Why are domain names so expensive?

1) Buy domains that you have no intention of using, but you think someone else will.

2) Sell domains for 500 times what they cost you because you were wrong to think "someone will want this" about most of the domains you purchased.

3) Write a blog to say "Domain investing is a business" instead of admitting it's a ridiculous business that probably shouldn't exist because it doesn't add any value to anything.