Domain names are the names that are used to identify web sites. The best known types of domain names end in .com, .net, or .org, although there also a vast number of other types of domains - some of which are intended to be used for sites associated particular countries, or for particular purposes (such as government, educational or academic institutions).

As far as .com, .net, and .org domain names are concerned, these can be registered for just a few dollars per name per year. Apart from rules about what types of domain names are valid, the main rule is that whoever registers a domain name first, generally speaking, continues to own it until they either stop paying renewal fees, or until they transfer it to another person or business. The first-come-first-served basis of the domain registration system, has led to the development of a marketplace and speculators - people buy domains in the hope of reselling them later to others for a profit.

Since many people confuse the two, it is important however to realize that there is a different between speculation and cybersquatting:-

* A speculator is somebody who does the research to recognise value in a previously unregistered generic name, and buys it in the hope of selling it later for a profit. In many cases, speculators will market their names, suggest possible branding ideas based on the name, or even develop web sites on them (in the hoping of flipping both the domain and web site later). 

* A cybersquatter is somebody who registers trademarked terms, in bad faith, in the hope of extracting money from a trademark holder. Note: There are however methods by which trademark holders can use to recover such domains with paying up - either domain name dispute procedures, or through the courts.

Of course, if you want to earn an income through domain speculation and flipping domains, you will need to follow the legitimate route, sticking to generic names. I won't pretend that such a business is without risk - if you buy domain names but then fail to sell them, you would be out of pocket for the registration fees. Therefore, if you want to turn a profit, you will need to understand the domain market and do your search.  It also wouldn't hurt to learn from people who have personal experience in this kind of business - if you don't personally know anybody, you might want to consider reading guides such as Edwin John's "How I Sell My Domain Names", or Brian Pubrat's "Domain Cash Vault".