Imagine a database where a single entry in means that you have a million dollars. Pretty cool, right? This is basically how modern banks remember how much money is in your account. (Too bad it doesn’t default to $1M!) Of course if the bank messes up, or gets hacked, your money could go to zero; and of course if that happens there is automatic government insurance for on the order of $100K. Cool.
Now imagine if it wasn’t just a database that a single entity owned, but instead “no one” or “everyone” owned. Imagine if each of those entries could also be declaring you have $1M. Great! ($1M is almost always great:) Is this possible, and since when? The answer on the tip of your tongue just might be “Duh. It’s the blockchain.” I ask you to consider the possibility that there’s a much earlier example. The “original blockchain” if you will. Each of its digital addresses holds value, and to control that address might cost you $1M. What drives the value is scarcity.
What am I talking about? Simply: the DNS. Domain Name System. The DNS is decentralized – no one really controls it. ICANN has its fingers in, but ICANN itself is a federation of many independent entities. The split between registrar and registry was a stroke of genius. (Except that we got a million godaddys… oh well.) Whereas the scarcity in the bitcoin blockchain is a finite supply of coins, the scarcity in the DNS is a finite supply of domain names — only one person can control, say, trent.com (alas, not me). Or one of my favorites – just one person controls this one. (BTW I’m Canadian so it’s not about the politics. It’s about the “tans”.)
Here’s one address (DNS, not bitcoin) I’d like to own: toys.com. Toys R Us plunked down $5.1M for that one. Or fb.com, which Facebook paid $8.5M for. The list goes on and on. I just discovered siteprice.org which allows you to estimate the price of any domain. It says google.com is worth $3B as of today. So perhaps fb.com was a bargain!
Depending on whose numbers you use, the total value of all websites is in the billions, tens of billions, or more. The top three sites are: $3B – google.com, $837M – yahoo.com, and $832M – egroups.com. That adds up to $4.7B. In comparison, the total asset base of bitcoin is $4.1B as of today. That’s right:
The top three DNS addresses are worth more than all the bitcoin addresses combined.
How’s that for digital scarcity? So, in many, many ways:
The DNS is the original blockchain.