Why Brands Need to Pay Attention to Unregulated Domains

By Monica Talley
September 24, 2014

While much attention has been focused on ICANN’s new gTLD program and the transfer of IANA function to ICANN, a new domain structure positioned outside ICANN’s purview is being developed with the possibility to significantly impact brands and businesses.

The ‘.bit’ domain, a new decentralized domain structure, has secured a small but loyal following, and could one day change the way brands operate online. .bit registrations are not associated with a name, address, or phone number, but are linked to a cryptographic identity, preserving anonymity. Unlike customary domains – such as ‘.com’ – ‘.bit’ cannot be accessed from traditional web browsers or registered using traditional currency. Instead, individuals attempting to gain access to these domains must first download specialized software that allows access to the sites using Windows browsers, and pay for the registration with a crypto currency called Namecoin.

However, the importance of ‘.bit’ comes not from its use of crypto currencies or special software, but rather from the decentralized nature of the programming. Likening itself to a peer-to-peer ICANN, .bit sites are free from oversight or control by a central regulatory entity. Namecoin can be used as a currency, but its main purpose is to manage information access rather than money – on its website, Namecoin describes itself as a “decentralized open source information registration and transfer system based on the Bitcoin cryptocurrency” (see www.namecoin.info).

The .bit domain is both praised and vilified for its ability to operate outside of the internet’s established regulatory and governing apparatuses. The system only became publicly known in 2011 after it was endorsed by WikiLeaks, and one of the stated goals of the effort is to protect free speech rights online by making the web more resistant to censorship. The .bit effort was also established in response to a mounting concern (in some quarters) over the potential impact of the Stop Online Piracy Act (SOPA), by a group looking to circumvent the threat of domain name blocking and censorship by creating a new Internet top-level domain outside of ICANN control. The effort currently uses proxies, cryptography, and a small collection of DNS servers to create a section of the Internet’s domain address space where domains can exist and be traded anonymously.

Proponents of this technology highlight the security benefits of a system where the location of individual sites remains fluid, thus making the sites resistant to hijackings and shutdowns. The decentralized nature of ‘.bit’ makes it nearly impossible for anyone to compromise a website, whether they be criminals, corporations, or even governments. Enthusiasts expect these features to entice brand owners seeking to establish sites where security against cloning and hijacking are paramount. Other possible legitimate uses include storing identity information or for voting.

While the increased security may seem welcomed in the current online environment, there are significant areas of concern for intellectual property owners.

First, Namecoin’s approach heavily favors early adopters. This facet, although lauded by some, has worrying implications for trademark owners and anyone seeking intellectual property protection. Without regulatory entities such as ICANN or the Uniform Domain Name Dispute Resolution Policy (UDRP) protecting marks and shutting down infringing sites, traditional brand protections become unenforceable in the ‘.bit’ space. In the absence of a vehicle for domain name dispute resolution and with low entry costs, cybersquatting may flourish within the ‘.bit’ domain registry. The current cost to register a .bit domain is very low, under ten cents. So far, over 13,000 names have been registered (a list can be viewed here: namecoin.bitcoin-contact.org/domains.php), a review of the list suggests that cybersquatting may already be rampant.

Fortunately for those seeking brand and trademark protection defensive registrations will be equally budget friendly. Currently the number of domain registrations for ‘.bit’ is extremely low compared to the more traditional new gTLDs controlled by ICANN, but should it take off brand owners may be left defenseless.

Second, as .bit was established – at least in part – to circumvent SOPA, it follows that at least a portion of the information shared in this platform will include pirated content.

Just how effective this new virtual top-level domain will be in preventing censorship by ISP’s and governments remains to be seen. For now, companies should at least be aware of and monitor developments in this next Wild West of the Internet.

The Author

Monica Talley

Monica Talley

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 5 Comments comments.

  1. Anon September 25, 2014 8:12 am

    There is still an inherent element of control – shifting the control outside of the current paradigms – be those paradigms actual government or pseudo-government like ICANN – does not eliminate the control.

    This is one reason why communism has always failed in the real world. Communism is a concept that sounds great on paper, but cannot overcome the reality of the human condition. When put in practice, those elements of the human condition are unavoidable, and if the paradigm does not realistically account for them, they do not magically disappear.

    All that has happened with the “.bit” paradigm is that a different group of people, with their different set of rules are in power.

    Nothing more.
    Nothing less.

    If what happens is a blackmarket, it will be a blackmarket no matter what “crypto” anything label is slapped on it.

  2. Anon September 26, 2014 2:42 am

    That’s not quite right. Nobody controls Namecoin. Nobody can take away your domain from you or censor you. Not even the Namecoin developers or people who have .bit domains parked. You can always barter for domains if someone has yours registered. There’s an element of plutocracy in it, but only in the sense that those with more money can get better domain names, as it always has been. The difference here is that nobody can shut you down or censor you whether you have an easily recognizable address or a really obscure one. ICANN has little to do with market prices. Domain name registration prices have gone up with the popularity of the internet, and those who got in early got good deals, just like what is happening with .bit domains. The point of Namecoin is not to provide a balanced distribution of popular domain names, but to provide an uncensorable set of them to anyone willing to pay the price determined by the market for them.

  3. Anon September 26, 2014 8:15 am

    Anon @ post 2,

    I think you have missed some critical steps at which the controls have been moved to.

    Yes, once you get to the point of having your “.bit” location, THEN the controls are different. But something (and someone) still controls the path TO that point.

    As to any other “control” aspects, I would have to understand the system in greater detail in order to analyze them better. As I mentioned, there is NO shortcut to dealing with ALL of the foibles of the human species, and if a system is too good to be true – if it promises too much, it will fail.

  4. Benny September 28, 2014 2:41 am

    Disambiguation required. Which Anon is which? I’m guessing Anon @ 1 is the original Anon who is always bickering with MaxDrei, on the basis of his unnecessarily obtuse style of writing.

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