You Heard About The New Domain Name Boom (2.0)
 

Any of you guys been following this latest Domain Name sales and registration boom thats been pushing prices up and mostly emanating from China. I reported some weeks back about some big ticket Domain sales that had been boosting the market:

https://gfy.com/fucking-around-and-pr...hlight=roaring

However, very recently the Chinese have been buying up MASSIVE amounts of Domain Names through hand registrations and Domain Name purchases. More dot com Domain Names were registered in the last month than for the entire three quarters preceding it. It has got to the point where VeriSign has been warning about it:

Verisign warns about Chinese .com boom | DomainIncite - Domain Name Industry News, Analysis & Opinion

Here's it is discussed by some Domain Name experts (including the one and only Frank Schilling) in this Video at Domain Sherpa:

Chinese Numeric and Acronym Boom or Bubble?

Domain Names (primarily in main stream) offer a great risk reward and are a key digital asset you should consider holding in some small way. Quote from Domain Sherpa story and video page:

"Three, four and five number numerics (like 98569.com recently sold for $5,079) have increased in price so quickly that now eight numbers (like 33772211.com recently sold for $380) are now being registered. Even five letters are selling for hundreds (like hyhhh.com recently sold for $686)."

those 8 number domains and the likes are going to end so badly for people...I heard they are moving to .info and .net numericals :1orglaugh:1orglaugh:1orglaugh...come next years renew fee theres gonna be a whole lot of these to be had cheap...

The Chinese tend to avoid English and have real affinity with numbers but I suspect you are right about that. There is no logical sense in registering a domain (dot com or otherwise) that is about as long or longer than an IP number. :1orglaugh

The interesting thing is that a lot of these registrations are coming from a small group of Chinese companies. Domaintools shows some of these companies owning over 4 million domain names each.

Simple math assuming average registration price of $9 USD shows that 4 million dot coms will cost over $36 million USD per year to renew. I can see value in say 5 or 6 digit dot coms. They're already selling for decent markup but you'd have to take a long term view to see big tickets unless its a number with lots of 8's (8 is a lucky number in China).

The crazy thing is that I remember some guy (a decade ago) buying up all the random 4 letter dot coms when no-one wanted them and being called a complete idiot in 2006 when most people thought they were too late for the land grab. That guy grabbed over 120,000 of them and just looking at the basic sales price happening on the forums today, they are selling at around $2000 USD each:

6.xyz Tops This Week's Sales Chart After Changing Hands for Six Figures in One of Year's Four Biggest Non .Com Sales

That implies his portfolio is now worth at least $240 Million USD.

http://quotes.ino.com/charting/histo...15&a=50&v=dmax

Chinese like to gamble ...
A domain pump and dump?
Good luck catching a wave ...

agreed. who are they going to sell these to? it seems they rather keep regging longer and longer numerical domains that purchase from others. of course good numericals like 3 and 4 number or maybe even 5 will continue to have value but its gettin ridiculous. i predict a lof of western investors losing a lot of money trying to appeal to this new chinese market.

Well if you look at the example of a six digit dot com.

10 x 10 x 10 x 10 x 10 x 10 = 1,000,000 (One Million possible combinations)

So it looks like anything up to 6 digits in dot com might be worth owning especially if the combination is attractive and maybe has repeating numbers to make it more memorable or some other advantage over the combinations like 8's.

You have to remember that China is a bit late to the Domain Name industry but they have huge capital and, as Frank Schilling put it in the above video, there are more wealthy Chinese people than there are Americans (wealthy or otherwise). You only need a small portion of investors coming in and buying up stock to have a trading market, let alone the end user market. Our company owns a small portfolio and gets regularly spammed with offers from China.

Overall though, if you're really clever about your selections you could do reasonably well as you're only overhead is your renewals so risk reward is pretty favourable. I think 5 (or less) letter or 6 (or less) digit dot coms should do okay in my view but I still prefer words, two words or pronounceable dot coms though.

Any of you who have some experience and are interesting in increasing your intelligence on the Domain Name market, hit me up and we can help each other out with ideas and strategies that we will share with no-one else....

A good time to get in will be next year...when most of the numerics drop...icann has dropped the gay ass business liability insurance and opening a registrar has never been easier...one could catch them at a theoretical 8.03$ and quick flip for at least 100$ or let them be auctioned off by others...

Apparently there are some quite big risks in the safety of Chinese bank deposits at the moment, so maybe some Chinese are taking the view that it's safer to put their money into some domains.

I would say its a small part of it as all the major banks are mostly state owned and China still has a massive FX surplus (over $3 Trillion USD). So although there is a bit of a credit meltdown happening in China right now, it is unlikely that the major banks (BOC, ICBC, CCBC, ABC, etc) face insolvency and if they do, the sovereign is in a good position to fix the problem.

The main reasons I can see are as follows:

(1) China's economy is slowing down and interest rates are being cut which means less yield on cash deposits in banks.

(2) China recently devalued their currency, the Yuan (RMB) against the USD and there is an expectation that it's going to happen again causing people to seek to buy assets outside cash including Domain Names.

(3) There have been cash outflows leaving China which has led to the government introducing capital controls on the flow of money outside China. Domain Names are an easy way to park cash that is quite portable.

(4) China's stockmarket has been extremely volatile, commodities are going down whilst at the same time real estate has also seen a slowdown until very recently. Some money from these asset classes is probably finding its way into Domain Names.

(5) There is a global tech boom that is still going on and IPO's are still the buzz around the world especially in countries like the USA, India and China.

(6) Chinese interest in Domain Names has been gathering pace over the last 5 years or so and so it seems to be accelerating partly due the foregoing.

I'm not so sure, its really a small group of what must be well funded companies buying up all the name space and surely they wouldn't be doing so if they thought they could hold them only for a year. For now at least, they appear to be appreciating.

More likely the market will be determined by how far the tech boom and the stockmarket holds up because, if I look back, the Domain Name market took a total hit last time during the 2000 dot com bust.

The same would probably happen if it came around again and maybe an increase in interest rates can reduce any leverage. However, even if we have a total meltdown, I think other more asset classes get sold more easily before Domain Names which are not necessarily liquid.

I guess now is a good time to cash out on my last few? Down from an all time high of a little over 4000 to less than 100.

Some say 2016 is going to be the market peak. Frank Schilling just sold 2000 LLLL.com (four letter dot coms) as a package for a total price of $3,000,000 (Three Million USD):

Franks Schilling Sells 2,000 4 Letter .com for $3 Million Dollars