Can tokenization really alleviate inflation for developing countries around the world? This is a common question amongst modern-day economists and emerging technology enthusiasts alike. It turns out that tokenized agriculture via blockchain technology is indeed providing significant opportunities for crucial economic relief.
A prime example of this brings us to Argentina, where farmers are grappling with a plummeting peso amidst pandemic uncertainties, with net currency reserves near zero and inflation risking to 40%. Tokenized agricultural assets could offer farmers the ability to seek a hedge against inflation and access liquidity via certified financial titles accessible by both national and international investors. With more than 40% of the world’s soybean oil and soy-meal production coming from Argentina, it is of great national interest that smallholder farmers can liquify their real, physical assets.
Agricultural-backed tokens are becoming a critical solution to solving volatility and liquidity issues inherent in most cash and stock-based saving plans. As such, tokenized agriculture has the potential to help developing countries generate more investment and export opportunities across a range of agricultural industries.
Speaking with Coreledger, a platform that allows businesses to access the benefits of blockchain technology, they shared news of their new partnership with Abakus, a soon to be launched P2P marketplace. Together they aim to launch a digital barter economy in Argentina, enabling farmers to tokenize their agricultural assets and seek relief from looming hyperinflation. Such a marketplace would enable farmers to redeem and trade their tokenized titles with any other tokenized asset on the Abakus platform. This means that soybeans could effectively work like an asset-backed currency, and be traded for cattle, corn, or even the peso.
“In an inflation-stricken country, access to physically-backed assets can be the difference between surviving and thriving for these farmers”, said Johannes Schweifer, CEO of CoreLedger. Meanwhile, Martin Furst, CEO of Abakus commented, “the tokenization of agricultural assets brings greater agency to farmers who can now sell the physical-backed assets according to their own needs.”
So there you have it, a soy story of sorts, a new use case of how tokenization can help developing communities. It remains to be seen whether agricultural-backed tokens truly solve volatility and liquidity issues inherent in cash and stock-based saving plans. The argument in favor is that these tokens become actual stablecoins, backed by real assets, not unstable fiat currencies. Tokenized agriculture will no doubt provide an opportunity for developing countries to generate more investment and export opportunities across a range of agricultural industries, improving financial inclusion on the ground, and giving locals a medium of exchange that’s not at risk of devaluation.