Have you tried getting a good, unused name today? Anything remotely close to a dictionary word, if unused, is squatted with a $xx,000 price tag. Do registrars get a cut of these sales prices because it seems ridiculous to allow squatting.
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Registrars get a lot more domains registered at 5-20 $/year this way.
How would our lives improve if squatting were "not allowed"?
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Well, at least there's still some room for that with some of the new TLDs.
But at some point we will also exhaust all nice TLDs too...
It will be even more difficult than it is now