NFT Conceptual Overview

Non-fungible token functionality is part of the NonFungibleTokensV1 amendment to the XRP Ledger protocol. You can use these functions on the NFT-Devnet now, but they are not yet available on the production Mainnet.

The XRP Ledger offers support for tokens, also known as IOUs. Such assets are, primarily, fungible.

Fun·gi·ble /ˈfənjəbəl/ (adj)

  1. able to replace or be replaced by another identical item; mutually interchangeable.

Fungible tokens can be easily traded between users for XRP or other issued assets on the XRP Ledger's decentralized exchange. This makes them ideal for payments.

A good example of a fungible item might be a postage stamp. If you are standing around in 1919 and need to send a letter by airmail, you would purchase a 24-cent stamp and affix it to your envelope. If you lost that stamp, you could use a different 24-cent stamp or use 2 10-cent stamps and 2 2-cent stamps. Very fungible.

Jenny Stamps

But since you are standing around in 1919, you might be offered 24-cent airmail stamps where the aeroplane on the stamp is accidentally printed upside down. These are the world famous “Inverted Jenny” stamps. Only 100 were circulated on a single sheet of stamps, making them extremely rare and sought after. The current value of each mint condition stamp is appraised at over $1.5 million dollars.

Jenny Stamps

Those stamps cannot be replaced by just another other 24-cent stamp. They have become non-fungible.

The NonFungibleTokensV1 amendment adds support for non-fungible tokens (NFTs, or “nifties” in the vernacular) natively on the XRP Ledger. Non-fungible tokens serve to encode ownership of unique physical, non-physical, or purely digital goods, such as works of art or in-game items.

NFTs on the XRP Ledger

On the XRP Ledger, a non-fungible token is represented as a NFToken object. A NFToken is a unique, indivisible unit that is not used for payments. Users can mint (create), hold, buy, sell, and burn (destroy) such tokens.

The ledger stores up to 32 NFToken objects owned by the same account in a single NFTokenPage object to save space. As a result, the owner's reserve requirement for NFToken objects only increases when the ledger needs to make a new page to store additional tokens.

Accounts can also designate a broker, or "Authorized Minter", who can mint and sell NFToken objects on their behalf.

NFToken objects have several settings that are defined when the token is minted and cannot be changed later. These include:

  • Various identifying data that uniquely defines the token.
  • Whether the issuer can burn the token regardless of who currently holds it.
  • Whether the holder of the token can transfer it to others. (The NFToken can always be sent to or from the issuer directly.)
    • If transfers are allowed, the issuer can charge a transfer fee as a percentage of the sale price.
  • Whether the holder can sell the NFToken for fungible token amounts, or only for XRP.

NFToken Lifecycle

Anyone can create a new NFToken using the NFTokenMint transaction type. The NFToken lives on the NFTokenPage object of the issuing account. Either the owner or an interested party can send a NFTokenCreateOffer transaction to propose buying or selling the NFToken; the ledger tracks the proposed transfer as a NFTokenOffer object, and deletes the NFTokenOffer when either side accepts or cancels the offer. If the NFToken is transferable, it can be traded multiple times between accounts.

You can destroy a NFToken you own using the NFTokenBurn transaction. If the issuer minted the token with tfBurnable flag enabled, the issuer can also burn the token regardless of the current owner. (This could be useful, for example, for a token that represents a ticket to an event which is used up at some point.)

The NFT Lifecycle

For more info about transferring NFToken objects, see Trading NFTokens on the XRP Ledger.

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