Towards the end of 2021 the Ethereum name service domain paradigm.eth sold for 420 ETH (CAD 1.87 million). Now you’re probably asking “what is Ethereum name service?” and “why would anyone pay that much for a domain”.
Ethereum name service is a recent development in the world of crypto, and it’s growing quickly in its popularity. If you’re into crypto, then this is something you want to be involved in sooner rather than later.
To find out more, keep reading.
What Is Ethereum Name Service?
ENS (Ethereum name service) is a system that lets people translate machine-based addresses to human-readable addresses. It’s a service on the Ethereum blockchain and its purpose is to make the use of crypto more accessible.
A typical address on the Ethereum blockchain is made up of a long series of letters and numbers. It will be 42 hexadecimal characters, which makes memorizing it nearly impossible. Any time you need to give it to someone you have to copy and paste it into a message of some kind.
With ENS you can give a “nickname” that is much easier to remember. This could just be a name or phrase of your choice, and it connects to your public address.
How Does ENS Work?
ENS is made up of two smart contracts.
One is the ENS registry which is essentially the domain name system. It stores three crucial pieces of information for all ENS domains which are the domain owner, the resolver, and the caching time. The other smart contract ensures the domains match up with the correct user, address, or website.
Anyone can use the ENS app to create a Web3 username. Just note that they’re unique, so you can only pick a name that’s still available. You’ll need to confirm two initial transactions and then start paying a yearly fee (this is $5 a year for names over 5 characters).
ENS supports .eth and other popular DNS names such as .com, .io, .org, and .app. One of the main benefits of ENS over DNS is the fact that it runs on a decentralized network, eliminating the risk that comes with a single point of failure. It’s also more secure and has excellent interoperability across the Ethereum blockchain.
ENS is a fully decentralized protocol, so it’s not controlled by any government or financial institution. It works as a DAO (decentralized autonomous organization) using the ENS token.
This means that any individual who holds ENS tokens has a say in any proposals put forward. Anyone with a crypto wallet can hold ENS tokens, provided that the wallet supports ERC-20 tokens.
There are various ways to invest in crypto. Exchanges such as VirgoCX make it easy to buy Ethereum name service tokens as well as many other cryptocurrencies. They even have an easy-to-use smartphone app so you can manage your funds on the go.
The Future of ENS
You no longer need to ask “what is Ethereum name service”, but the future of the system isn’t entirely certain. As it stands, however, ENS seems to be the most suitable replacement for the older DNS system, so it seems very likely that it could grow to take over.
If you’re interested in more tech articles check out some of our other blog posts.