Patent application describes a virtual currency that may offer tax benefits and ways to improve domain name leasing.
Epik founder Rob Monster and SVP John Lawler have filed a patent application titled “System and Method for Domain Leasing, Acquisition and Development Incorporating a Virtual Currency Platform”.
You may recall that Epik started a virtual currency called Epik Bucks. These could be used to buy domain names, purchase web design packages, and other domain related services.
The patent application (pdf) notes that, by using a virtual currency, domain name traders could potentially avoid/defer taxes on domain sales:
In order to minimize this loss, there is a need for an alternative payment method, such as using virtual money as currency for any and all domain-related transactions. The virtual money can be used to purchase other domain names, related services, and related products. In some cases, the transactions using virtual money can qualify as a tax deferred “like kind exchange.” In these situations, the user may not be obligated to pay taxes for each transaction relating to the purchasing and selling of domain names allowing the user to realize the full value of his transaction.
The application also describes a method of handling a domain name lease, whereby the domain is placed into a locked state for the duration of the lease.
This patent application was filed in March 2013, but follows a provisional patent application filed in March 2012.
Epik owns a domain name registrar and marketplace and also offers web development services.
The virtual domain currency is a great idea, and one that I described in detail on Frank’s Seven Mile blog back in May of 2012:
http://domainnamesales.com/sevenmile/2012-05/in-new-gtlds-the-only-certainty-is-change/comment-page-1/#comment-229621
I think this proves that Rob Monster has more money than sense. The guy has a track record of bad decisions in the domain industry and this looks like another one. Remember all the mini sites that he stated would change the internet and got de-indexed by Google or how about the disgusting spamming techniques through his Intrust registrar and like you mentioned above lets not forget about the classic Epik Bucks that was going to change the way we buy domains.If he thinks domainers will use that system he has applied for then he might need to see a doctor.
Hasn’t Epik already used the “Epik Bucks” in public, including its own conference, prior to applying for the patent?
According to http://www.garson-law.com/blog/category/patent/patent-prosecution/
“…your sale or offer of sale, public use, or written or verbal disclosure in public can terminate your patent rights forever, with some actions such as public use or sale terminating your rights immediately.”
Curious what patent experts have to say on this.
You have one year after the invention is publicly disclosed, and I believe the March 2012 provisional is the key date. That said, EpikBucks were introduced in 2010 I believe. It’s possible the claims made in the application are for more recent innovations related to Masterbucks. Rob can certainly respond if he’d like to.
Thanks Andrew for picking up on this patent application. We have not been high profile, but have been methodically executing our strategy.
A few comments:
1. The topic of making domain names transactions more efficient is not a new one for Epik. EpikBucks, which is now operating as Masterbucks.com, is one innovation in that arena. Customers who sell or lease domains at Epik have proceeds deposited commission-free into their Masterbucks account. They can cash out from there or spend them on other Epik services, e.g. hosting, renewals, domain purchases, etc.. Masterbucks users can all push funds between members without fees.
2. As for Intrust, as has been explained prior, including on this board, Epik acquired Intrust’s registrar operations in 2011. We did *not* acquire Intrust’s brokerage operations which is famously known for “Alex”. As part of the acquisition Epik secured a customer base, and also an impressive engineering team, which is a main reason for the rapid pace of innovation in building the industrial strength domain management and registrar platform that you see at Epik.com today.
3. We are big believers in the future of domain name leasing, particularly in light of new TLDs that are coming online. Leasing also fits with our broader view that the domain industry is overdue for significant financial innovation that allows domain name assets to graduate into the status of being a respected asset class on par with commercial real estate in the physical world.
“using a virtual currency, domain name traders could potentially avoid/defer taxes on domain sales.”
Bitcoin anyone?
Don’t pay taxes and you will be charged with tax invasion. Law may not be present at this time, but I guarantee you the IRS will know about this and stop it immediately. Big brother is watching.
Rob is probably doing this whole currency idea because of inflation fears, which may be true in the future, but to have a currency system work you need fluid transactions with trust. Not many people can trust Epik these days!
Also, just move to the Caymans like Frank if you’re worried about taxes. Come on…why re-invent the wheel people!
Thanks to Rob for clearing up the Intrust spam, I got that one wrong. But as for this currency model, that will never take off. For one, you have to have an amazing platform where you can buy quality domains, dedicated hosting and so much more etc.. for people to want to stay within that system and spend within it.Epik does not have that and to be anywhere near that will take a miracle and a huge user base. Secondly, Epik have a poor reputation with domainers across the board and the trust issue is low.So how do you get these people back on board?
Look, even as good as Godaddy is, if they introduced a currency system they would not get that many users and look how much they have to offer. Why do you think they havent done it?
Epic fail(excuse the pun)
With apparently such an “impressive engineering team” they could have come up with something better than that.
Re: Alan
As for virtual currency, to be clear, this is not a cornerstone of our activity. That said, we found that many customers were selling and leasing domains, and then turning around and registering and renewing domains. The domain sales were capital gain events, and in many cases short-term capital gain. And since most domain investors do not have offshore holding entities, and yet still have a desire to operate within the bounds of the tax code of their domicile, it made sense to offer a tax-efficient way to re-deploy proceeds from domain sales. It is not for everyone, which is why the process for fully cashing out proceeds from a domain sale is straight forward, prompt, and cost-effective.
As for customer traction, 99% of our customers are end-users of domains. In addition, we do serve a growing number of professional domainers from around the world. In terms of economic model, we view domainers as supply chain partners. This is why domainers are able to get domains at cost, e.g. $8.03 all-in for .COM with free privacy, URL/email forwarding, live support, free Wordpress hosting, and commission-free listing in the Epik Marketplace. What is in it for Epik? Simple. When a domainer sells or leases a domain to an end-user, Epik gets a full-service customer. This is why domainers essentially get a free ride at Epik.
As for the question about trust among domainers, I think this needs context. in 2009-10 we had an ambitious mass development strategy for domains that centered around something called product portals. It was very successful, both for Epik and for Epik customers until Google changed their approach to indexing exact match domains. We did announce a performance guarantee for product portals which we honored across the board. A lesser company would have simply folded up the tent, and recapitalized under a new entity. We stayed the course and instead reinvented the business around Domain Name Asset Management, with an accredited registrar at the core. So far so good.
As for Epik’s product mix, there is a balance between doing everything *quickly* and doing everything *well*. We added hosting services in 2012. Dedicated hosting is a Q4 2013 initiative. That being said, hosting is commodity and there are many capable providers these days. On the other hand, there are a lot of mediocre registrars, including some well-known ones with large numbers of customers. In addition, the new TLDs represent an inflection point for the industry. The decision in 2011 to become a full-service registrar was partly driven by the anticipated arrival of the new TLDs. Epik will be a player in gTLDs.
Thanks for replying once again but your plan is not going to be successful.
I have read your reply and it is even more clear now.You are going to give so many things like wordpress hosting etc… with a domain for $8.07 then you will most likely making a loss on each domain you sell. Godaddy can do it but they make most of their money on hosting and you are going to give it away for free?
For this plan to be successful you will need a mass migration of customers(10s of thousands even hundreds of thousands) to make this a viable business and for them to want to spend money within this micro-system. With your profit margins(if any) being so small and in a declining industry like this then that will most likely mean taking market share out of a big player like Godaddy, Dynadot or Name.To do that you will need one hell of a marketing campaign and marketing budget and team for you to pull that off.
I am not trying to be nasty but I hate to see people throwing money down the drain.If I was an investor and you came to me with this business plan and even if I knew about domains I would tell you “Get the hell outta here” because it has no chance of gaining traction and will leak money. Domainers are a fuckle bunch.
Either you have poor business sense or you have the wrong people around you. Either way it is a deadly combination.
Instead of spending tens of thousands of dollars on patent and attorney fees you should have bought a quality domain, come up with a brilliant business plan and built a great business on it.
I meant to say “domainers are a fickle bunch” not fuckle
I don’t want masterbucks, I want real money, I can buy food with!