Prices have gone down a LOT for many short domain types, especially those driven by interest from China such as 4-letter .coms without aeiouv (CHIPs). For example, 4-letter CHIP dot coms that used to fetch $2,000+ in late 2015 to early 2016 can now be bought at let’s say $450 easily at public venues, even lower if you buy directly from the investor, without there being an auction house commission involved.
Some people think this asset class is dead, whereas others put their contrarian shoes on and believe it might be time to go bargain hunting.
The two main problems, in my opinion, are:
- Crypto. Even if crypto prices have fallen a ton, more so than CHIP LLLL prices for example, the crypto space is still multiple (as in a gazillion) orders of magnitude “hotter” than the domain space. Look at how many crypto conferences there are for every domaining-related event. Look at how much money is being parked in crypto, at the big players setting up trading desks (even if, at this stage, they’re only dipping their toes… but it’s still more attention than they’re paying to domaining, that’s for sure) and so on. This is a major liquidity hurdle IMO
- The end user potential is just not there. If you own an awesome one word dot com, then even if reseller market prices are down, a well-funded end user might come knocking at your door and turn a bad month into the best month you’ve had all year. Or ever. When it comes to CHIP LLLL.coms (for the sake of our discussion, I keep using them as examples), how many of those who bought one at $2,000+ in 2015-2016 ended up selling for 5 figures or more to an end user? Exactly
The two main “silver lining” elements, however, are:
- Even if they’re not exactly end user magnets, a case could be made that CHIPs at least have more usage potential than your average “pump and dump” altcoin, which in most cases has nothing going for it other than a copy/paste whitepaper and a marketing team. These domains do have properties that make them attractive assets. They’re also scarce domains in the world’s most desirable TLD, that counts as well
- They are under far less legal scrutiny than cryptocurrencies, yet have the same portability as cryptos (as long as you memorize your login details, you can “take” your domains with you from country to country with nothing physical on your person)… in and of itself, this makes them at the very least an interesting alternative
So… will there be another short domain mania?
I’m pretty sure that yes, eventually there will.
However, do keep in mind that many people snagged LLLL.com CHIPS at regfee after the first LLLL buyout failed and if they were patient enough, they could have sold for $2,000+. Even at today’s prices, they’re still in excellent shape!
What I’m trying to say is that while I do believe there will be another short domain mania, it’s probably wise not to expect returns that are as impressive this time around. There will be money to be made, that’s for sure, but you need to understand the nature of the game you’re playing and accept the fact that as time passes, you’re less of an early adopter than the previous generation and have to hedge your expectations accordingly.