Producer’s Token, an agricultural supply chain start-up, conducted a trial using Stellar lumens, concluding that “it’s just not useful” after the cryptocurrency’s price dropped between 15 and 20 per cent during the trial, according to Colin Stewart, Director of Agricultural Technology for the company.
He made the comments in a recent interview on the Decrypting Crypto podcast. He said he researched various distributed ledger technologies (DLTs), including Bitcoin, Ethereum, and Hashgraph, but decided that they “aren’t actually a good solution” for the company. Instead, Producer’s token is building their peer-to-peer Producer’s Market on Holochain.
“[Holochain’s] method of cryptographic accounting allows for the creation of asset-backed cryptocurrencies,” he said, “And this is really interesting because what we’re designing and implementing in our platform is a method for agricultural producers to mint their own cryptocurrencies that are actually backed by their goods. So you can think of the cryptocurrency as a forward contract.”
An example of a ‘forward contract’ could be an agreement between a wheat farmer and a grain processor for the sale of the farmer’s crop, at a certain price on a certain date. The currency minted by the farmer would act as a receipt for the future delivery of the shipment of wheat. This food-backed cryptocurrency, tied to an asset with real value, would be more stable than blockchain-based tokens that are notorious for their volatility.
Volatility was one problem with Stellar, but another issue lay in what is normally touted as blockchain’s great innovation: consensus. Most DLTs require the entire network to agree about the order of events, but Stewart said this forced consensus doesn’t make sense for their application: “If I’m an apple grower in Washington state… why should I have to know that the avocado grower in the Michoacán sold his avocados?”
He explained that Holochain allows for transparency, accountability, and immutability, like blockchain, but without the inefficiencies of using one monolithic ledger that contains the history of all transactions in the network. Instead, Holochain is agent-centric, with each user having their own hash-chain of data. Transactions are countersigned by each party with cryptographic keys, then validated by peers in a distributed hash table — the same technology underlying BitTorrent.
According to Stewart, this approach better protects users’ privacy and agency, and better fits with Producer’s Token’s goal to empower all parties in the agricultural supply chain. As an example, he cited indigenous communities in the Amazon who wish to engage in global markets, but who don’t want data containing their location to be accessible in a public ledger.