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Brazilian coffee farmers are now going to use digital currency to buy fertilizer and machinery. The blockchain-based coffeecoin will be backed by the coffee production of the region.
Innovative new cryptocurrencies
Cryptocurrencies are relatively new, and the world is seeing a rising number of coins designed specifically to work for an industry or economic sector. The number of cryptocurrencies by backed by real-world assets like dollar-pegged stablecoins is also rising, bringing a brand new asset class into existence. One such crypto is called coffeecoin that will be used by coffee farmers in the Brazilian countryside.
The coffeecoin will be used by Minasul, a major arabica-bean cooperative. The coin will be backed by the coffee supplies in the region and work as a blockchain-based asset which could be used to buy machinery, fertilizer, and other non-farm products. It could even be used to buy food and cars.
Speaking at the Global Coffee Forum in Campinas, Sao Paulo, the head of Minasul Jose Marcos Magalhaes unveiled the coffeecoin. The exchange of goods for coffeecoin will take place at a digital marketplace. The coin will be backed by the store of crop nutrients, machinery, and other products of Minasul.
Cooperative digitization of coffee
Coffee farmers in Brazil can acquire coffeecoin against their current and future coffee production. They can exchange 30% of the available harvest, 20% of the next crop and 10% of the crop of the season after that. Magalhaes said that using digital financing options like these will help in reducing costs for the cooperatives as well as the farmers. It doesn’t require registration via the notary’s office.
Brazil is the largest coffee grower and exporter in the world and Minasul, based in Minas Gerais, is one of the largest coffee cooperatives in the country. Their coffeecoin brings a cooperative view of cryptocurrencies to the fore. They are following a larger digitalization project in which farmers can sell coffee beans using mobile transactions.
Unlike other major and emerging economies like India and China, Brazil doesn’t appear to have a hawkish view on cryptocurrencies. Instead, it appointed a commission to consider cryptocurrency regulations on May 31 this year. The commission will have 34 members and will consider how to regulate this sector better. Brazil not just recognizes its blockchain and cryptocurrency sector but also intends to create regulations as per the guidelines of the Financial Action Task Force (FATF). A tax regime already exists for digital coins in the country.