The case of Ethereum foundation and the «.ETH » extension.
Ethereum is a foundation created during 2015, by Vitalik Buterin, a 21 years old Canadian. This foundation aims to promote the Ethereum blockchain technology, created by this young computer engineer, who proposes in addition to a virtual currency, like the Bitcoin blockchain, the possibility to create applications ensuring traceability, inviolability and sustainability of the transactions they manage. To allow to the greatest number of people to access to these applications, the Ethereum foundation has recently presented the ENS for «Ethereum Name Service», and its corollary, the «.ETH» extension.
Back to the Blockchain technology
For the record, the concept of blockchain, can be defined as being « a technology of storage and transmission of information, transparent, secured and operating without a central review body » (source: https://blockchainfrance.net/decouvrir-la-blockchain/c-est-quoi-la-blockchain/).
Thus, if we take the example of the Bitcoin blockchain, the purpose was to create a virtual currency. The major interest consists in the absence of any central regulatory body, since it is controlled and managed by the community members, in a fully decentralized way. Any transaction done on the blockchain leads to an inscription in a block, published on a registry shared between the members. The transactions’ inscription in a block is carried out by « miners », who check, register and secure the transactions in the blockchain. This database hence lists all the transactions in blocks, creating a blocks chain supposed to be immutable and inviolable, due to the use of electronic signatures, and redistributed on the network, since it is decentralized.
Ethereum blockchain also has its currency, namely the Ether. But unlike Bitcoin, Ethereum didn’t create a virtual currency but has extended the use of the blockchain to other applications: the «smart contracts». Thus, Ether must not be considered as a currency but rather as a consumable allowing to exchange on the blockchain, use the applications it hosts.
The « smart contracts » concept
Ethereum proposes many possibilities of decentralized applications usable on its blockchain. These smart contracts are defined by the Blockchain France website as being « autonomous programs, which once started, automatically execute predefined conditions. They operate as any conditional instruction of « if – then » type (if such condition is verified, then such consequence is executed) ».
Concretely, this is a decentralized application, developed according to the Ethereum programming language (the Solidity), which automatically executes predefined instructions, on the conditions that the requirements are met, without the assistance of a third party, and ensuring that no modification is possible. These programs are executed on the Ethereum blockchain and controlled and certified by its members.
Thus, the promise is to delete intermediaries thanks to the total decentralization, managed by the processes automation.
For example, among possible applications, Ethereum foundation has announced on May 4th 2017, the creation of Ethereum Name Service, allowing domain names registration using «.ETH » extension.
Names’ registration in «.ETH »
The Ethereum Name Service, or ENS, corresponds to the Internet DNS, managed by ICANN, but unlike the latter, ENS is not based on root servers, but on the multitude of servers/machines, members of the Ethereum blockchain.
This is not a new registry having created another extension, but rather an alternative notion of the Internet.
Indeed, ENS is neither attached to the Global DNS, or to the IANA organization, nor to ICANN. ENS is a naming system specific to the Ethereum blockchain.
Domain name registration using «.ETH » is operating in a different way than classic domain name registration. This is a bidding system by anonymous deposit of a number of Ethers. In short, the name request opens a 72 hours period allowing other persons to bid. A second period of 48 hours then opens, during this period, each bidder must disclose their bid. The best bidder wins the name registration and is refund of their bid, minus the value corresponding to the difference of amounts between the two best bids. These funds are kept in a contract during 1 year minimum and can be removed at the end of this period, subject to release the name. If the name is the subject of one bid only, the bid’s winner is refund of the invested Ethers, except 0.01 Ether, corresponding to the minimum bid. This system should allow according to the ENS developers to prevent from speculation on domain names registration.
The system then doesn’t need an authority like ICANN, since the names ‘attribution is automated thanks to an IT program distributed and secured on the blockchain.
Nevertheless, if you type a domain name in «.ETH » in your browser search field, like Google Chrome, or Mozilla Firefox, an error page will be displayed. Indeed, the registered names in «.ETH » are not recognized by these browsers, since they aren’t part of the DNS network, they aren’t recognized as a domain name. Google Chrome extensions are proposed to create a bridge between the « web Ethereum » and the Internet that we know.
Hence, essentially, names currently registered in «.ETH » are only usable on the Ethereum blockchain, and therefore don’t affect the general public.
Lastly, the first use of ENS is, like the DNS, to allow the user to read and remember more easily an address by giving it a meaning. The DNS allows to translate an IP address in a legible address via the domain name.
Thus, ENS allows to translate an Ethereum user’s address (a user portfolio) of type «f14955b6f701a4bfd422dcc324cf1f4b5a466265 » in « myfirstname.eth ».
For example, when a user wishes to send Ether to another user, they only have to know their domain name and not their user address anymore. These domain names have a quite limited use, but may thereafter be used to access to future Ethereum applications.
The risks of the «.ETH » for brands owners
To this day, current web browsers don’t support these extensions, it seems that brands owners have no need to worry.
However, many French and international brands are « cybersquatted ». I.e. Ethereum users have won bids on brands names like « samsung.eth » or « volkswagen.eth ». They take over the name’s ownership for one year.
At the end of this first year of registration, the owners may release these names to retrieve the Ether stock associated to the name.
Risks should not be excluded in a near future if the «.ETH » are led to become more common and to offer interesting uses for the general public. Under this hypothesis, current web browsers could natively integrate «.ETH », in the same way as «.COM » or «.XYZ ».
Therefore, the owners of «.ETH » taking registered trademarks, for example may seek to benefit from this registration by using the reputation or identity of these protected brands, in order to divert the traffic to their own products or services. It may also be competitors seeking to tarnish their competitor’s brand image.
In the ICANN system, the rules enacted, in particular with UDRP procedures, propose to overcome these risks afterwards by allowing brands owners to try to recover a domain name using unjustly their brand. The restrictive nature of these rules, accepted and respected by registration offices, facilitates the application of the decision of Arbitration Center experts, and thus a domain name transfer to their rightful owner.
In the ENS system, there is no central authority which could enact these rules. Furthermore, domain names in «.ETH » have no real Whois file. To register such a domain name, they need to have Ethers and to create a portfolio. The identity is concealed behind a characters sequence, i.e. the digital impression of a cryptographic key. Therefore, it seems difficult to know the real identity of an owner in «.ETH ».
Furthermore, unlike the current system, it seems difficult to justify a territorial competence for «.ETH». The blockchain is not linked to any territory, it is distributed on all its members ‘machines, and thus all around the world.
The solution could eventually be developed by the Ethereum users themselves. It’s not to be excluded that an application is created in order to check the legitimacy of a domain name owner, on the basis of criteria defined in a program, like for example, the risk of confusion regarding a preexisting brand, and the good faith criteria in the use made of them. The constitution of a «popular jury » with voting materials would allow to decide on the issue as the result of a complaint from another member.