Introduction to Domain Names
The technical foundations, history, and industry structure of domain names.
What is a domain name?
A domain name is a human-readable address for a location on the internet. Instead of typing 142.250.80.46 to reach Google, you type google.com. The Domain Name System (DNS) handles the translation between the two.
Domain names have three parts: the subdomain (www), the second-level domain (google), and the top-level domain (.com). Most of the investment value sits in the second-level domain - the part you register.
How DNS works
DNS hierarchy
Resolution process
- 1. You type a domain in your browser
- 2. Your computer checks its local DNS cache
- 3. If not cached, queries a recursive resolver
- 4. Resolver queries root servers → TLD servers → authoritative nameservers
- 5. IP address returned, browser connects
The domain industry
Three main players govern the domain industry:
ICANN
Internet Corporation for Assigned Names and Numbers. The nonprofit that coordinates the global DNS. Sets policy for TLDs and accredits registrars.
Registries
Organizations that manage specific TLDs. Verisign manages .com. PIR manages .org. Each registry sets rules for their TLD.
Registrars
Companies accredited by ICANN to sell domain registrations to the public. GoDaddy, Namecheap, Cloudflare, and thousands of others.
Why domains have investment value
Domains are scarce digital assets. There's only one google.com. Once registered, a domain is unique - no one else can have it as long as you keep renewing. That scarcity, combined with growing demand from businesses needing an online presence, creates real investment value.
The domain market has produced some remarkable returns. Sex.com sold for $13 million. Voice.com sold for $30 million. CarInsurance.com sold for $49.7 million. These are outliers, but they illustrate the ceiling.