Financial services company PayPal has expressed interest in exploring the world of non-fungible tokens (NFTs) through a recent patent filing with the United States Patent and Trademark Office (USPTO). The filing reveals PayPal’s intention to develop an NFT marketplace that facilitates the buying and selling of digital collectibles. This proposed platform will enable users to list various digital assets, including images, videos, music, event tickets, deeds of personal property, and artwork.
The patent filing outlines detailed descriptions for both on-chain and off-chain NFT transactions, with third-party service providers playing a crucial role in facilitating these exchanges. The document explains that an intermediary will handle checkout and custodial services, while off-chain transactions will utilize an “omnibus wallet” containing contracting parties’ address details. As a result, no transfer will be registered on the blockchain, eliminating the need to broadcast the transaction or pay associated gas fees.
While the filing does not explicitly mention the nature of the service provided, references to the Ethereum (ETH) network suggest PayPal’s potential integration with this blockchain platform. This move hints at the possibility of tokenization and the potential for NFTs on PayPal’s marketplace to earn royalties from secondary purchases, expanding the functionality of NFTs beyond collectibles.
PayPal’s proposed NFT marketplace will also support fractionalization, allowing users to own fractions of a digital collectible. Fractionalization seeks to enhance asset liquidity and lower the barrier of entry for investors. To address liquidity concerns, the filing proposes the establishment of a decentralized autonomous organization (DAO) dedicated to maintaining satisfactory liquidity levels on the platform.
PayPal has been actively exploring Web 3 since 2020, enabling its users to buy, hold, and sell digital currencies. Their recent launch of PayPal USD (PYUSD) further demonstrates their commitment to the digital asset space. However, PYUSD’s adoption metrics have been modest, with a market capitalization of less than $50 million compared to industry-leading stablecoin Tether (USDT), which boasts a market capitalization of $82 billion.
Critics have voiced skepticism about PayPal’s ability to drive significant innovation in the stablecoin sector. Nonetheless, with over 400 million customers, PayPal remains a formidable player in the ecosystem and continues to attract attention from industry experts.