I am sure by now most people have heard of Bitcoin, or other cryptocurrencies. While Bitcoin value has significantly dropped this year, the underlying technology, blockchain, is fascinating. Blockchain is the concept of a distributed ledger backed securely with cryptography techniques. Since most farmers do their own books, it's essentially having all of your financial transactions secured with a dual handshake, encrypted and then kept in multiple locations. It also ensures that no one institution controls the financial exchange and that the money is guaranteed at point of delivery of goods.
This is where blockchain comes into agriculture. The exchange of agricultural goods is cash flow heavy, and traceability to source is becoming increasingly important. Receiving payment immediately through a validated currency exchange tied to an official currency is really interesting! AgriDigital based out of Australia is tying agriculture and blockchain together, and being the first to do so shows how agriculture may benefit.
The pilot AgriDigital was run in partnership with CBH Group at an oat processing facility. Using a payment methodology directly tied to the Australian Dollar. The commodity, oats in the pilot, was digitally represented as a digital title token that represented the quality and quantity. The digital token was then made available and a buyer in this case the CBH's subsidiary Blue Lake Milling secured the token and requested physical delivery. At the point of physical delivery, settlement of exchange happened in real time transferring the title of the digital token to the buyer in exchange for Agricoin at the agreed upon price for the token. The Agricoin could be immediately settled for the Australian dollar to which Agricoin pegged.
While this was a small pilot, it's new tech proving itself out in agriculture, and something to be thinking of in terms of the possibilities of new formats of delivery and immediate cash settlements. While this example is grain delivery, it would be just as easy to envision this in technology being applied for inputs including tokens for which a farmer would peg the token the price and quantity of given inputs like seed or fertilizer. Any transaction where a trusted distributed ledger, easy/immediate settlement and a bidding system would be beneficial could effectively utilize blockchain technologies. If you would like to read the in depth pilot study it is available for download here.
If you haven't heard of Bitcoin and you enjoy a comedic approach to it, John Oliver's explanation on Last Week Tonight is both funny and a good overview. As you've probably read a number of our blog articles, you know we like comedy, but in forewarning there is a number of swears as this was originally broadcast on HBO.