Domain names are the easy way for a user to distinguish one website form another. It is easier to remember a name than an IP address with numbers and dots! Until a few years ago, all domain names had to be in English characters. Even other Latin-alphabet-based languages (French, Turkish etc.) had to use the English character set. This was even more hard for languages like Greek, Indian, Thai, Chinese or Russian.
Let's take the example of the Greek word "ταξιδι" which means travel. Before the advent of the IDN the name would have to be registered as "taxidi.com" (where Greek letters were replaced with homophone English letters". Now the domain ταξιδι.com is properly registered. But when you type this domain name and press enter, in older browsers or IE (that are not IDN enabled) the address automatically turns to "http://xn--mxagobw8a.com/", a character sequence (puny code) that helps the browser understand the address and convert it to an IP address. The Sundial browser, based on Firefox, was one of the first fully IDN enabled browsers.
The domain www.ταξιδι.com as it appears in the IDN enabled Chrome browser (left) and the non-IDN enabled Internet Explorer Browser (right).
The opportunities with IDN are great but so are the dangers. Someone else may register your domain name in a language that is of direct or future interest to you (ie. a market you would like to enter). This means that when that website appears in search engine results, it can be easily be confused with the original, and thus "steal" visitors, potential clients, and even defraud your clients, damaging your business reputation. But the IDN characters are not only limited to the name of your domain, but at its extension as well. In the case of Russian domains, the original domain extension is .ru but now it is in Cyrillic .рф
Early consultation and research is required for a business in order to avoid brand damages and issues of homograph attack. Strathclyde Forensics will discuss YOUR needs, YOUR brand and YOUR image, evaluate the threats and produce an appropriate strategy for your business.