Bitcoin has received considerable coverage in the news recently. The cryptocurrency is mainly known for its high peaks and deep troughs and, for the time being at least, does not seem to offer an alternative to current payment methods. However, while the cryptocurrencies themselves still need time to mature, the technology behind them already offers many possibilities, including for the agricultural sector.
What is blockchain?
Bitcoin and similar digital currencies are based on blockchain technology. Blockchain is essentially software that keeps track of every party's transactions. The idea at the centre of this technology is that different parties can make a joint transaction without having to involve an external party, such as a bank. These transactions are logged in a large computer network, meaning that there is no single central database. This ensures that the system is well secured against malfunctions and hackers, for example.
Monitoring is the responsibility of the users themselves. New transactions are saved in the database by use of nodes*. To do this, the nodes first have to find a code indicating that all information is correct. The nodes must all 'agree' that the code is correct before the information can be stored in the chain.
What could blockchain technology mean for our sector?
It could play a role in the shipping of livestock or in harvesting, for example. In 2018, blockchain technology was successfully used for the first time when shipping a cargo of soya beans from America to China. Five parties were involved in the transaction, including Dutch banks ING and ABN Amro.
The Louis Dreyfus Company, a large international trader of agricultural products, has praised the use of blockchain due to its efficiency. A soya bean transaction such as this would normally take at least two weeks but, in this case, the complete transaction took just a week. This not only means a significant improvement in efficiency but also results in less waste, as foodstuffs arrive at their destination much sooner.
Blockchain is valuable for consumers
As consumers are becoming increasingly critical of what they buy and eat, blockchain can also fulfil an important role in terms of providing information. Adding value to food is a simple process for food producers, because they are able to show where the food has been produced, which methods have been used and so on. At the same time, food producers can obtain a better price for their product, as fewer parties are required to get their product to the customer. A separate currency could even be created to guarantee a good price.
Blockchain technology appears to offer endless possibilities, and the possibilities for the agricultural sector are now being given serious consideration. Watch this space...
Do you have any questions about blockchain and its influence on the sector? Let us know via knowledgecenter@kramp.com.
*Nodes verify all information using algorithmic calculations
** This article previously appeared in Kramp Focus Edition 3 2018
