This is a topic that I’ve seen come up quite a bit lately and I’ve now seen enough people try that I thought it would be worth doing a deeper dive into. Over the last year, domain investors, who are very comfortable buying and selling digital assets have seen a new digital asset class take the spotlight – NFTs.
Some domain investors jumped on the NFT train early, others, well, not so early, or not at all. That being said, for anyone that waited until now, it’s safe to say, FOMO has more than set in and they’re ready to dive in and start buying NFTs.
Not surprisingly, many domain investors think – I have a solid domain portfolio, I should just trade some of my domains for NFTs of similar value. Sounds simple right? 🤷♂️
For anyone who has tried it, you know it’s a tough sell, and here’s why. Let’s use Bored Ape Yacht Club as an example as this is the NFT that most people are eying. The floor on BAYC is 50ETH, which currently (ETH is at ~$4,200) is around $210,000.
Now let’s look at your average $210,000 domain name. In most cases we’re talking about one-word .COMs, not the best of the best, but what some might call floor(ish) one-word .COMs.
While you might own a domain name that’s worth $200k or more, selling it for that price is something that, as many domain owners know, can take an unknown amount of time. Doing outbound and getting someone to pay six-figures for a domain is tough, you really do need inbound offers, people who want to buy it and have the budget.
In some cases, one-word .COMs can take a year or two to sell, in other cases ten years ore more. And yes, sometimes people get lucky and sell in a year or less, but that’s not guaranteed in any way.
Now let’s look at a Bored Ape Yacht Club NFT, on the floor, that’s worth $210,000. If you want to sell it, you literally list it for $208,000 and it will likely sell within the hour. Need to move it in a matter of minutes, list it for $190,000 and poof – it’ll be gone almost immediately.
And herein lies the challenge for domain investors trying to trade domains for NFTs. The NFT owner ends up trading an asset they can sell immediately, for an asset they might not be able to sell for a decade. On top of that, a lot of NFT owners (myself included) strongly believe that these are still the early days and NFTs are going to 5x – 10x in price easily over the next couple of years.
Of course, like anything in life, there is another way to look at this, that some NFT owners might want to consider. A domain name that is worth $200,000 can, and regularly does sell for $500,000 or more, if the right buyer comes along. There could definitely be some trades that, if you have a long enough time horizon, could pan out to be a very good move, if you know what you’re doing.
That being said, it’s a tough one. Giving up liquidity in a six-figure asset for something that might be worth six-figures to someone some day, isn’t a great proposition. I don’t think we’re going to see a lot of people trading domains for NFTs, and that’s okay.
The advice I give to domain investors is – if you have a domain that’s worth $200k, $300k, etc. Sell the domain, convert it to ETH, and buy your Bored Ape. In the end, that will probably be the best path.
One thing I can say is, anyone still sitting on the sidelines – it’s time to jump in, there’s still time, don’t miss the boat 🛥