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PayPal files petition for an NFT system enabling transactions on and off blockchain
PayPal's patent application to create a marketplace for seamless on and off-chain NFT trading was filed in March and made public in September 2023
Image: Shutterstock
Digital payments provider PayPal, on its recent crypto-related development, has published a patent outlining a system for the transfer and trading of Non-Fungible Tokens (NFTs), both on and off-chain, within its network. This is significant progress for PayPal towards creating its blockchain ecosystem.
The pending patent application establishes a system where users can purchase and trade NFTs utilising a third-party service. The patent application includes a variety of figures, images, and technical explanations of the various methods and systems involved in enabling off-chain transactions via the NFT marketplace.
According to the abstract included in the application, “A plurality of digital wallets associated with a service provider are provided with access to the NFT marketplace. The NFT marketplace corresponds to a decentralised blockchain associated with an entity that is different from the service provider.”
The application lays out certain expected features of the NFT system. The system will accommodate various forms of currency for NFT transactions. The users will be able to access this NFT marketplace through multiple digital wallets associated with and managed by a service provider. The service provider may perform compliance and risk management as part of the processing.
PayPal’s NFT marketplace will also allow off-chain transactions, providing flexibility and efficiency in NFT trading. Off-chain transactions could be handled with an ‘omnibus wallet’ without recording them on the blockchain. It would eliminate the need for broadcasting and paying gas fees associated with on-chain transactions.
The system could be customised in a variety of ways. For example, it could accommodate fractionalized purchases by distributing governance tokens, which could then be traded. In addition, a decentralised autonomous organisation associated with the service provider may be used to promote NFT liquidity through a dedicated platform.
This development is part of PayPal’s broader efforts to expand its presence in the crypto and web3 space. PayPal had previously introduced its ‘Cryptocurrency Hub,’ allowing users to hold, interact with, and transact in cryptos. The NFT integration could be the next step in PayPal’s crypto journey.
The move highlights PayPal’s commitment to tapping into the growing popularity of NFTs and blockchain technology. Despite some challenges in the NFT market, mainstream interest and adoption of NFTs remain strong.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
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