Cryptocurrency technology is already applied for ag credit contracts in Brazil, increasing agility, transparency and efficiency in the field.
Agricultural advances occur many times outside farms. Blockchain technology creates one of these occasions because it provides more agility, transparency and efficiency in the field.
Bart Digital, a start-up from Brazil, has more than 60 clients all over the country and forecasts a boom for this year. What is the reason? Among others, for saving 70% of the time from contractual procedures between credit institutions, ag input companies (seed, chemicals, machinery) and producers.
It started in 2016 and Mariana Bonora is one of the founders. She is a lawyer and met Thiago Zampiere and Renato Girotto, both partners and founders, in order to simplify business between producers and financial institutions.
As a lawyer from the chemical industry, Ms Bonora experienced all obstacles for credit concessions in Brazil. The next step after a hackathon, they passed through incubation and acceleration processes in different Brazilian ag hubs until their business prototype was released in late 2016 and got their first clients in 2017. “We work to increase agility, especially for barter transactions. In other words, credit sales with warrants of receiving. Our blockchain platform has brought several solutions inside credit concession processes,” says Ms Bonora.
The start-up enables involved parties to access all details regarding their contracts in real time and assure transparency in case of any change. It means a huge increase of certainty for business. “We find out all information regarding contractual topics and social-environment compliance, for example. Our solutions provide agility and transparency for the entire credit process automation until the signing step, including warranty monitoring via satellites with integrated partners in our platform,” she adds.
According to her, the main proposal of Bart Digital is to integrate different credit players in the same ambience. This way, they can offer and demand vantages about credit for both sides. “We have made a robust work of research for developing blockchain solutions in agribusiness. Bart Digital does not use this technology just for hype. We studied the technology for 2 years to find its real benefits for different players of the sector. Our system already allows information exchange between users safely,” she argues.
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In the coming half year, Bart Digital will start a higher level of blockchain possibilities. More than checking contract information, it will be possible to exchange business titles and contracts among parties. The first step is a proof of concept. “Currently, we provide an immutable register by a single party. It is already faster and cheaper, even more so in Brazil where bureaucracy is very complex and moves focus from what really matters. The most important is that farmers receive their inputs and credit providers receive their payment. In a few months, we will expand our services,” she adds.
Basically it means that the Bart Digital platform is going to allow contracts and agricultural assets among several players. All processes are placed in a sort of ‘bullet train’ for businesses. Not every process needs to pass through conventional and bureaucratic procedures. The aim is to find out which of them can be transferred through the Bart Digital blockchain platform without risk of legal security.
“Bart Digital already has over 60 clients across entire Brazil, like São Paulo, Mato Grosso, Paraná and so on. We expect quite a boom this year due to new possibilities and acceptance of blockchain technology. Most customers are input companies, such as investment funds, chemical factories, distributors, seeds and others,” states Ms Bonora.
Bart Digital’s clients pay an annual license and there is some on demand specific services that requires further rates. In any case, the start-up has no access to the customer data. Blockchain is a basic technology solution that needs connection to data sources and aggregates multiple people in a closed network. To improve blockchain for other services, you need more and more smart contacts with more present IoT technology. “Most important is that agricultural producers can generate and exchange an even greater volume of information that is relevant and interesting. This will be the experience and the result,” she concludes.
What is blockchain?
A blockchain is a growing digital list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic code of the previous block, a timestamp, and transaction data (generally represented as a mark tree). This “list of records” can be useful in several exchanges of data, increasing transparency, agility and traceability through undeletable digital records.
In other words, both parties trust that the blockchain system will register any kind of modification of the contracts. This technology is widely used and known in cryptocurrencies like Bitcoin, but is also very useful for many other applications based on exchanging information, reliability and traceability. In agriculture, it can accelerate credit concessions, input purchases (seeds, chemicals, fertilisers, etc) or trade of products.
By design, a blockchain is resistant to modification of the data. It is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. This way contracts can be made, in real time, between both interested parties without other certifications.