or related service providers that provide domain name-related functional services, such as supporting address resolution, which can be used to receive assets or log in to decentralized applications, etc. Only when the relevant functions of domain names are supported, can these texts similar to domain names have domain name value.

Take the above .btc, .sat, .stas, .sats, .ibx, and .gm domain names as examples. Currently, the unisat wallet supports parsing .sats, so users can use .sats domain names to receive and send Bitcoin assets; and the decentralized social application Damus supports setting the username to .sats, so users can use .sats as their identity representative. At this time, .sats already has the function of a domain name, while other plain text domain names with the .xxx suffix are just text-based NFTs because there is no wallet application that supports address parsing or other domain name functions.

How to get a text domain name?

If the domain name has been registered, users can purchase it on the Bitcoin NFT trading market or in an off-site peer-to-peer manner, and the price depends on the seller's listing price; if the domain name has not been registered, users can directly engrave it on a platform that supports Bitcoin engraving or use code, and only need to pay the Bitcoin chain gas fee (currently about US$3 per transaction), and there will be no fees in the future.

Take the Unisat platform as an example, if you want to engrave a new domain name:

Step 1: Before registering, you need to check for duplication to confirm whether the domain name has been registered.

Use the platform's search function (Search) to enter the desired domain name to see if it already exists. If it already exists, the registration will be invalid. It should be noted that during the duplicate checking process, the data may not be very accurate for some reasons. In this case, users are required to check for duplicates on multiple platforms and cross-verify.

Step 2: Confirm that the domain name has not been registered yet, then register the inscription through the platform's inscription function (Inscribe) . Since Unisat supports .sats and .unisat, users only need to click on the relevant domain name suffix and enter the characters they want to register, and multiple domain names can be minted in batches.

If there is no relevant suffix domain name on Unisat, the user can enter the desired character suffix domain name through the Text dialog box. It can support batch casting of domain names with different suffixes.

What are some well-known text domain names?

Bitcoin Name Service (.btc) — is a domain name with the suffix .btc that was voluntarily organized by community users. It has minted satoshi.btc and donated it to the Bitcoin Foundation. As of May 31, according to Unisat retrieval, there are 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 short for satoshi, and there are 298,000 registered sats.

.unisat ——Introduced by Unisat wallet, users with .unisat can enjoy discounts on platform fees.

.ord — A nod to the first BRC20 token, ORDI.

Text domain name related tools——

• Check for duplicates and record new domain names

iDclub ——can be used for domain name duplication checking and batch registration, and a certain handling fee will be charged.

Unisat - Supports domain name duplication checking and registration. On May 31, the .sats and .unisat domain name trading market was launched, and the domain name can also be resolved to a Bitcoin wallet address. Users can use .sats and .unisat domain names to receive Bitcoin assets and inscriptions.

Best in Slot ——aggregates various assets of the Ordinals protocol, including NFTs, domain names, inscriptions, etc. Users can use it to check for duplicates and view the holding address information of each inscription.

• Domain name secondary trading market

Ordinals Wallet - The service is similar to Unisat, integrating wallet and Ordinals asset trading functions. On May 30, it announced that it has launched support for domain names such as .sats, .btc, .unisat, .xbt, and supports domain name resolution to Bitcoin wallet addresses, that is, users can bind these domain names to Ordinals Wallet Bitcoin addresses and use domain names to receive and transfer assets.

Ordswap——is also a platform that integrates wallet and Ordinals asset trading functions, supporting text domain name listing and trading.

Magic Eden——Added a new Bitcoin NFT market and supports domain name transactions such as .btc.

2.BTC.US: .btc domain name issued based on Stacks network

BTC.US is a domain name service system with the suffix ".btc" built based on smart contracts on Stacks. Stacks is a Bitcoin smart contract chain that can provide smart contract function support for Bitcoin and help deploy DeFi, NFT and various decentralized applications.

Currently, if users want to obtain a domain name on BTC.US, they need to connect to wallets such as Hiro or Xverse on its official website to apply for registration and pay with the native token STX of the Stacks platform. Each registration requires a one-time payment of 2 STX tokens (about $1.3) for 5 years, and the fee will be automatically deducted upon expiration.

Domains provided by BTC.US

The .btc domain name provided by BTC.US supports users to bind Stacks on-chain addresses and Lightning Network addresses, that is, users can receive and send Stacks ecosystem assets and Lightning Network assets through their .btc.

From this point of view, the .btc domain name of BTC.US is generated based on the Stacks chain, and the data is stored in Stacks. It serves more as an identity pass in the Stacks network and its ecosystem.

3.BTCDomain: Provides paid .btc domain names based on Ordinals

BTC Domain provides .btc domain name services based on the Bitcoin Ordinals protocol. It is more like a comprehensive domain name service platform, which not only provides 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 the product operates in a similar way to ENS on Ethereum.

If a user wants to obtain a domain name on BTC Domain, he or she must first have an Ordinals type wallet address. During the registration process, in addition to paying the Bitcoin chain gas fee, an additional annual service fee must be paid, and the maximum payment period is 5 years.

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

BTC Domain Fees

The .btc and text-based domain names .btc provided by BTC Domain are also based on Ordinals, but the two operating systems are completely different. According to the official statement, the .btc provided by BTC Domain is a Json format that has been designed with deduplication and anti-counterfeiting signatures during the initial design. Therefore, registering a .btc domain name 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. It is a native Bitcoin domain name and can be bound to a Bitcoin wallet address. Users can receive and send Bitcoin and inscription assets through their .btc domain name.

In addition, the .btc domain name provided by BTC Domain can resolve not only Bitcoin wallet addresses, but also web page content. This is a convenient solution for businesses, charities, and individuals who want to create identifiable identities for their Bitcoin transactions. Currently, the .btc domain name provided by BTC Domain supports the resolution of Tokenview, TP wallet, Foxwallet wallet, etc.

However, some users also said that due to the official existence of BTCDomain, it is not as decentralized as text-based domain names. In addition, the fees paid by users using the leasing model are too high. In response, the official said 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, which will give its .btc domain name more application scenarios.

Bitcoin domain name market is growing rapidly but 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 because it is still in the early stages of development. Since anyone can engrave the .xxx suffix on a text-based domain name, there are many suffix characters for text-based domain names in the current Bitcoin domain name market (.btc, .sat, .sats, .ord, .xbt, etc.), and .uniswap, .xen, etc. may appear in the future. In a short period of time, it is difficult to unify domain name suffix characters, domain name resolution methods, registration format requirements, etc. in the Bitcoin ecosystem in a short period of time.

Take the .btc domain name as an example. Although the suffix btc characters are easy for users to identify and spread, there are three different service providers and operating systems behind it. Although BTC.US's .btc uses the btc suffix, its functions and usage scenarios are more inclined to the domain names within the Stacks ecosystem; BTC Domain's .btc is the native domain name of Bitcoin and supports multiple wallet resolutions, but it is criticized by users for not being pure enough due to fees, domain name registration restrictions and centralization issues; and the text-type .btc is sought after by users because of no subsequent fees and a relatively fair issuance method, but because the community needs to organize operations spontaneously, the application scenarios and resolution of text-type domain names in the later stage are still problems. Currently, only Ordinals Wallet addresses support .btc text-type domain name resolution. Although these three .btcs are different in product design and operation mode, they are easy to confuse for most users.

Moreover, even if they are all text domain names (such as .sats, .ord, .unisat, etc.), the registration rules are not unified. For example, some domain names support spaces, special characters, and emoticons, while some domain names do not.

Differences in the format of text-based domain names. The image is from .btcdao

In terms of domain name usage scenarios, especially address resolution, there are also different schools of thought. For example, some wallets only support partial text domain name resolution. In addition, the domain name resolution rules and domain name types between wallets are not unified.

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

In addition, the hype factor of text-based domain names is greater than their real application. Although text-based domain names are valid for life once registered and there is no additional fee, the current application scenarios are limited, and even most suffix characters do not have wallet support for address resolution, and do not have the function of domain names. The transactions of these domain name characters are more of a gamble on future expectations. Once they are supported by wallets for resolution, the price will rise.

In addition, it seems that everyone is equal when engraving text-type domain names, but the reality is not so . Some users have already engraved a batch of 3D (3 characters) and 4D (4 characters) domain names before promoting certain suffix domain names, and then come out to call orders to raise the price of the domain name, and take the opportunity to make a profit. Therefore, users need to understand the risks when investing in text-type domain names.

In addition to the chaos in 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 ENS, the leader in decentralized domain names, as an example, according to Dune data, the number of registrations in May was only 15,702, the lowest level since June last year, and the number of monthly registrations reached 400,000 at the peak in September 2022. Since September last year, the number of monthly registrations in ENS has been on a downward trend. The .bnb domain name project Space ID on the Binance Chain has received much less attention since the airdrop; the Bonfida (.sol) domain name project on Solana has only had 716 registrations in the past 7 days.

Will Bitcoin domain names follow suit and become a flash in the pan? Although the current popularity is still in the early stage of wild growth, community organizations such as .btc, .sats, and .sat are actively exploring the market and attracting more wallets to support domain name resolution to expand more application scenarios. In the future, there may even be a special text-based domain name resolution service. As for which suffix character will eventually become the king of Bitcoin ecological domain names, it will take time and the community to jointly choose.