Introduction to NFT on the XRP Ledger
Welcome all to my blog where I will be posting my findings and research about the concept of NFTs on the XRPL. For my thesis I will also research how to apply this to real artworks. Wietse showed me how you can give the tokens (formerly called IOUs) the properties of a NFT.
At XRPL Labs we decided to stop primarily using the term "IOU" for issued tokens on the XRP Ledger.— XRPL Labs (@XRPLLabs) February 15, 2021
While some tokens issued on the XRP Ledger are indeed IOU's (I owe you), with counter party risk, it's also possible to issue 'regular' tokens. Fixed supply, NFT's, all possible.
Tokens can be issued by anyone with access to a account on the ledger. The cost of this (of an XRPL transaction) is 12 drops. In today's use the tokens are used to represent any currency that is owed by the counterparty, for example exchanges to there users and the other way around.
To issue (mint) a token, a trust line has to be created between two accounts. A limit will be set a limit for the amount of tokens to be sent.
The smallest amount of units for an issued token is as little as 80 zero's after the decimal and then a 1.
The scientific notation, as used “under the hood” by the XRPL (when requesting transaction / Trust Line information from a node) is 1000000000000000e-96.
The proposal of XRPL Labs is that numbers smaller than 70 zero's after the decimal will be considered as NFTs. and the last 11 digits will be seen as whole numbers.
0.0000000000000000000000000000000000000000000000000000000000000000000000 | 00000000001 Would be 1 NFT.
0.0000000000000000000000000000000000000000000000000000000000000000000000 | 00000000010 Would be 10 NFTs.
There are considerably 3 possible ways of creating NFTs on the XRPL:
- One account can issue (mint) one token, after that the account will be blackholed, which means it would be impossible to create new tokens after.
One account can issue (mint) multiple tokens as a batch, after that the account will be blackholed
One account continuously issues (mint) new tokens because it can be trusted. (Set a domain and emailhash). Also doesn’t get blackholed.
For a more detailed overview of technical aspects of the methodology check out the proposal from XRPL Labs regarding NFT on the XRP Ledger.
Let's say we go for the last one and see how this works out on the testnet.
We use two accounts for this which the first one is the issuer (minter) and the other one the hot wallet for the NFT to be sent to a buyer.
Issuer (minter) – rawSnhbdjsxrRqMupArYZAiSwVNyWgtM4M
Hot wallet – r3uZPZJsEjy4CV59EQZZcLzjAwVPc2fLZR
First we set a default flag which enables rippling. That is because we want the token to be moved between future recievers of the token with that trust line later on.
After that we set a trustline for the token between the two accounts with the smallest amount possible. For now I will call this one “De Nachtwacht”, since I will also be researching the registration of real artworks on the XRPL. The name is converted to hexadecimal code, this is the way the XRPL handles token names.
Next up we will send the token from the issuer to the hot wallet.
Now we have our token in the hot wallet. and can be seen on the balance sheet.
From here we could send it to a buyer. Any new account has to set a trust line with the initial issuer (minter) first.
This is because the XRPL has an 'opt in' (explicit trust) model, where to be able to receive a token, one has to trust the token issuer (minter) first After that the token can be sent to that account.
XUMM support for the the described methodology will be added on version 1.1 late Q1 2021.