Digital Currency Craze Comes to Private Food

Almost from the inception of bitcoin eight years ago, food activist Liz Reitzig has been fascinated with the potential of cryptocurrency, especially with its potential to revolutionize local food distribution. “It enables small farms worldwide to bypass the corporate distribution systems, and connect directly to those they serve,” she says.

But it’s been a tough go. Just as bitcoin has experienced several serious price crashes since its introduction in 2009, so has Reitzig experienced setbacks. Early on, she lost several of her own bitcoins to hackers. Then, two years ago, she was involved with a venture to market a food related cryptocurrency that didn’t attract enough funding to launch.

Last week, though, a new cryptocurrency venture she has helped get off the ground—known as Foodcoin—gained traction, lots of traction. During what is known as a pre-initial-coin-offering (pre-ICO) of their token, the new project attracted $1.5 million worth of sales on its first day, mostly through bitcoin and ethereum. By the end of a week, it had more than $3 million committed by individuals who want to get in early on acquiring a currency for buying food privately from farmers. In part, this money will be used to develop the “blockchain” platform (which includes technical items specific to cryptocurrency such as “wallets,” and “smart contracts” and other special software) enabling Foodcoin to be used as a digital currency in conjunction with ethereum.

What made the event especially noteworthy is that the offering wasn’t even available to U.S. citizens, because of regulatory uncertainties in the U.S. So all the money, from about 2,000 subscribers,  that was committed came from Europe, Russia, Australia, Asia and other parts of the world.

Bear with me while I try my own cyber-currency calculation: According to the Foodcoin website, Foodcoins will be valued at 100 for each ethereum cyber coin; at recent market prices of around $300 per ethereum, Foodcoins would be worth about $3 each. Subscribers to the current pre-ICO, which ends tomorrow (Wednesday), will receive a 35% bonus in Foodcoins for being first in. Think I’ve got that right—I suggest you read the web site and the accompanying white paper on the site to get all the details and make your own calculations before making any commitment.

The online entity behind the Foodcoin offering, 1000ecofarms, is less than a year old, having launched last October as an online marketplace for food sellers. It is described in a white paper on the Foodcoin site  as having more than 650 food sellers, with about half in America and half in Russia. It says it has offices in Bethesda, MD, and Moscow, and is up to 4,000 registered users. The Foodcoin web site shows photos of five other co-founders besides Reitzig, though it’s difficult to determine from the one and two-sentence biographies of each whether they have the expertise and credibility to develop all the software they promise to make Foodcoin a viable cyber currency.

The international interest in Foodcoin becomes more easily understandable in the context of a worldwide explosion of interest in cryptocurrency. That interest has seen bitcoins roughly quadruple in dollar terms just since last spring, from about $1,200 to more than $5,000 at one point in recent weeks.

According to The Wall Street Journal, there have been more than 100 ICOs so far this year. So far, 10% have declined in value and 30% haven’t traded, the paper reports. Losing deals, which initially raised nearly $300 million, have lost about 40%, on average. There have also been some astounding gains. The WSJ reports on a Chicago entrepreneur who in the last year has turned an $80,000 inheritance into $2 million.

Some experts quoted by the WSJ compare the current digital coin craze to the dot-com boom of the late 1990s, when all sorts of companies were adding .com to their names and raising huge amounts of money in public offerings. That boom ended badly in 2001.

As just one indication of the uncertain nature of the current marketplace, the Chinese government declared ICOs illegal on Monday, causing bitcoins to lose 5% of their value, and ethereum, the second digital currency, to lose 17% of its value, according to the WSJ. All of which points to the difficulties governments are having in trying to determine how to regulate and tax currencies created outside of official governmental bounds. America’s SEC has been very tentative in determining if or how to regulate these currencies, and so far has shied away from approving anything substantive and long term in scope.

Can Foodcoin succeed in its stated goal of developing “a new blockchain ecosystem, architecturally designed to create a global marketplace of food and agricultural products….a universal trading platform for businesses related to food”? Given the explosion of interest in digital currencies and so-called “blockchain ecosystems”, it certainly seems do-able.

Practically speaking, though, I wouldn’t expect rapid acceptance in the U.S. of digital currencies for private food, if only because farmers are notoriously slow to adopt new technologies. Many owners of small farms that sell directly to consumers have only in recent years begun making active use of email to accept orders and alert their customers about such matters as food availability and pickup hours. American Amish farmers, who are heavily into the private sale of food, don’t even have their own computers or accept credit cards. While some have signed up for online platforms to take orders, in practice most prefer to be paid directly by customers in cash or by personal check.

Even for those of us who are active in the online world, making and accepting payment in bitcoin and ethereum is still a major leap and requires learning new ways of thinking and interacting. Here is just one issue I have encountered: How do you set up a bitcoin account when the online account platform doesn’t accept dollars or other cash as we know it so that you can buy into a cybercurrency? The questions for many users just multiply from there.

The developers of Foodcoin expect the barriers to dissolve as banks and other such real-world entities become involved in mediating transactions, if only to avoid being left out of the new world of virtual currencies being developed. According to the Foodcoin white paper, banks will come around to avoid “the risk of exclusion from the trade transaction chain and reduction of the customer base with global implementation of blockchain.”

Full disclosure: I have no connection to Foodcoin or 1000ecofarms.com. I have also ended my involvement in the Real Food Consumer Coalition, to avoid any appearance of conflict of interest when I report and write about food rights and other food issues.

 

12 comments to Digital Currency Craze Comes to Private Food

  • mark mcafee mark mcafee

    Liz,

    Good luck to you….you will need it. I really respect your vision and tenacity.
    It is one thing to fight for and get access to raw milk….quite another to create an alternate food monetary system and or change the worlds banking systems and means of commerce.

    You went from fighting the FDA to fighting the worlds capital markets.
    Bless you Sister!!!!

    One thing for sure….Farmers are by nature the most conservative people on earth. Most want money…just hard cash. They have already fought with mother nature and the risked the elements and just want to get paid for their risks and blood and sweat.

    How does a farmer pay for a bank loan or fuel with FoodCoin? The entire structure must become involved.

    I think I will stick with fighting and challenging the FDA on interstate commerce of raw butter!

    Hugs to you!! You are a rare and special spirit!! The world needs you.

    Stay out of jail!

    Mark

  • We really do need to find a way to work around the fed reserve – if foodcoin has a place in doing that I would be open to the inclusion of this new currency in our private food system – like yesterday! Perhaps we can collectively start our own public banking system with just a few sub-units to do the transaction work. It seems that fortunes are made by taking a small percentage to “handle” our hard earned food dollars.. Imo, farmers are not selfish, if they are conservative it is because they must be uber efficient! Good luck to one of my heroes in the private food world, Liz Reitzig! Thanks for helping to keep this activist/foodie/farmer out of the clink:) Be well, all ways! Alvin in MN

    • David Gumpert David Gumpert

      Alvin, appreciate the sentiment. These new currencies are a little more involved than starting our own public banking system. They are based on something called “blockchain” technology which, among other things, is highly resistant to hacking, is highly transparent, and allows for preservation of contracts and accounting records. Thus, leaves out lawyers and middlemen in important respects. I suggest you search around to read up on blockchain technology. It’s not easily understandable to us mortals.

  • Some one explain why cash doesn’t work? It is a possession.
    As a mortal,…..I need a lesson in Foodcoin.

    • David Gumpert David Gumpert

      Mark, it’s not that cash doesn’t work. It’s just that cash is subject to the vagaries of policymakers and regulators–things like inflation and deflation and currency controls. That’s why gold has held as a store of value for 5,000 years. Digital money has an advantage over gold, though: it can be moved and carried around much easier. And as financial conditions deteriorate in any particular country (think Venezuela, Turkey, Russia, Philippines, Greece) and tyrannical governments try to control the movement of money, digital money has greater appeal. Digital money is also appealing in underdeveloped countries, where the banking system isn’t available to the impoverished. Governments definitely don’t like this, because they lose control, and control is what they are about.

    • Pete

      Cash isn’t a possession, its a debt instrument that is constantly declining in value.

      Inflation and interest are parasites on America that allow the financial aristocracy to suck up 30 to 50% of all profits in the economy. That has to change or it will kill us.

      Cryptocurrencies have the potential to end that and also provide a life raft for Americans when the narco-oil dollar fails. But they also have the potential to usher in a dystopian digital currency 666 future.

      However right now what we’re seeing is a boom reminiscent of the late 90s day traders as everyone gets in; not because of any underlying economic activity to justify the value, but because they hope to get rich flipping the things.

      What that means is most of these currencies will go bust.

      Whats the advantage of FoodCoin over something more accepted like BitCoin? The ICO and the profit and publicity it offers. This is little different than any other hot IPO from the dot com bubble.

      It will only be useful in the long term so long as people can go FoodCoin -> Etherium -> BitCoin -> USD -> tractor diesel. But thats not easy to do.

      The other thing pushing cryptocurrency right now is people fleeing national currencies. There is talk about significant trading being related to people exfiltrating wealth from South Korea. And I’m sure the deep state types are squirreling away a portion of their ill gotten gains in preparation for the end of USD.

      • Gordon S Watson

        exactly what?! is it that’s being ‘Squirreled away’? Crypto currencies are the Image of wealth in place of Reality. Notice that all the cryptos use an image of a coin. With Bitcoin, you’ll even see an image of a nice glittering GOLDEN coin as though that’s what you’ll get out of an ATM when it comes to time to cash-out. As this fad “catches fire”, people are frantically exchanging national currencies for something even LESS! substantial … a couple of glimmers on a crystal ball – a computer screen. Cryptos are just a hallucination shared over the internet … the glorious “blockchain technology” they’re raving about, is nothing more than an electrical charge on a grain of sand, in some anonymous building full of racks of hardware, in some place you can be sure you’ll be denied entry. And all this operated by faceless people, you’ll never be able to find when the bubble evaporates as they ALWAYS do. The capper, is Bix Weird, coupling his cheeleading for the cryptos, with the old NESERA scam ; the notion that “there are good guys inside the US govt. who are trying to save the country from the baddies”… Someone so gullible that he will trade something for nothing, deserves what he gets.

        yes, what Liz Reitzig et al, are doing, is a noble endeavor ; ie. as long as they stick to implementing a local currency for a special interest group. Tupper F Saussy wrote the book on how to do that, entitled “Miracle on Main Street” 40 years ago. In the mid 1990s, The Liberty Dollar was a good effort, too. The mistake Bernard von Nothaus made, was : calling it a “dollar” while making it exchangeable for a given unit of real silver. Being in the US of A, the minute you use the term “dollar” you’re automatically counterfeiting. Lesson learned Number One : for an alternative currency to function at all, it MUST be tied to something tangible. A gallon of REAL MILK, or a pound of raw milk butter, is realistic

        • David Gumpert David Gumpert

          It’s definitely something more than blue smoke and mirrors. Just not clear how much more. This in the current Fortune Magazine, cover article:

          http://fortune.com/2017/08/22/bitcoin-ethereum-blockchain-cryptocurrency/

        • Pete

          Foodcoin ISN’T a local currency, its based on etherium.

          Bitcoin is no less real than USD. Worthless paper aside, the latter is mostly dealt electronically. Bitcoin on the otherhand is mathematically protected from infinite inflation.

          Its not that they’re trading for something less real, their trading for something not controlled by the vampire squid.

          • Gordon S Watson

            Pete = you use the term “coin”, even though there is nothing available to be seen, nor touched, nor tested, in the sense of the English word “coin”. You’ve allowed yourself to be deceived so as to accept that some thing does exist [ in what we call “objective reality” ] when there is no thing there.

            I can show you a genuine dollar uttered by one of the mints of the united States of America, with 375 grains of fine silver. Still perfectly legal tender, a century later. Please point readers of this forum to a place where we can see, touch and bite whatever it is you call a “Bit coin”. Please give me the GPS location of an ATM, or some other money exchange, which dispenses a Bit Coin. Issued by whom?

            All I can find to substantiate the existence of “Bitcoin”, or any of the other cryptos, is : 10 stock images in a commerical photogallery service. No small co-incidence that they look kinda like gold

            it amazes me that people can accept that you accept that “Bitcoin … is mathematically protected from infinite inflation” ! the numbers of the ostensible value of this mirage, change by the minute!! Right there, it’s disqualified as one of the 3 prime requisites for “money”. At the very end of the Dutch tulip mania, people who’d lost their family fortunes in that craze, were eating the bulbs

  • Tina

    I, for one, would not bet my money on Bitcoin, but some people really believe it is the new currency and the end of the Federal Reserve…

    The 1% Has Started to Embrace Bitcoin – Why It Matters: https://libertyblitzkrieg.com/2017/09/07/the-1-has-started-to-embrace-bitcoin-why-it-matters/

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