Spaces Protocol Launches on Mainnet, Bringing Decentralized Naming to Bitcoin  

Spaces Protocol, a decentralized naming system built on Bitcoin that empowers users with control and privacy over their online identities, launches on mainnet. By enabling permissionless registration, management, and transfer of digital identities in a secure, censorship-resistant environment, Spaces Protocol is fostering a more open, creative, user-centric internet. 

Mike Carson, Founder of Spaces Protocol, said “If you are relying on centralized naming services, it is only a matter of time until you’re compromised, especially if you are in a high-risk industry for censorship or property confiscation. As a truly decentralized, permissionless naming system built on Bitcoin, Spaces Protocol is free from third party certificate authorities, and empowers users with control and privacy over their online identities.” He continued, “Names and money both have historically relied on trust for their efficacy, but just like bitcoin as money ushered in an era of trustlessness, Spaces Protocol is accomplishing the same for names. If anything is as important to society as money, it’s naming.” 

“Spaces” are unique, user-owned primary digital namespaces distributed via auctions that function similarly to traditional top-level domains (TLDs), but with enhanced security and decentralization provided by the Bitcoin network. Within each Space, users can create “Subspaces,” which are individual identities that can be thought of as subdomains, allowing for further customization and management of names. Subspaces are managed mostly off-chain but verifiable on-chain using zero-knowledge proofs. This trustless, verifiable system is scalable and adaptable to various use cases, including Bitcoin payments, social identities, Nostr applications, and Tor addresses. 

A “Space” acts as a community identifier in the Spaces protocol, similar to a top level domain like .com or .org on the traditional web. For instance, in the identity “bob@bitcoin”, ‘bob’ represents a subspace or a member of the ‘bitcoin’ community.

Spaces Protocol uses an auction-based method for distributing names, rather than a first-come first-serve approach, aiming to prevent any single entity from accumulating a disproportionate number of valuable names. Since auctions alone cannot entirely eliminate the possibility of name squatting, and to further ensure fairness, Spaces Protocol introduces a dynamic name rollout process to control the release of names through a pre-auctions phase ensuring that each name gets adequate attention and the opportunity for fair & open public bidding. Proceeds generated through auctions are irrevocably burned.

During the pre-auction phase, users propose names they’re interested in. Names that receive enough interest, determined by their highest bid values, advance to the auction phase. The protocol caps the number of spaces released to 10 per day, or a total of 3600 community spaces per year, whereas Subspaces can theoretically scale to billions because owners of Spaces can sell Subspaces. When a pre-auctions Space advances to the top 10 on a given day, it enters the auctions phase. Auctions last for 10 days. To discourage last-minute bidding, new bids extend the auction duration by one day.

The basic principle behind the auction mechanism is selecting some UTXO to represent the Space (known as the “Space UTXO”). This UTXO is “passed” around by bidders until the auction concludes. An open transaction is first submitted to initiate the auction and place the initial bid.