Dollar digital currency in action

Non-Fungible Tokens: How Dollar Digital Currency Powers the New NFT Economy

Non-fungible tokens (NFTs) enable individuals to participate in markets for a broad spectrum of digital and digitized collectible items, from digital trading cards to online gaming items or digital representation of real-world items. Learn more about the booming NFT market and how Circle can provide the infrastructure to seamlessly operate payments for NFT platforms.

What Are NFTs?

Non-fungible tokens (NFTs) are unique blockchain-based digital assets that represent tangible and intangible items, ranging from virtual kittens and digital collectible cards to crypto art and in-game items. 
Non-fungible means that an asset cannot be readily interchanged for another. Instead, each non-fungible token represents one unique digital asset.


In contrast, fungible tokens are interchangeable for another token of the same type. Examples would be utility tokens, reward tokens, or digital currencies like Bitcoin.

Types of NFTs

The NFT economy is a vast ecosystem of different types of non-fungible tokens, ranging from the obscure and entertaining to sophisticated digitized versions of real-world assets.

Let’s have a look at the main categories of crypto collectible items.

  • Crypto Art: With provenance recorded on the blockchain, a new type of digital art has emerged in the form of tradable, non-fungible tokens.
  • Trading Cards: While some of us once traded in physical baseball cards, the next generation now does that online in the form of digitized collectible cards that “live” on the blockchain.
  • Gaming Collectibles: Blockchain gaming is a booming industry as more and more game developers recognize the benefits that DLT can bring to online gaming. The ability to create in-game items with verified ownership in the form of NFTs has been a driving factor.
  • Virtual Assets: NFTs are also used to represent asset ownership in virtual worlds, also known as the Metaverse, where you can own virtual land or other types of property.
  • Sports Collectibles: Many fans with a passion for sports also collects items related to their favorite teams. That is now also possible in digital form via NFTs representing collectible sport memorabilia. For example, NBA Top Shot enables you to own highlight footage of NBA players in the form of a non-fungible token.

Learn more about NFTs in Episode 35 of The Money Movement:


Building a Payments Infrastructure for NFTs

NFT marketplace and storefront providers face the challenge of efficiently building on- and off-ramps for their applications. However elegant the design of their application may be, if it’s difficult for customers to add funds to or take funds out of their accounts, sales are likely to suffer.

Most traditional payment processors won’t directly facilitate NFT transactions. As a result, providers of these tokens must look at other options to avoid inconveniencing their customers. If a customer can’t purchase NFTs with their credit or debit card, it can dissuade them from participating in this new market.

Even in those cases where a payment processor will allow cryptocurrency purchases, the customer first has to purchase cryptocurrency, wait for that purchase to settle, then convert that crypto somehow to an NFT marketplace where they can finally buy NFTs.

While the most dedicated purchasers may be willing to go through all these steps to buy NFTs, more casual customers may not be willing to do so. As a result, NFT marketplaces can better serve their customers by offering them crypto-native payment options that simplify the process of purchasing their products

A crypto-native payment solution enables customers to transfer their funds to tokens and back out again at their choice. By smoothing these on- and off-ramps between tokens and traditional payment systems, a solution of this type provides a seamless payments infrastructure that facilitates customer acquisition and loyalty.

Dollar Digital Currency: The Base Currency of the NFT Market

Dollar-backed stablecoins such as USD Coin (USDC) have quickly become the preferred currency of NFT marketplaces and storefronts. These price-stable digital currencies offer a convenient funding source for NFT customers. 

USDC is a price-stable and transparent dollar digital currency that is fully backed by reserved assets held at regulated financial institutions.

The growing popularity of stablecoins in recent years stems from the ability of these coins to provide an alternative to the volatility associated with traditional cryptocurrencies. While that volatility has made such digital currencies attractive to speculators and investors, it is less attractive to consumers looking to use digital currency to fund purchases of goods or services.

The stability that has powered the rapid growth of digital dollar stablecoins has proved attractive in the NFT sector. As a result, some of the most popular NFT platforms use dollar digital currency to facilitate trading.

For instance, the popular NFT creators, Dapper Labs, use Circle Accounts to enable its customers to buy and sell NFTs using USDC.

Circle: A Crypto-Native Solution for NFT Marketplaces

NFT marketplaces need to build a payments infrastructure that provides their customers with a seamless, intuitive experience. This can be done by enabling customers to easily deposit funds into their account, which they can use to purchase NFTs without going through a series of hops in the process. Ideally, they simply enter card details and then have money in their account at the NFT platform.

Circle allows its business users to accomplish this via native payment processing settlement into USDC. Sales of tokens can be settled back into USDC within the Circle system. 

The Circle payment infrastructure offers both a pure-play fiat on and off-ramp for crypto purchases, as well as the ability to settle directly into a native USDC account infrastructure. 

Circle offers a master wallet where you can aggregate funds on a commingled basis while also having the flexibility to leverage the Circle  Accounts API

This allows you to instantiate as many wallets as you want to manage a complete transactional infrastructure so that you can hold customer accounts on a 1:1 basis in USDC or do any type of accounting that you need to or move funds on the Circle infrastructure. This can be done all in one place with the same partner with the same integration.

Dapper: Using Circle to Offer Seamless NFT Transactions


Dapper is an example of an NFT provider that has comprehensively integrated Circle’s native crypto account features into its operations.  

Dapper has its own blockchain that the company uses to manage its marketplace while using Circle’s fiat on and off-ramp capabilities to transfer money in and out of the platform.

Dapper also uses Circle Accounts infrastructure to manage the accounting of funds on their own blockchain. This removes significant friction from the process of sending and settling, and reconciling funds on the company side but also on the customer side. Circle facilitates this for Dapper by receiving the funds on the user experience side.

Using Circle’s payments functionality enables Dapper to leverage not only on-ramp/off-ramp capability to improve user experience but also crypto-native stablecoin infrastructure. In doing so, Dapper has brought dollar digital currency into their back-end treasury operations

Historically, they would have had to fund those accounts with other volatile tokens that would be acquired for the purpose of buying NFTs. Besides being clunky from an end user perspective, with multiple platforms involved, among other issues, it also exposes users to the volatility associated with unbacked cryptocurrencies. 

The solution Dapper has built with Circle integrates stablecoins into their payments infrastructure so they can abstract away cryptocurrency conversions so that using debit cards to purchase NFTs is all the customer needs to know about the process.

The following graph illustrates the payment flow a platform like Dapper might use when on-ramping customer funds.

Marketplace Account Payment Flow


A platform such as Dapper can use Circle Accounts to seamlessly route funds from payments or payouts using USDC. As the diagrams reveal, behind the scenes, incoming funds are converted to USDC, which are then transformed into NFTs in a user’s account. 

This entire process is abstracted for the customer, who sees that funds they added to their account are now available to make purchases. What has occurred behind the scenes is that as users add funds into sub-wallets, the master wallet effectively locks the funds once they settle and then issue platform dollars on a 1:1 basis with USDC. The platform is basically buying USDC and then initiating an atomic swap between the NFT and those digital dollars and allocating those funds to the proper users, who can then use them to participate in an NFT storefront or marketplace. 

At the same time, the platform can maintain an accounting of all transactions and use Circle’s accounts infrastructure.

This example, and the payout graph below, display the ability of Circle Payments to provide not only on and off-ramping capabilities but also the flexibility to provide accounting and natively embed stablecoins in NFT platforms.

The graph below illustrates the off-ramping process for an NFT platform. In this payout flow, a user holding digital dollars on the platform who wants to move them to a bank account involves funds flow in the opposite direction. After receiving the request, the platform burns digital dollars then moves those reserve USDC out of that accounting system and bank into their master wallet. Then, a payout is initiated from there to their end user’s bank account either via ACH or wire.

Marketplace Account Payout Flow




NFT Payments, Circle and USDC

The rising popularity of NFTs offers opportunities for innovative token providers to grab a share of this rapidly growing market. 

Circle’s natively crypto payments platform enables you to process payments at scale and build the flexible account infrastructure to enable NFT users to seamlessly buy, sell and trade NFTs on your platform using a solution that is developing in lockstep with this fast-paced industry. 

Using a globally accepted stablecoin, such as USDC, in conjunction with Circle's platform allows you to offer your customers seamless transactions across fiat and token onramps/offramps. 

Learn more about Circle Accounts