Dec 10, 2018
Commodity Monday #14: grains, chains and smart contracts
Every Monday, we curate the previous week’s most compelling stories on commodities, supply chains, blockchain and trade finance initiatives in emerging markets.
Overstocks-medici-invests-2–5-million-in-grain-tech-firms-blockchain-pivot
coindesk.com
Overstock subsidiary Medici Ventures is investing in a software firm looking to store grain transactions on a blockchain. The company is investing $2.5 million for a 10 percent ownership stake in GrainChain, with the option to purchase another 10 percent at a future date.
While GrainChain originally developed internet of things-focused software, the company began looking into utilizing a blockchain ledger when its systems were having issues coordinating with “thousands of trucks on a daily basis,” due to the number of contracts that had to be filled out and executed manually. To combat these issues, the company is developing a blockchain platform that makes it easier to track grain and connect with a larger set of buyers.
“What it’s doing is not only leveling the playing field for the farmer but … giving a more accurate vision of where that grain is coming from, how it’s being paid and how it’s moving through the market. It’s eliminating the need for multiple-tier middlemen in the industry.” said GrainChain CEO Luis Macias.
Earlier, Medici Ventures announced a strategic investment in a blockchain company VinX which plans to create a token-based digital wine futures platform based on the Bordeaux futures model. This will allow for the selling and trading of wine futures on a transparent and secure blockchain.
Crypto to get regulatory certainly in South Africa
ccn.com
South Africa is the only country in Africa where cryptocurrencies (one of the main applications of blockchain technology) are embraced, legal and regulated, according to a research by Ecobank. In the latest development, authorities in South Africa are seeking comments on proposed policy changes that could, among other things, offer cryptocurrencies regulatory certainty.
The South African Reserve Bank has also embraced distributed ledger technology with Project Khokha — a platform built on the Ethereum blockchain for processing interbank payments and settlements. Three months ago, Project Khokha won the Best Distributed Ledger Initiative at a global central banking forum.
South African authorities’ forward thinking view on cryptocurrencies is a good advice for other countries:
“Regulating cryptocurrencies prematurely could have the negative consequence of throttling the growth and innovation of the industry. In addition, if laws are drafted based on existing technology, which is still in its growth phase, there is a risk that the technology may have moved so much by the time the legislation is enacted, that the legislation is obsolete or requires updating almost immediately to align with the latest technology.”
Globally South Africa joins a few other countries including Singapore, Estonia, Canada to experiment the power of blockchain technology.
Smart contracts and the CFTC
cftc.gov
Commodity Futures Trading Commision, the regulator of commodity derivatives and cryptocurrencies in the US published an overview of blockchain smart contracts and their roles and use cases in commodity trading and settlement.
The CFTC recognises that, fundamentally, a “smart contract” is a set of coded computer functions. It also highlighted that “smart contract” not necessarily “smart” — The operation is only as smart as the information feed it receives and the machine code that directs it — nor “contract” — may not be a legally binding contract.
This could be a good primer for other commodity exchanges and regulators around the world.
Harvest Spotlight: Sorghum
Binkabi
We are approaching harvest season in West Africa. Harvest spotlight is a weekly post designed to provide background information about common produced and consumed commodities like Rice, Maize, Wheat and Sorghum in West Africa. This week’s commodity is Sorghum.
Nigeria consumed 6.7 million tons of sorghum in the 2016/17 season, second only to China in the world’s sorghum consumption leaderboard. This is essentially because the grain is one of the staple foods for poor and rural people — consumed by some of the largest tribe in the country in its northern region where it grows the most due to its drought-and heat-tolerant nature.
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