Bitcoin’s 46 percent decline in the value since its December peak hasn’t damped a surge in prices for Internet domain names related to the virtual currency.
Entrepreneur Niko Younts said he sold the BitcoinWallet.com name in January for $250,000 -- 23 times what he paid a month earlier. Investors buying bitcoin-related Web addresses in hopes of a fast resale are fueling a domain-name boom. Some 3,290 names ending with .com or .net and containing “bitcoin” have been registered since May 12, according to Verisign, which operates a registry for those top-level domains.
Prices for addresses referencing digital currencies such as bitcoin have tripled since last year, Rob Lagsam, sales director at domain-name seller BinaryCoin.com, said in an e-mail. While some sold for $5 a few years ago, brokerage Domain Guardians Pty Ltd. is now trying to sell BTC.com, based on an abbreviation for bitcoin, for more than $1 million.
“Premium, generic, category-defining domains are like prime real estate,” Mike Robertson, co-founder of Brisbane, Australia-based Domain Guardians, said in an interview. “Owning a name like BTC.com would be like owning a shop front” on New York’s Fifth Avenue, London’s Oxford Street or the Los Angeles area’s Rodeo Drive.
Should Domain Guardians get its price of more than $1 million, that still would be far short of the record for a domain name. The highest price paid was $13 million for Sex.com in 2010, according to DNJournal.com, which tracks the industry.
Another potential high-price domain name, Bitcoins.com, is set to be auctioned off by Heritage Auctions, with an opening bid set at $185,000. Heritage estimated that the name may sell for more than $750,000.
Some 30,000 domain names with “bitcoin” or another digital currency, “litecoin,” in them have been registered since 2010 through GoDaddy Inc., the largest registrar of the titles, said Mike McLaughlin, a senior vice president at the Scottsdale, Arizona-based company.
The registrations peaked at more than 5,000 in December, when bitcoin’s price passed $1,100, he said in an interview. With bitcoin prices lower and many of the best names snapped up, registrations have slowed to a few hundred a month, McLaughlin said.
Bitcoins traded at about $617 at 5:50 p.m. New York time yesterday on the CoinDesk Bitcoin Price Index, which represents an average of prices across major online exchanges. The CoinDesk peak was $1,147.25 on Dec. 4.
Not all the domain names are going to speculators. Some are being acquired by entrepreneurs wanting to jump into the bitcoin market with business ideas who need an easy-to-find website, McLaughlin said.
“Especially if you are interested in starting a small biz, one of the first things you do is stake out your space on the Internet,” he said. “A lot of folks were probably looking at the bitcoin market and saying, how am I going to play on this?”
Alex Charfen, who with a partner bought the BitcoinWallet.com name, said they wanted to make their new business easy to find through Google searches.
“We had an idea for a way of making a bitcoin wallet easier for people,” he said. “We bought the domain because we knew we could optimize it and have a lot of traffic.”
They introduced their software for securely holding bitcoins in March, and the site has had 6,700 users since April 3, when the service began to be promoted, Charfen said.
Bitcoin Shop Inc., an online retailer whose stock ticker was changed to BTCS in March, bought the domain name btcs.com for $12,250.
“That was quite lucky,” Chief Executive Officer Charles Allen said in an interview. The Arlington, Virginia-based company, which sells more than 140,000 products in transactions using bitcoins and other virtual currencies, is refusing to buy bitcoinshop.com, whose owner is asking for $100,000, he said. The company has been operating at bitcoinshop.us.
“What you are seeing is all the media hype around bitcoin, and everyone is trying to grab the domain names,” Allen said. “But startup companies are not going to play that. You can’t get venture funding if you are going to spend $250,000 on a domain name. The industry’s too young, we can’t afford it.”
Some domain-name owners are willing to wait for the industry to mature.
Charlie Shrem, who co-founded startup BitInstant LLC and was indicted on money-laundering charges in April by U.S. prosecutors in Manhattan, said he has bought several hundred domain names for about $5 each since 2011 and plans to let entrepreneurs whose projects he likes to use them “pretty much for free.”
So far, Shrem said in an interview, he’s declined all offers for names such as bitcoin.vc and watchbitcoin.com that he owns.
“I’ve gotten offers in the tens of thousands,” he said. “But if someone’s offering this much, what will someone else offer?”