Incompetance abounds at the InterNIC

Dean Anderson dean at
Wed Jan 20 19:55:47 UTC 1999

Ok, I thought I would stay out of this. It must be off topic.

"Pay-First" isn't a simple solution.  I'll explain why.

First, what do speculators do?  They register a domain and watch the news
for companies or products that might be able to use the domain. If they
find such a target company, they pay for the domain and try to sell it to
the target.  If not, they let the payment slip.  Perhaps in 30 days, they
re-register the domain if it still looks attractive.

Second, the current system evolved because of the requirements to reject
duplicates, and immediately notify the registrant about a duplicate and
allow registrations to go forward before "the check clears". Duplicates
might come in seconds after the first registation.  Thing are done on the
"internet" time scale vs. the "telco" time scale.

Third, the idea that it only takes minutes or a few days to process a
payment is wrong.  It takes up to eleven business days to clear a check. A
week to mail, and a week to process is not unreasonable, which quickly adds
up to about 30 days.  Credit card payments can take 60 days to clear, since
they can be refuted when it appears on your bill.

So, with that in mind lets look at what it would take to implement the "pay
first" idea.

To make sure that payment is received, all registrations would have to wait
until the check cleared, or the credit card charge wasn't refuted.  That
means you might wait 30 to 60 days for the registation.  That would be
unacceptable.  No one wants to wait until the check clears.  Also note that
this restriction doesn't affect speculation at all. Speculators don't care
if the domain can't be registered for 30 days. They want 30 days to decide
whether to keep it or not. But what net user wants to wait 30 days for a
registration? Probably very few. Ok, so we rule that out.

Lets say we modify that a bit, and give the first registrant the domain
right away, and then if payment doesn't clear in 30 days, you revoke it.
The second registrant is notified immediately of a conflict. (You might
recognize this as the current system)  This delay can be used by
speculators to speculate on useful domains.  So we aren't quite happy with

Lets modify this a bit further, and say we keep a queue of registrants. If
the first registrant doesn't pay, it goes to the second registrant.  Now
the second registrant would have to wait 30 days to know whether they get
the domain or not. In that time, they probably would change their mind and
select a new name which can be registered right away.  So they might not
want it in 30 days. The third registrant would have to wait 60 days.  

Now NSI has the expensive logistical overhead of keeping track of this
queue for each registration. Have speculators been limited? No. Speculators
can still form chains of organizations to make multiple registrations of
the same domain. This would work very well unless someone got in the middle
of this chain.  This is probably even better for speculators, since now
they can "reserve" a domain for as long as they want, merely be creating a
chain of companies to register the domain many times.  Lawyers are good a
creating a chain of companies. 

So, is it possible to have immediate notification of duplications,
registration before payment completes, and still reject speculation?  It
doesn't appear so.

I'll go on record here that in my opinion, speculation is a unavoidable
"feature" of the system, which may be somewhat undesirable but one that
cannot be removed.  The reason it cannot be removed is because of the delay
involved in completing the financial transaction, and the possibility that
such transactions can be terminated.  We can't change the banking system to
prevent domainname speculation.

Further, there are legit activities the look very much like speculation.  I
don't know how many of you have been involved with startups, but I have
advised a few.  Its a very hectic time as the principals try to select and
register a name. Figure out trademark conflicts, etc.  Often the business
idea, image, and focus change greatly during this initial period.  They
typical register a dozen domains or more. Some are rejected. Others they
get. Once they select one that they got, they usually don't want the others.

My point is that there is a lot of legitimate "register, cancel-no pay"
activities. It is precisely these same activities that speculators use for

While speculation may produce some additional load on NSI, there was also a
time when people only bought and sold stock with the intention of buying or
selling a company, rather than speculating about its future stock value. So
speculators produce tremendous load on stock exchanges.  However, in doing
so, they now provide much of the capital to finance business.

I don't expect domain speculators to become the equivalent of stock
speculators, but they really aren't any different from speculators in land,
bonds, currency, grain, or anything else.  They are part of the market
system.  Speculators in other areas don't enjoy the gratitude of the
"regular users" of those areas either.  Farmers generally hate land
speculators.  But they realize they have to live with that.

So I think the solution is to build a system that scales well to millions
of transactions per day, regardless of the ultimate purpose for those
registrations.  The per transaction cost becomes trivial, and the cost of
speculation is likewise minimized.


           Plain Aviation, Inc                  dean at

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