October 1, 2023

PayPal Seeks To Offer Off-chain NFT Trading



PayPal has taken a significant step towards establishing its blockchain ecosystem by filing a patent application for a purchase and transfer system for NFTs.

The patent application outlines a method of conducting transactions with NFTs, both on- and off-chain. The application, which is currently pending, describes a system in which users can purchase and sell NFTs via a third-party service provider. Although the provider has not been specified, Ethereum is mentioned in the text.

PayPal intends to utilize the complete potential of NFTs for tokenization, which will go beyond the exchange of electronic collectibles, saying: “The NFT in this example may represent any unique piece of digital data that can be tracked using a decentralized blockchain ledger. […] Examples of such assets include […] digital images and videos, music, collectibles, and other digital art along with deeds to personal property, event tickets, legal documents and other real-world items.”

The customization options for the system are diverse. It could support fractionalized purchases by distributing governance tokens that can be traded. Moreover, a decentralized autonomous organization linked to the service provider could enhance the liquidity of NFTs via a specialized platform. Royalties could also be earned from NFTs.

PayPal explained that the system works in the following way: A request for a transaction involving purchasing an NFT associated with a specific source address is received from a first user of the service provider with an identifier and digital wallet. Upon determining that the source address corresponds to a second user of the service provider with a different identifier and digital wallet, the NFT identifier is updated to the first user’s identifier.

The system enables off-chain transactions within an NFT marketplace and allows different wallets to access NFTs. Additionally, the digital wallets within the system are linked through a service provider.

Despite the industry’s difficulties, payPal is creating an NFT transfer system, proving the continued existence of a mainstream market for NFTs.

Author profile

Whether you want to learn about NFT, Blockchain, Web3.0, Metaverse, or any other emerging technologies, we have the vital resources that will enlighten and help you make an informed decision.