The blockchain principle that underpins cryptocurrencies like Bitcoin, offers an enormous opportunity for smallholder farmers in developing countries to improve their economic prosperity and livelihoods.

A blockchain is a database, or digital ledger, which is distributed across widespread and independent computers. Additions to the ledger are verified and replicated automatically across the network, providing an authenticated chain of entries, as well as confidence that changes made are visible and transparent to all parties.

Cryptocurrency tends to be the loudest noise, but it is the underlying blockchain which provides the value. To put simply, blockchain is a great way of gathering information that relates to each other, providing transparency and integrity of information to tell a story.  

Blockchain also provides an opportunity for everyone to connect and access services for economic development. One of the biggest potential impacts that blockchain can achieve for smallholder farmers is to provide them identity and connect them to external buyer markets.

The benefits of transparency and integrity extend to all market participants. Farmers can connect to a wider market, aggregate with other farmers, and reduce the number of supply chain intermediaries, all intended to provide fairer pricing and increase the financial return and value capture to farmers for their efforts.

50 percent of crop value vanishes between harvest and the point of sale

Blockchain technologies can prevent price extortion and delayed payments, while simultaneously eliminating middlemen and lowering transaction fees.  

There are some technology requirements, however establishment of such technology for farmers is not dependent on a smartphone, internet or electricity. A simple phone with a 2G connection can provide data capture, data sharing, and the establishment of farmer identity.

Identity provides the ability to leverage assets, even in situations of customary land ownership. Digital identity provides the opportunity for farmer finance, insurance, and crop protection.

Digital financial technologies not only enable the ‘unbanked’ to use an efficient and reliable financial system for the first time, they also establish new systems of financial trust which allow entrepreneurs from less established economic systems to participate fully in the global economy.

Blockchain will open new enterprises that are based on trust, with global connectivity. Micro-economies will be established in communities to connect to the global economy.

But more importantly, it will allow smallholder farmers, many in precarious economic situations, to improve their livelihoods, and enjoy the benefits of connected economies that have eluded them to date.