Asia Blockchain Review recently talked to James Allen, Co-founder and CEO of CoffeeCoin (COF), the world’s first token for purchasing, selling, and tracking coffee using distributed ledger technology (DLT) on the Waves Platform. Allen shared his views on how blockchain technology and cryptocurrencies can transform the coffee industry, while also discussing the recent Origin X project and future endeavors.
Asia Blockchain Review: What exactly is CoffeeCoin and how does it work? What was the idea behind its conception?
James Allen: CoffeeCoin (COF) is a verified token on the Waves platform that works both as a cryptocurrency for global coffee payments and as a utility token for transmitting and preserving coffee trade data on the blockchain. Launched in 2017, CoffeeCoin trades with liquidity on both the Waves decentralized exchange and Crex24.com. It has been actively used for buying and selling coffee and for data preservation for nearly two years now.
I had been involved in the coffee industry and was already familiar with many of the inefficiencies in the industry when I first came across Bitcoin. In 2013, I was one of the first people to sell source-roasted coffee from Indonesia for Bitcoin via our RoastStation project. When I realized how farmers could benefit from Bitcoin by being able to receive payments directly from buyers around the world, without having to go through banks or middlemen, I was instantly sold on the technology. However, it took another four years before blockchain technology had advanced far enough to perform the additional functions that make it so useful for the global coffee trade.
In 2017, the newly launched Waves platform made it possible to create, launch, and develop blockchain tokens that could solve many of the problems in the coffee supply chain.
ABR: How would you describe the overall market for COF?
JA: Initially, we are focusing on the specialty coffee market. This represents around 10% of the entire global coffee market. Within specialty coffee, there is a demand for more direct trade between producers and roasters, improved traceability between coffee origin and consumers, and an expectation of higher payments to the farmers for the work involved in producing a higher quality coffee. These are all major issues in the coffee industry right now.
Fortunately, blockchain technology offers solutions to these issues, and CoffeeCoin is bringing those solutions to the specialty coffee market. With the commodity price of Arabica coffee at its lowest in years and consumers demanding more transparency in the supply chain and more direct relationships with the producers of their coffee, we have a large and expanding market for CoffeeCoin and our blockchain payment and coffee tracking solutions.
ABR: What are the advantages for sellers of doing business through a distributed ledger, rather than using conventional transaction methods?
JA: CoffeeCoin works as a cryptocurrency for rapid global transactions. This avoids issues and loss of value in the global specialty coffee supply chain that occur through the current use of legacy banking systems, multiple currencies, and exchange fees. For example, a producer in Indonesia can sell his coffee directly to a buyer in America without going through the traditional system of banks, loans, and middlemen, thereby avoiding the wasted time and fees involved.
Instead of waiting days for payments to process, CoffeeCoin payments go from buyer to seller within seconds. Instead of paying multiple bank fees and currency exchange fees, CoffeeCoin transactions cost less than 0.01 USD for transactions of any size. When CoffeeCoin is used for payments, outdated centralized systems are bypassed, and the producer can receive a better price for his coffee – nearly instantly.
ABR: In what ways do customers benefit from utilizing COF tokens and making their purchases via mobile wallet?
JA: For consumers, using CoffeeCoin allows them to quickly make payments to producers and to track and verify that their payments went directly to those who produced the beans that their coffee was brewed from. Consumers of specialty coffee expect transparency in the supply chain – they want to know that their purchase is having a positive effect on the lives of the producers.
With blockchain technology, there is no way to alter transaction data once it is transmitted – and the ledger is public. Because of this, those who use CoffeeCoin to purchase their coffee can easily verify who received their payments. This has a positive impact on both marketing and, more importantly, improving true direct and fair trade.
ABR: What were the most difficult challenges to overcome when incorporating blockchain technology?
JA: Adoption of blockchain technology in an industry that still relies on very old payment and data systems is the most difficult challenge at this time. Since the technology is so new, it is hard to introduce it to the market despite all the obvious benefits. Because of this, the CoffeeCoin project has been developing our token and tools and launching and running use cases ourselves between coffee producers and buyers around the world. Explaining the functions and benefits of blockchain technology is useless without being able to show it in action in a way that those unfamiliar with the technology can understand.
Since launching CoffeeCoin, I have traveled extensively throughout Southeast Asia, connecting farmers in Indonesia and Thailand with buyers around the world, all while continually meeting and networking with importers, roasters, and cafe owners to explain what we are doing and how CoffeeCoin works. After nearly two years, we are now starting to receive serious inquiries from people at both ends of the supply chain who want to integrate CoffeeCoin into their businesses, both for payments and data preservation.
ABR: How has the Waves Platform been uniquely suited to CoffeeCoin’s core strategy and business model?
JA: When we launched CoffeeCoin in 2017, we decided to go with the Waves Platform because of how easy they made it to create a token that could instantly be used as both a cryptocurrency and a data transmitter on the blockchain. As soon as we released the token, it could be traded on the Waves decentralized exchange (DEX) against the Waves token.
This gave COF value and liquidity from day one, allowing us to quickly begin using it as a cryptocurrency for coffee payments. In fact, we were able to receive payments in CoffeeCoin from supporters around the world right after launching for our first use case in Bali, Indonesia. Indonesia already had a cryptocurrency exchange that traded Waves, which meant we were able to receive CoffeeCoin, swap it to Waves, and turn those Waves into the local currency in minutes to purchase green coffee directly from buyers at the source.
This is something that prior to blockchain technology would have been impossible to do. It is now one of the most important aspects of the CoffeeCoin project – getting payments directly to producers, quickly and without middlemen.
Furthermore, tokens launched on the Waves Platform could be used from the start to transmit and preserve text data on the blockchain as well. Using this feature, we were able to launch a prototype blockchain coffee trade data platform as soon as we launched.
Waves has continued growing and developing during the two years since, which means we have been able to continue developing and enhancing our project too. Our new integrated CoffeeCoin wallet and data platform at https://coffeecoinwallet.com was only possible thanks to Waves’ continued advances developing their platform.
ABR: What targets have you set for this year and in the foreseeable future?
JA: Currently, CoffeeCoin trades with liquidity on both the Waves DEX and Crex24.com, has been integrated with the MyCryptoCheckout plugin, allowing it to be accepted for payments on any website using WooCommerce and WordPress, and our CoffeeCoin client is live and functioning at CoffeeCoinWallet.com. Our complete functioning CoffeeCoin ecosystem can be accessed at CoffeeCoin.io and we have been successfully buying, selling and tracking coffee lots from farm to cup for nearly two years now.
With everything in place, functioning and proven, we are now in the position to focus on adoption – helping others to take advantage of the speed, efficiency, and cost-savings that CoffeeCoin brings to the specialty coffee industry. Our main goal for the next year is to bring more producers, importers, exporters, roasters, and cafes on boards to scale the CoffeeCoin ecosystem.
ABR: Can you tell us more about Origin X and other possible projects running concurrently or in the pipeline?
JA: Origin X was our use case that went live in early 2019 to showcase our complete farm-to-cup, CoffeeCoin-powered ecosystem available at https://coffeecoin.io. We ran it from Thailand during this year’s harvest. Coffee lovers were able to purchase coffee directly from our partner farms via our website using CoffeeCoin (via our integration with the MyCryptoCheckout plugin). Each coffee lot was given a unique tracking number, and we also used COF to transmit and preserve sales and tracking data for each lot on the blockchain. (Our legacy coffee trade data platform can be seen at https://coffeechain.io)
We have just launched our web client at CoffeeCoinWallet.com, which integrates our payment and data solutions and will soon include coffee trade document certification on the blockchain. This will provide another major enhancement to traceability and logistics efficiency across the specialty coffee supply chain.
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