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Innovation Percolates When Coffee Meets the Blockchain

Coffee’s global popularity has a long, storied history. Over time, coffee beans have evolved into the world’s second most traded commodity, after petroleum. Further, according to the International Coffee Organization, world coffee exports amounted to 9.13 million bags by October 2016, the last month that this statistic was tabulated.

Some 125 million people earn a living growing coffee, says the Fairtrade Foundation. The vast majority of them are small-scale farmers and their families who live on less than $2 a day, the World Bank reports.  

Now a Denver-based startup called Bext Holdings Inc. wants to make it easier for those producers of this much-in-demand commodity to garner a fair price and get paid instantly for their beans. As a complete logistics solution, the company aims to utilize blockchain technology to better track all elements of the worldwide coffee ecosystem and thereby boost supply-chain productivity.

The bext360 system tracks goods from producers to the end consumers. The company then delivers digital/mobile payment transactions to the farmers, communities, banks and other stakeholders through the use of the blockchain.

This process begins with the use of the company’s API tool, which allows wholesalers and retailers to embed the technology into their own websites, marketing, point-of-sale systems and supply chain management tools. Bext360 has also built a mobile robot akin to a sophisticated scale that allows coffee buyers to quickly assess the quality and weights of a farmer’s product in the field. This provides the information needed to negotiate a fair price through bext360’s mobile app.

The app and cloud-based software utilized by bext360 employ blockchain technology from the alternative payment platform Stellar to create a record of where the beans originated from, and who paid what for them.

To jump-start their business launch and growth trajectory, bext360 has raised $1.2 million in seed funding monies from SKS Venture Partners, a company that mainly invests in financial technologies.

Daniel Jones, bext360’s founder and CEO, asserts that coffee drinkers should be able to know, down to the cup, where their coffee originated from and whether farmers were paid a fair rate for it. Jones is a U.S.- and Africa-based entrepreneur with over 17 years of experience living and working in emerging and frontier markets, including China, the Democratic Republic of Congo (DRC) and India. He has deep professional roots in technology, applied mathematics, e-commerce and emerging economies.

Jones says that the launch of bext360 was sparked by the nexus of mobile technology and access needs in developing economies. This, he says, created the possibility of deploying machine vision and AI tools directly into all layers of the supply chain.  

“Bext360 is transforming the coffee supply chain while bringing consumers and farming communities together to improve product quality, community livelihoods and the consumer coffee experience. This mobile access allows bext360 to implement our technology directly into the supply chain for traditional optimization, product payment and the financing of capital equipment necessary to increase the value of commodities in the country of origin, bringing more equity to local businesses and communities in emerging economies.”

He says that there are two primary problems that he is seeking to solve in the coffee industry through blockchain technology and Stellar’s application.

The first is in ensuring secure and transparent payments directly to the farmers at the instant their products are evaluated and sold. “Stellar’s solution allows us to give each farmer, machine owner and the machine itself a digital wallet to pay for goods collected and to pay any loans for the machine,” he says.

The second problem addresses the need to track goods from the point of origin all the way to the end consumer through the use of the blockchain. Says Jones: “Groups working on fair trade spend a lot of overhead on tracing materials. They use rudimentary tracing mechanisms. And it’s very imprecise. People in the field can still get exploited.”

Jones said that his goal is to bring complete transparency not only to the coffee supply chain but also to other commodities as well, including cocoa. According to estimates from the Fairtrade Foundation, “coffee is one of the world’s most popular beverages and 80 percent of it is produced by 25 million smallholders. [Moreover,] around 125 million people worldwide depend on coffee for their livelihoods.”

Jones sees a number of trends emerging around the intersection between blockchain technology and the coffee industry. The big one, he says, is the demand among consumers to be able to understand where their food and beverages come from. Second, he believes that we’ll see greater access to electricity, mobile phones and development in some emerging markets that have been lacking in those areas. And the third? Greater efforts are being made to track all supply chain data (using blockchain technology) to ensure the full traceability of goods.  

Says Jones: “Many importers/roasters want the ability to trace and track their coffee. They have a picture of the community on their websites. But they don’t truly have that last-mile connection to the actual origin of where the coffee is harvested and they certainly don’t do this in real-time.”   

Bext360’s long-term goals are to link consumers directly to the suppliers that provide the products. He says this quest is largely driven by the desire on the part of consumers to have these sorts of relationships, with younger generations most likely to demand this connection. “Ultimately we would like to be a technology company that can improve both the quality and traceability for myriad commodities produced in the developing world, such as coffee, cocoa, fish, palm, nuts and minerals. This is all possible because emerging technologies like the blockchain give us the ability to collect, analyze and pay as close to the production date as possible. Our goal is to increase the quality of the products while improv[ing] the lives of the people that produce them.”

Michael Scott

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