What is needed is a domain name resolution system based on cryptographic proof instead of trust, allowing any two parties to interact directly without the need for a central authority.

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We've had that for a long time, in many forms. Might be a bit of an xy problem here.

like editing your hosts file?

lol these were my thoughts too

Doesn't get more decentralized than that. Just publish a hosts file as a nostr note.

You can't have it. It is impossible unless the domain name is the public key.

You could use ordinals, but then all the good ones will get scooped up instantly.

Could you explain what ordinals are in this context? Thanks.

A standard formatted message containing an IP address and a URL

TLD*