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Following up on the signs of the times, I want to now explain some significant differences between the “real” New World and the “virtual” New World. In order to simplify this exercise, I will not take such a broad view of the real New World as is commonly done. Instead of using broad strokes to paint a picture of the real New World, covering the past 6 centuries since the 15th Century, I will focus on one puny, tiny, but nonetheless very significant detail: the United States Homestead Act signed into law by President Abraham Lincoln in 1862. The basic idea behind this was to fill up “empty land”… — that this land was not actually empty is not the point here. I do not wish to downplay the way settlers treated native american indians (namely, quote poorly). Here, I simply wish to make different observations using this example.

The point I wish to make is that the settlement of “real” property (New World Settlement 1.0) follows a different pattern than the settlement of “virtual” property (New World Settlement 2.0). The most basic, fundamental and important differences are:

• Cost to Settle

1. 1.0 High
2. 2.0 Low

• Reward to Settlers

1. 1.0 Low
2. 2.0 High

• Choice of Location

1. 1.0 Relatively insignificant
2. 2.0 Highly significant

For each of the above aspects, the New World 1.0 attribute shows why the Homestead Act made sense.

Likewise, for each of the above aspects, the New World 2.0 attribute shows why some domain names still appear to be “unused” parking lots, while the vast majority of domain names that are in fact presently being used are nonetheless by and large worthless.

Unlike real world real estate, the cost of moving content stored on virtual world real estate is negligible. However, compared to the real world, the cost of finding / locating virtual world property is relatively high (in the real world, all you have to do to find property is to open your eyes; in the virtual world, you need to understand how language and linguistic expressions are used to locate relevant information).

Since only a few people understand how the “Wisdom of the Language” works, and since the transaction costs of transferring data from one domain name to another domain name are negligible, the value of domain names varies widely — ranging from nothing more than the registration fee of just a couple bucks to billions of dollars for the most valuable domain names (such as “shopping” or “weather”).

As the rate of online literacy increases, so will the market prices for valuable domain names. In contrast, I expect that the market valuations for worthless domain names will plummet as more people become more literate. In other words: there is every reason to expect that the wide variation in the valuation of domain names will continue to become even more pronounced over the foreseeable future.