PayPal has taken a giant leap by filing a patent application for a cutting-edge nonfungible token (NFT) purchase and transfer system. This patent, filed in March and unveiled on Sept. 21, outlines a revolutionary approach to NFT transactions, both on- and off-chain.
The NFT Ecosystem Unveiled
Exploring beyond the realm of electronic collectibles, PayPal envisions utilizing the full potential of NFTs for tokenization. The patent describes a system where users can seamlessly buy and sell NFTs through a third-party service provider, with Ethereum being a prominent mention.
The NFTs in this system are not limited to digital collectibles; rather, they encompass a broad spectrum of unique digital data. From digital images and videos to music, collectibles, digital art, deeds to personal property, event tickets, legal documents, and other real-world items, the possibilities are vast.
Customization for Versatility
One of the features of this system is its adaptability. Users can explore fractionalized purchases facilitated by the distribution of governance tokens. Furthermore, a decentralized autonomous organization associated with the service provider plays a key role in promoting NFT liquidity through a dedicated platform. The potential for NFTs to generate income from royalties is also a notable highlight.
Risk Management, Compliance and Efficient Off-Chain TransactionsIn
The processing of transactions through the service provider includes robust risk management and compliance measures. Users have the flexibility to utilize their digital wallets, although it’s not a mandatory requirement. Alternatively, a third-party broker can offer diverse storage and checkout services as a viable alternative.
In a strategic move, off-chain transactions are streamlined within an “omnibus wallet” linked to the service provider. This wallet seamlessly integrates the buyer and seller’s wallets without the need for transaction registration on the blockchain. This innovative approach eliminates the necessity for broadcasting transactions to the blockchain network and avoids associated gas fees.
The patent application emphasizes the system’s currency agnosticism, allowing the use of any currency. Notably, in August, PayPal introduced its stablecoin, PayPal USD, built on the Ethereum blockchain.