There are a lot of problems with blockchain based TLDs that don’t get talked about much. I looked at purchasing ENS (.eth) and HNS (a custom TLD) domains/TLDs to match one of my ICANN domains. These are a couple of the problems I see with decentralized TLDs.
The first issue is that registration is comlicated. Yes, you can go to Porkbun now and register second level Handshake domain, but who controls the keys and who ultimately controls your domain? Now instead of relying on ICANN, which has well defined rules and policies, you’re relying on whoever controls the Handshake TLD you bought into, aren’t you? Who owns
.startup? Is it Porkbun? Can you ultimately control something like
example.1 if you register it?
To capitalize on the decentralized nature of the Handshake blockchain you really want your own Handshake TLD and to do that you need to set up a wallet, which involves being ultimately responsible for the key management, buy HNS, which has complex tax implications in some jurisdictions, and participate in their weird auction system they use for minting TLDs.
Compare that to normal ICANN domains where you go to Porkbun, put in your contact and credit card info, click buy, and you’re done. The registries and registrars all have clearly defined rules they need to follow. ICANN might not be great, but, if you’re looking to build an online brand, the predictability and stability you get from having an oversight organization is important. I’d rather legally own an ICANN domain than technically own an HNS or ENS domain.
The second problem is who’s liable in terms of bad acting like trademark infringement. The decentralized, “no one controls us, we’re immune to court orders” nature of blockchain TLDs sounds great until you start thinking critically about brand management and brand protection. Who do I appeal to if someone starts squatting on
mybrand.eth? What do I do if someone beats me to the Handshake TLD for
mybrand and uses it in a damaging way as a means of strong-arming me into buying it from them? Look at the extortion the VOIP providers have been dealing with lately. Cloudflare has a reputation for being the solution for dealing with those types of bad actors, not the tech provider that facilitates their activities.
In those situations, I’d be looking at the first link in the chain that operates in the (judicially) regulated world. So if Cloudflare supports HNS or ENS and hosts the DNS for it, that’s who I’d consider to be responsible for facilitating trademark infringement or libel. No one knows if that’s right or wrong because it hasn’t happened yet, but I remember seeing a list of .eth domains a while back where I thought there were a lot of (potentially) trademark infringing registrations. What happens when Alphabet or Meta or Apple or Disney has their trademarks violated by a bad actor that’s an anonymous participant in the unregulated, judgement proof blockchain? Who gets sued?
I think the technology is cool, but it’s something where you really want to solicit input from brand managers and lawyers before even considering it.