Blockchain is a technology with broad applications across a variety of business operations, according to Serkan Terek, co-founder and chief product officer at Australian technology startup Meadow Labs.
Nonfungible tokens (NFTs), the company’s focus area, are just one of a variety of uses for the underlying blockchain technology. NFTs consist of digital artwork uniquely minted using blockchain. Meadow Labs is currently working with Australia Zoo — owned by conservationist Terri Irwin, wife of the late Steve Irwin, star of “The Crocodile Hunter” documentary series — to offer limited-issue NFTs as a means of fundraising to support its wildlife conservation mission. Still, that technology and the protocols involved can have significant implications on everything from costs to speed and efficiency.
“Specifically for Australia Zoo, it is an alternative medium to reach their audience through the use of NFTs,” Terek told PYMNTS in a recent interview. “But the question of, ‘What can blockchain do?’ That’s endless.”
What lies beneath
Meadow Labs’ NFTs reside on the Algorand blockchain, which Terek said differentiates the company’s NFTs. Like other blockchains that have emerged in recent years, Algorand uses a proof-of-stake protocol rather than the proof-of-work protocols of earlier blockchains. Proof-of-stake uses less computational power, meaning that transactions can be faster and even consume less energy.
“You may have heard of Bitcoin as being very energy-inefficient — that every block added to Bitcoin takes out a lot of energy because it requires a lot of calculations to add every single block,” Terek explained. “These new blockchains have alternative ways of doing that, so they become extremely efficient, extremely fast and very adaptable to a high degree of usage.”
In the case of Algorand, its pure proof-of-stake protocol combined with carbon offsets makes transactions carbon-negative, with the low energy usage complemented by carbon offsets purchased with transaction fees. For a client such as Australia Zoo, being able to offer NFTs that can be branded as carbon-negative is important.
“It’s about the environment. It’s about being fast and highly adaptable to the current world,” Terek said.
These blockchain innovations are going to put pressure on the market and force all blockchains to adapt and become faster and more efficient, Terek believes. As an example, he cited the “gas” price — the costs to complete a transaction — on Ethereum, one of the original blockchains that enabled NFT projects. Gas prices on Ethereum increase exponentially during times of high usage and can rise to hundreds or even thousands of dollars. Consumers can reserve a spot on a whitelist to mitigate cost spikes, but that benefits only the individual consumer.
“The technology itself is the problem, [in that case],” Terek said. “This is essentially solved with an efficient blockchain, so these are all kind of ‘solved issues’ that are just waiting for another player to come in and be a competitor in that space.”
Creating long-term value
Competing in the NFT space requires more than just having better underlying technology. Being carbon-negative does help to create additional perceived value for projects such as the one with Australia Zoo, but Meadow Labs has also set out to build a better user experience, both in terms of the immediate purchase and for the long term.
Terek said that a significant part of a good NFT offering is the ongoing curation. Unlike with physical works of art, the originator’s role with NFTs, which provide proof of ownership of digital content, does not necessarily end once the initial sale is complete. Terek noted that Meadow Labs provides clients with marketing support, customer service and long-term value. A good NFT project attaches more than just the digital content to NFT ownership.
“You don’t just end up selling pixels, which is not the formula for success of a good NFT project, but you sell the promise of future rewards. You promise future utility and everything that a good NFT project brings with it,” he explained.
Maturing the technology
Terek said the current NFT market has some similarities to past technology booms, such as the dot-com boom of the late 1990s, but the underlying blockchain technology is solid.
“We’re dealing with a new way [of doing something] that gets everybody excited and has a lot of potential, but it’s obviously exploited, so currently the sustainability of the boom is not there,” he said. “But that doesn’t mean the technology is not sound. I believe the technology is amazing.”
As the hype around NFTs dies down, the projects that survive will be the ones that continue to provide utility, he said. Eventually, NFTs hold the potential to be about much more than just digital content, and projects such as the one Meadow Labs has undertaken for Australia Zoo open up entire new possibilities to put NFTs to work for good causes with lasting impact beyond the digital sphere.