Coffee farmers in the Brazilian countryside will be amongst the world’s first to use cryptocurrency for their daily expenses.
During the Global Coffee Forum in Campinas, Sao Paulo, Jose Marcos Magalhaes, president of Minasul coffee farmers collective, announced the organisation’s plans to launch a blockchain-based digital token, according to Bloomberg. He explained that the cryptocurrency would be backed by coffee supplies.
As one of the largest Arabica-coffee cooperatives in the country, Minasul has been expanding its digitalisation initiatives over the past few years. The company currently hosts a platform that allows its farmers to sell their coffee beans through mobile phone transactions.
While this would be the world’s first digital currency to be backed specifically by coffee and related supplies, according to CoinGeek, using goods to back a cryptocurrency is a popular tactic amongst stablecoins.
The farmers in the collective would then be able to use the currency to buy farming supplies, such as fertilizer and farm machinery. The token will also be used to purchase personal, non-farm items, including food and even vehicles.
To exchange the token for goods, members will need to use a digital marketplace that will be backed by Minasul’s inventory of machinery, crop nutrients and other items.
Magalhaes also stated that the farmers will be able to acquire the tokens based on current and future coffee production. Currently, up to 30 percent of the present harvest is eligible for exchange; this will adjust to 20 percent of next year’s crop, and 10 percent for the season after that. This enables the members to have access to a flexible and affordable line of credit, CoinGeek explained. This will also reduce costs for the cooperative and farmers because this type of digital financing doesn’t require registration though a notary.
While Minasul may be behind the world’s first coffee-backed cryptocurrency, blockchain technology has become quite popular throughout the coffee industry. International coffee conglomerate Starbucks has teamed up with Microsoft to create several programmes that use blockchain and other emerging technologies, including a “bean to cup” tracking platform and predictive drive-thru ordering. The corporation has also reported plans to accept Bitcoin-based payments in its stores.