Namecoin and Economic Rent

[Explodicle]

I normally hate "OMG I discovered an econ flaw!" threads and can't be the first person to think of this, so please point me in the right direction if it has already been discussed.

Namecoin has a different "early adopter" effect than Bitcoin. Specifically, the only objects with value in Bitcoin are the coins themselves, which are fungible, while Namecoin also has domains which are non-fungible. "google.bit" is worth FAR more than "googlesearch.bit". In this respect names behave similarly to land; there are infinite spots available, but some are worth a lot more than others.

In part because of its fungibility, the market for Bitcoins has nearly perfect competition. Since names are not fungible and "rent" is extremely low, used Namecoin domains may experience monopoly pricing. So I can buy Bitcoins/Namecoins from Alice if Bob charges too much, but if I want Bob's Namecoin domain he can dictate the price.

As with any monopoly this incurs a deadweight loss, and is less efficient than if we magically knew the economic rent of a name and required name owners to pay it in their transaction fees (or whatever). Unfortunately, I have no idea how to determine the economic rent of a name without a central authority.

[maaku]

A perhaps better alternative would be to have namecoin domains leased instead of owned, and come up for renewal somewhere on the order of 6 mo - 2 yr. They could be renewed by auction with the winner committing the highest (or second-highest) sum, or perhaps by some other means.

In terms of economic principals though, there's been a lot of work done in this area. Googling "land reform" should get you plenty of perspectives. Georgism or Silvio Gesell's "free land" proposals probably best address your concerns.

[jancsika]

A perhaps better alternative would be to have namecoin domains leased instead of owned, and come up for renewal somewhere on the order of 6 mo - 2 yr. They could be renewed by auction with the winner committing the highest (or second-highest) sum, or perhaps by some other means.

Looking forward-- and the off chance of widespread Namecoin adoption would certainly be way in the future-- do you really think user-friendly domain names are going to be such a priority that an imagined scalable Namecoin is going to be worth the coal it burns?

I know domain names are still awfully valuable to the companies that buy them, but so is network advertising.  (Hey, maybe a proof-of-work block chain could be used to re-implement network tv in a decentralized way, too!)

[maaku]

I don't think this is about scalability so much as perceived fairness & solving the domain squatter problem.

[Explodicle]

In terms of economic principals though, there's been a lot of work done in this area. Googling "land reform" should get you plenty of perspectives. Georgism or Silvio Gesell's "free land" proposals probably best address your concerns.

I am a Georgist, that's part of the reason I thought about it this way.

The big difference is that we don't have a central authority for name value assessment, nor would we want to... inefficiency is preferable IMHO. The land reform proposals I'm familiar with (like land taxes) won't help Namecoin.

[Explodicle]

A perhaps better alternative would be to have namecoin domains leased instead of owned, and come up for renewal somewhere on the order of 6 mo - 2 yr. They could be renewed by auction with the winner committing the highest (or second-highest) sum, or perhaps by some other means.

An outright auction wouldn't be fair to non-squatters who built up the value of their domain. Maybe if current name owners only needed to beat X% of the highest outsider bid, but bidding in general is complicated and could undermine faith in Namecoin.

Still, it's a good idea - market-based and objective.

EDIT: or maybe have all outsiders bid first, and then provide a grace period for the domain owner to match X% of the winning price and renew.

[maaku]

The design of auctions is a science in and of itself. If the various goals are clearly articulated, there's no reason some sort of auction protocol couldn't be designed to meet those concerns.

George and Gesell used taxation and central authority because that was the framework within which they worked. They were statists/nationalists, and a product of their times. But their basic concept of land ownership could certainly be applied to a decentralized system with a free market approach.

[Explodicle]

The design of auctions is a science in and of itself. If the various goals are clearly articulated, there's no reason some sort of auction protocol couldn't be designed to meet those concerns.

George and Gesell used taxation and central authority because that was the framework within which they worked. They were statists/nationalists, and a product of their times. But their basic concept of land ownership could certainly be applied to a decentralized system with a free market approach.

Indeed. But I don't want to rely too much on the land analogy. Competition for land and the cost of keeping it aren't a problem when the "land" can be forked for free and strong property rights are enforced with crypto.

At least the land analogy tells us one thing: underpriced names are fixable if this ever becomes a huge problem. My biggest fear was that I had found a problem and hit a dead end.

[phelix]

please note that name ops were rather expensive at the start of namecoin and price dropped slowly over a couple of months. you could see this as a kind of reverse auction. i think the namecoin inventors (vinced and others) put quite some thought into this.

with me it worked, the system prevented me from squatting early on.

maybe some day there will be another namecoin tld and more people will join the auction.

Has there every been something like that with an ican tld?

[markm]

Has anyone looked into getting .bit added to the opendnsproject's portfolio of top level domains?

-MarkM-

[doublec]

Has anyone looked into getting .bit added to the opendnsproject's portfolio of top level domains?

http://ideabank.opendns.com/story.php?title=NameCoins_as_a_DNS_Lookup

[phelix]

Has anyone looked into getting .bit added to the opendnsproject's portfolio of top level domains?

http://ideabank.opendns.com/story.php?title=NameCoins_as_a_DNS_Lookup

yeah, vote this up so we get into the popular box (~10)

[Explodicle]

please note that name ops were rather expensive at the start of namecoin and price dropped slowly over a couple of months. you could see this as a kind of reverse auction. i think the namecoin inventors (vinced and others) put quite some thought into this.

with me it worked, the system prevented me from squatting early on.

That's true, but this "auction" took place only once, and when a small percentage of people had even heard of Namecoin. Now squatting is prevalent.

maybe some day there will be another namecoin tld and more people will join the auction.

Perhaps, but how many times and when would we decide to do this? We would have to argue with existing name owners every time the user base increases significantly.

[phelix]

please note that name ops were rather expensive at the start of namecoin and price dropped slowly over a couple of months. you could see this as a kind of reverse auction. i think the namecoin inventors (vinced and others) put quite some thought into this.

with me it worked, the system prevented me from squatting early on.

That's true, but this "auction" took place only once, and when a small percentage of people had even heard of Namecoin. Now squatting is prevalent.

maybe some day there will be another namecoin tld and more people will join the auction.

Perhaps, but how many times and when would we decide to do this? We would have to argue with existing name owners every time the user base increases significantly.

not arguing against a new solution. but it is somewhere between difficult and almost impossible to get it right.

[jancsika]

I don't think this is about scalability so much as perceived fairness & solving the domain squatter problem.

I have a reply in mind, but it is possible I may not be truly understanding what Namecoin does, so let me ask this question:

Was it designed to be able to gracefully replace the current DNS system, or is it necessarily disruptive?

[khal]

I have a reply in mind, but it is possible I may not be truly understanding what Namecoin does, so let me ask this question:

Was it designed to be able to gracefully replace the current DNS system, or is it necessarily disruptive?

I'm not sure I understand your question, so, here are a lot of replies :p

- the current DNS system does not allow to be extended to everybody at once without some changes being made at IANA (which controls top level TLDs)
- you can't have .com registered both in namecoin and at ICANN, one must have the priority
- you can add the TLDs you want in namecoin, they will be available on your computer with the IANA TLDs

So :
- you can use both standard DNS + namecoin
- if you want everbody to switch to namecoin only there are 2 solutions :
1. IANA switch one day to namecoin and register all existing domains in namecoin
* this would require some changes in namecoin, but is technically possible (but they won't refuse to get some million dollars :p).
* each people could use namecoin or their normal DNS server and they will have the same results
2. everybody installs namecoin on their computer and use both standard DNS + namecoin for .bit (and any other TLD we decide to add)

[unabridged]

I don't think there will ever be enough support to make these changes in namecoin, we should start creating a proposal for a new coin.

features i want to see:
btc merged mining
ssl support
auction system for names

For the auction, trying to create a brand new name should create a period of a couple days where others can make bids, if no bids the name is granted at the minimum price. Make a certain % of each bid nonrefundable to prevent people from bidding up the cost for spite. Require each new bid to be 5-10% higher than the current highest, allow people to add to their bids, and reset the auction timer each time there is a new high bid.

For renewals, in addition to or instead of having a timer (6m - 1y), let auctions be triggered if a certain amount of coins are pledged (coins made unusable until the next auction is completed then returned to pledger), maybe set around 10x the amount the name went for last time. Again maybe make some % of this pledge nonrefundable.

Create domain root authority for the new coin, allow each name owner to upload an ssl key to the blockchain that is under that root authority, lobby the browsers to get this root authority packaged with install or place it under a root authority already included in browsers.

[crazy_rabbit]

I think part of the argument really boils down to this:

Either a) the squatting problem gets taken care of in some effective way, making all the squatters incredibly unhappy, but opening Namecoin up to the possibility of being truly useful in the future or b)the freedom of name coin triumphs, the squatters squat and no one else ever bothers to do anything with Namecoin because everything is already squatted and it dies a quiet death.

The idea of charging rent is a good one. You don't necessarily have to outbid someone who wants to 'take over' your domain whenever it comes up for renewal, but you should have to pay a non-trivial amount of money to keep your domain. Perhaps the amount you need to pay could be determined by it's traffic, or the traffic of it's Standard "real world' DNS counterpart or some fixed price that would make a portfolio of hundreds of squatted domains economically unviable. For example maybe "Facebook.bit" should be more expensive then "salliespumpkinpie.bit" and the price could be set by some metric of traffic.

Perhaps the money received could be redistributed to people who host traffic, provide some sort of 'backbone services' or distributed via committee decision or network-wide poll (kickstarter style) to fund startups that build upon Namecoin.

But something has to be done about the squatters otherwise it's worthless.

[Explodicle]

If it charges by traffic, what happens when someone DDoSes you? Who decides what rate to charge?

IMHO it would be better to keep it simple and rely on the market to handle pricing, and just dump the rent into either block rewards or the void.

[crazy_rabbit]

If it charges by traffic, what happens when someone DDoSes you? Who decides what rate to charge?

IMHO it would be better to keep it simple and rely on the market to handle pricing, and just dump the rent into either block rewards or the void.

Well I thought to meter by the traffic that the current DNS system version of the domain gets, as the problem is squatting on domains that are already "real world" successful. So Google.bit would be really expensive based on the traffic google.com gets. But if you were to start a totally new web on .bit that became super successful on the .bit domain, it's rate would not be so high as it was a productive domain in the .bit world. As much of the squatting is mostly to try and unfairly capitalize on the strength of brand names and trademarks the traffic the 'real world' versions of the domains would be a good metric to measure the likelyhood a domain is being squatted purely for exploitation of anothers trademark.