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(Kitco News) – Digital payments provider PayPal is wading deeper into the blockchain waters as a recently published patent filing shows the company has created a system that enables the transfer and trading of non-fungible tokens (NFTs) within its network.
According to the patent application, which was filed on March 21, 2022, but only made public on September 21, the system enables “off-chain transaction via an NFT marketplace,” and will allow users to transfer NFTs in their possession to other users on the PayPal network.
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.
Patent figure 1. Source: USPTO
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 decentralized blockchain associated with an entity that is different from the service provider.”
PayPal described the way the system operates as follows:
“A request to perform a transaction involving a purchase, via the NFT marketplace, of an NFT associated with a specified source address is received from a first user of the service provider associated with a first identifier and a first digital wallet,” they said.
“Responsive to determining that the specified source address corresponds to a second user of the service provider associated with a second identifier and a second digital wallet, an identifier associated with the NFT is updated from the second identifier associated with the second user to the first identifier associated with the first user,” they added.
In other words, the system allows for off-chain transactions within an NFT marketplace, allows for various wallets to have access to the NFT, and all digital wallets in the system are connected via a service provider.
In the macro picture, PayPal’s move to create an NFT transfer system shows that a mainstream market for NFTs remains despite the industry’s struggles, with the floor prices of popular projects like Bored Apes Yacht Club (BYAC) at their lowest levels in more than two years.
This is just the latest crypto-related development for PayPal, which has ramped up its activity in the sector in the second half of 2023.
In August, the firm announced the launch of PayPal USD (PYUSD), a U.S.-dollar-denominated stablecoin that is issued by Paxos Trust Company and is fully backed by U.S. dollar deposits, short-term U.S. Treasuries, and similar cash equivalents.
Later that month, the payments giant updated its terms and conditions to introduce its new ‘Cryptocurrencies Hub’ feature, which allows users to hold and interact with Bitcoin and cryptocurrencies through their PayPal account.
According to the updated terms and conditions, the Cryptocurrencies Hub allows users to buy, hold, and sell crypto assets, use any proceeds to pay for purchases, convert between PayPal USD (PYUSD) and another crypto asset, send and receive crypto assets, and view market information and educational content.
“Any balance in your Cryptocurrencies Hub represents your ownership of the amount of each Crypto Asset shown,” PayPal said. “You will not hold the digital Crypto Assets themselves in your Crypto Asset balance. The term ‘Crypto Assets’ means the particular digital assets that PayPal supports and that you may buy, sell, and hold using your Cryptocurrencies Hub.”
Based on these updates and the newly published patent application, there’s a strong possibility that PayPal will integrate NFTs into its Cryptocurrencies Hub once the application makes its way through the approval process and is made official. As for now, the patent is pending.
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