Coffee is an agricultural product that passes through many hands from grower to picker to shipper to roaster until finally our barista turns our roasted coffee beans into that perfect cup of cofffee.
What can blockchain and cryptocurencies offer?
Caffeine issue 32 was a special issue The Future of Coffee. An article entitled Crypto coffee looked at blockchain and cryptocurrences and what role if any they had to play in the coffee supply chain.
Coffee is the second most valuable traded commodity after oil.
The price of coffee is determined by speculators in London and New York.
Fairtrade coffee adds a small premium to the commodity price. In essence it maintains farmers in poverty as there is no incentive to improve the quality.
Direct trade offers a higher premium for quality. It relies on transparency as all parties have to trust the others in the chain. If I buy a bag of natural processed beans from a finca in El Salvador with a Q grade of 86, how can I be sure?
Blockchain superficially offers all the answers, blockchain offers trust, only it does not.
Blockchain systems do not magically make the data in them accurate or the people entering the data trustworthy, they merely enable you to audit whether it has been tampered with. A person who sprayed pesticides on a mango can still enter onto a blockchain system that the mangoes were organic.’Blockchain never has, never will, imply, infer or comfirm trust.
Blockchain protects the integrity of the data, each data block is linked to the previous datablock by crypotography.
Blockchain tells us nothing about the validity of the data, the trustworthiness of the data or of the person who was responsible for that data.
Trust comes from interpersonalrelationships.
Coffeeography documents the trust Stephen Leighton has built with the growers who he visits and buys his green beans from. He trusts them to deliver quality, they trust him to pay a fair price. When the beans reach Hasbean we trust Stephen Leighton to choose a roast profile to bring out the best the beans have to offer.
During the dot.com bubble we saw comanpanies increase in value merely by adding dot.com to their name. We are now seeing the same with blockchain, hype and little more.
Why do comanpanies need a blockchain, it is not easily adaptable? Therein lies its strength, it is immutable, what we need for a currency, that is why gold serves us well, it is immutable.
Though immutable is not quite the advantage it at first appears in a currency as it leads to hoarding and money is of no use if hidden in a cave, it has to be put to work in the economy.
Beans are shipped around the world, different currencies, fluctuating cuŕrency exchange rates, banks.
Cryotocurrencies, no exchange rates, no banks.
Bitcoin on energy grounds alone should be rejected, rejected that is if we care about climate change and its devastating impact on coffee growing.
Bitcoin fails to meet the criteria of a currency, as a medium of exchange not widely accepted, as a store of value it widely fluctuates.
CoffeeCoin for coffee. How many cryptocurencies do we need? Acceptability approaching zero. It is little more than an in-house trading token with a lot of hasssle.
FairCoin was developed to address the problems of Bitcoin. A cryptocurrency for coops around the world.
FairCoin is actually used in the real world. On a local autonomous street market in Heraklion in Greece FairCoin is in use.
FairCoin can act as a local currency, where indy coffee shops trade with other local businesses, as many already do, keeping money flowing within the local economy, whilst at the dame time we are providing support for direct trade.
FairCoin is backed by cooperatives in Catalonia. If speciality coffee shops use, encourage its use within their local economies, it will help support and stabilise the currency.
But a word of warning. Coffee growers already suffer speculators in the commodity market. We do not wish to expose them to further risk of cryptocurrency speculators.
Beware of snake oil salesmen.
Keithpp's Blog 