This year has been the coming-out party for the non-fungible token, whether it’s a piece of art, a video or even an article like that one you’re reading.
A non-fungible token — usually shortened to NFT — refers to any digital asset that has been verified by blockchain technology.
Artist Beeple is using it to sell a piece of digital art for nearly $70 million. One company is using it to turn NBA highlights into digital trading cards. The New York Times even sold one of its reporter’s columns for more than half a million dollars.
Kaleido, a growing Raleigh-based startup, is hoping to expedite the adoption of that blockchain technology in the business world.
Business uses for these tokens — and the underlying blockchain technology that ensures them — are just starting to be realized. “We want to speed up the adoption of this technology,” Kaleido co-founder Sophia Lopez said in a video interview.
Lopez and Steve Cerveny, both former IBM employees, founded Kaleido in 2017. At IBM, they worked on blockchain and cloud computing. Their goal is to help businesses create their own blockchains.
A blockchain is a digital ledger that uses a network of computers to document the transfer of ownership of a digital asset and gives the buyer proof that they are its sole owner.
While anyone can make a copy of art or digital trading cards, the blockchain is able to verify which one is the true original.
The technology was originally developed as a way to document cryptocurrency transactions, such as bitcoin.
Kaleido specializes in creating so-called private blockchains, which lets companies choose who they allow onto its platforms. They can also be less energy-intensive than open blockchains, which usually require large amounts of computing power to validate transactions.
Kaleido’s platform runs on Ethereum, one of the most popular open-source blockchain systems.
The privacy aspect is important, as Kaleido often helps competing companies create consortiums on the blockchain.
One of those consortiums is Covantis, a commodities trading platform founded by Archer Daniels Midland, Bunge, Cargill and other companies. The consortium wants to use blockchain to verify agricultural contracts and share shipping data that has previoiusly required massive amounts of emails and physical paperwork.
Kaleido boasts other notable clients — from mobile phone operator T-Mobile and the grocery store Kroger to financial institutions like Citibank and the Shell oil company.
For example, Kaleido provided the blockchain infrastructure behind a Kroger coupon that T-Mobile rolled out to its users.
For that project, Kaleido helped the companies create digital tokens that people could use without having any previous knowledge of cryptocurrencies or the blockchain — usually by tying the promotion to a specific phone number.
“The people got the coupon on their phone,” Lopez said. “They didn’t even realize they were using blockchain underneath.”
By having the coupons backed by the blockchain, T-Mobile could keep much clearer data on them. It could ensure the coupon would only be used a single time and keep a record of its use.
That could potentially lower the costs of running a coupon program, said Jonas Hudson, the co-founder of Greenfence Consumer that worked with Kaleido on the project.
“Say you wanted to run exactly 200,000 promotions,” Hudson said in a telephone interview. “If that jumps to 212,000 promotions, that could really mess up your budget.
Greenfence also has worked with Kaleido to create NFTs, like a collectible digital posters for the movie “Deadpool 2.”
A growing concept
The more that popular artists use NFTs and the blockchain, Lopez said, the faster the technology will go mainstream
“Anyone could come to Kaleido today and set up an NFT, and get the whole infrastructure up and running on our starter tier,” she said.
Kaleido currently has 20 full-time employees, Lopez said, a number it continues to add to. Though everyone is working remotely, the company maintains offices in Raleigh Founded’s Capital Club office in downtown Raleigh.
Kaleido isn’t releasing its revenue numbers, but the pandemic has been good for the company. With more companies looking for ways to become more digital during the pandemic, Kaleido’s business tripled in the past year, Lopez said. The company is now cash-flow positive as well, Cerveny added.
The past year could be just the start, Cerveny believes.
“Over the course of this decade, I think blockchain will become a ubiquitous technology,” Cerveny said.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate