The Virtual Public Ledger
Featured in the September issue of our magazine.
By Joli A. Hohenstein
“People hear blockchain and assume cryptocurrency, and it turns them off,” says Jason Tatge, co-founder and CEO of Farmobile, which created a blockchain-powered farm data store. But many experts agree blockchain provides unlimited potential, including for agriculture. The “virtual public ledger” offers opportunities for commodity trading – as already proven in cotton and peanuts — as well as supply chain verification, guaranteed transactions and more.
Blockchain is not bitcoin
Blockchain Revolution authors describe blockchain as “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” But what exactly does that mean?
Blockchain is about verified transactions, whether records, contracts, data or money.
“Bitcoin is the first application of blockchain technology. It just happens to be currency,” says Mark Pryor, CEO of The Seam which created the first online, neutral trading cotton exchange.
The appeal is blockchain’s inherent security. It is built on impenetrable encryption, multi-level cryptography that creates a series of chronological, networked data blocks which comprise a virtual public ledger. Created under the pseudonym Satoshi Nakamoto, its complexity can be intimidating. But the reality is, while users may not understand how the internet or cars work, people still use them. Pryor says everyone needs to think about blockchain the same way.
Agriculture presents particular challenges for blockchain because of industry paper reliance.
“We’re one of the least digitized industries. We have very paper-based processes,” Pryor says.
But agriculture’s players want more. Driven by food safety, companies are asking for greater traceability and transparency and demanding information that can be trusted implicitly. For example, suppliers who want soybeans with special attributes, and are willing to pay a premium for them, will increasingly demand independent verification.
“That’s where blockchain comes in,” says Pryor. “Farmers can provide proof and make it visible, convey their practices and command a premium for what they’re doing.”
Tatge envisions a world where farmers market data like commodities with blockchain. “Farmers could license their data as a revenue stream,” he explains. “Turn it into a monetizable asset.”
The beauty of data, he adds, is that a new crop is created every year. Farmers can sell it three or four times, record who bought it and have complete transparency. New data is valuable, even to people who already bought data. “It’s an infinite commodity,” he says.
In addition, blockchain provides opportunities through guaranteed transactions and smart contracts where a set of rules is programmed as a contract placed on blockchain.
“A farmer could deliver a high-oleic soybean as confirmed by a grader, with a simultaneous exchange of ownership or for currency when certain provable conditions are met,” Pryor says. “They’re doing it in Australia, delivering electronic ownership and getting grain farmers paid.”
Blockchain’s transparency is part of what makes it so secure. “You have the traceability from origin on,” says Pryor. “Companies like Levi Strauss have an interest in looking back down the supply chain, because they have a responsibility to the consumer.”
Blockchain gives them that. “Blockchain is one way you develop a sense and confidence that you have a trail and know for what purposes your data is being used,” says Tatge.
Success with blockchain will take the cooperation and collaboration of the entire industry, says Pryor, from software providers to processors to farmers. He’s seen its success in cotton, where many organizations came together and united the supply chain.
“We see blockchain as a shared source of truth,” he says. “It’s an actual, distributed, decentralized platform. It allows multiple partners to connect through this digital fabric.”