Introduction
Cotton is one of the well-known crops and is referred to as the “White Gold”. It is one of the commonly available commodity and is part of our lives in many ways. From the dress we wear to the bedding and bedsheets we use, cotton touches our lives in more than one way. Our summer dresses are usually made of cotton to save us from the heat as much as keep us cool. Cotton garments are easy to use and maintain and therefore, is one of the popular choices when it comes to garments; especially, in countries with hot climate. Well, that’s the great and beautiful life of a cotton.
Now, if we are the curious kind and want to know more about where the cotton comes from and how it reaches our wardrobe, the picture is not as great as what we have seen so far; in fact, grim is the word for it. Cotton’s wide use may make us feel that the participants in its growth and supply must be really making a killing in money terms. But that is far from the truth. In India, one of the suppliers of cotton, farmers are committing suicide because of not being able to make money from selling cotton. They are burdened with debt and leave behind a family with no means to support themselves. Why is it so?
Cotton is investment heavy but revenue light. What do I mean? Cotton requires heavy investments in pesticide and insecticides, roughly 11% and 24% of global sales for all types of crops. In countries like India, Pakistan, and others, which lack proper irrigation channels, rain is the main source of water still. Global Warming, Ozone Depletion, and other environmental pollution have only made the monsoon dependent reality even worse. We have not even touched the supply chain yet. If we do, lack of proper pricing mechanism, delayed payment, informal loans with heavy interest rate, inefficient supply chain, government inability to ensure benefits reaching the source, corruption, and obsolescence during storage are just about few problems amounting to touching the tip of the iceberg. We don’t even have a sense of the remaining part of the iceberg which is out of sight.
It is like saying that the beautiful cotton dress that we wear seems to have had a grim past!
Is there anything that can be done?
Well, apparently, yes. Most of the problems have solutions but the solution in this case at least, needs to have an out-of-the-box approach. Now, traditional approach would say, just improve the supply chain, make it accountable, and make it transparent by framing policies enabling it. Easy to say but how do we do it?
Government policies have a lead time to trickle down and the illiterate demographics of most of the farmers in the chain, disallows them to know about the benefit leave alone utilizing it. Governments may have the right intention but it is difficult to monitor right up to the last piece in countries like India and China which have mammoth population to take care of.
So, in a nutshell, if we can have a solution which can make every loop in the chain visible and every transaction transparent without a possibility of corrupting information, then we would have hit the right block. But do we have such a solution?
Yes, the solution is blockchain and Cotton Coin brings such a blockchain solution for the cotton industry.
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Cotton Coin – Let’s get to know them
Now blockchain was a concept brought forth through the Bitcoin platform in 2008. Thanks to the revolutionary concept, few aspect like decentralized working, immutable ledger and multi-party collaboration becomes quite easy. The concept thus is taking many industries by storm. From Finance to Legal, from Sales to Trading, all the industries are witnessing the benefits of the blockchain technology.
Cotton Coin goes one step further and brings the blockchain concept to the Farming world. It’s success will ensure that all the negative aspects that we saw under the supply chain side of the cotton crop, including farmer suicides, can be handled with care; more about that soon. This is one blockchain initiative which has a human touch!
Cotton Coin’s website describes the initiative as:
Cotton Coin is a humanitarian effort created to give hope, save life and make money.
To be honest, this is a vision good enough to transform the cotton industry.
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How does it work?
Cotton Coin intends to bring the supply chain participants, farmers, consumers and authorities on the same platform for an easy, reliable and efficient mean of transacting. What it does is it removes third party involvement and brings about visibility which was anyway something that governments in these cotton producing countries were vying for. This solution, despite the government intervention, will bring about efficiency and prosperity to all in the network.
Imagine, the benefits that could reach the farmer, the price of cotton falling because of third party elimination and a whole new focus on cotton by the garment industry because of the renewed price-point! Many of these mentioned points are the effects that will be felt because of the solution, the actual beneficiary would be the farmers, and in turn, their families, and societies at large.
The solution foresees that once implemented the ecosystem will be serving more than 30 million participants across the globe. Two distinct DApps (applications), one B2B and the other B2C, will help to authenticate cotton sources, track delivery and monitor cotton prices.
Some of the immediate benefits are:
Instant Payment
This is one of the ailing issues of the cotton industry. Delay in payment to farmers ruins their lives and livelihood. With Cotton Coin that is set to change. Cotton Coin has taken measures to avoid miners to mine coins and dump them in the exchange to make profit, rather the idea is to allow the industry participants to use and arrest volatility and bring about benefits to each in the chain.
Versatile Traceability System
This is an important aspect bringing visibility to the otherwise hidden cotton supply chain. All points of movement of the cotton crop from the farmland to the end customer can be tracked. This can be enabled through integration of multiple technologies like barcode scanner at the warehouse, etc. and bring an unified view to the supply chain.
Cotton Safety Alert
This is an additional feature at any point of the supply chain where the cotton takes more time than usual to move. This can trigger an event for investigation.
Reputation System
This brings in the aspect of every loop in the chain rating the previous loop on cotton movement. This improves the credibility and reputation of few farmers or supply chain participants over the others and hence a better demand from them. Because of such healthy competition, the whole chain will transform into one with credibility and better reputation.
Conscious Consumer Behaviour (B2C)
This allows consumers as much as retailers to track the cotton right up to the source and show responsible behaviour in purchase. The B2C DApp is as shown in the figure.
Industry Management Tool (B2B)
All the data and information available on the blockchain are only as useful as the ability of the system to make it useable for different participants. So low-end phones with multi-lingual capability is good enough to run the DApp. It will take care of the farmers as much as the local language of the users.
Cotton Registry
In my opinion, this is the single biggest visibility tool that Cotton Coin brings forth. Both domestic, as well as international participants, and consumers can have visibility of the chain. Not only that but also it comes with a number of reports which can be easily available to consumers, retailers, authorities, and supply chain members. It improves trust through the chain as much as brings visibility to the supply-demand schema and therefore, allows proper management of price and volatility.
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Use Cases
Anti-Adulteration Monitoring
Country 2 imports cotton or cotton garments from Country 1, however, there is a slight distrust on the quality of the cotton and doubt on its possibility of being adulterated at any point in the transit or initial packing. There is however, no way to find this directly but only through a lengthy investigative process where authorities from Country 2 travel to Country 1 for the investigation, sampling and then verifying.
In comes Cotton Coin and the entire equation changes. Cotton Coin’s open ledger has captured all the relevant information from the time of the Cotton Registry, to the Supply Chain Movement, including delays at any point, which could be construed as an attempt to involve in unbecoming trade behavior. This is information enough for Country 2 to nail any such doubts without having to spend too much energy themselves. In fact, this is also incentive enough for Country 1 to be vigilant of such trade misbehaviours which can hamper its image and therefore, foreign revenue.
In-built corruption and misbehaviour handling mechanism!
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Demand – Supply Shocks
Country 3 imports cotton from Country 1 and Country 2. Country 1 and Country 2’s annual production is 100 tonnes (as an example) and 200 tonnes, respectively, and they supply 80 tonnes and 120 tonnes to Country 3, respectively. In other words, Country 3 imports 200 tonnes from Country 1 and 2. The remaining production from Country 1 and 2 is supplied to other demands.
Year 2018 was a bit different. There was a long-drought situation in Country 2 but Country 1 had a bumper year. The production of Country 1 was 200 tonnes whereas Country 2 fell to 50 tonnes. Now, Country 3 does not have the information of bumper production in Country 1 and fall in production in Country 2. When the reality of shortfall comes to the fore, it is too late for Country 3 to work out contingencies. By the time it does work out the contingencies, there is a spike in prices across the globe, until the situation is rectified.
In comes Cotton Coin and the situation changes. Country 3 can see that the Cotton Registry report of both Country 1 and 2 and realizes the shortfall that is expected. It now has time to plan the orders even before the supply from the countries start. So, Country 3 now orders 150 tonnes from Country 1 and 50 tonnes from Country2 and is still able to meet its own demand for 200 tonnes of cotton. Demand spike was muted even before it could take place and hence the volatility was arrested. Also, notice, that country 1 can still meet the other demands (other than country 3) bringing down the overall total demand fall to only 50 tonnes and therefore, a minor spike in price as compared to the situation where no demand could be met.
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Pest Warning
Country 1 and 2 are neighboring countries supplying cotton. The Cotton Registry shows that there is a huge drop in cotton production in Country 1, and a bit of report reading shows that the possible cause is due to insects. Since Country 2 shares its boundary with Country 1 and has the same conditions as Country 1, the insect attack on their crop is imminent. But the information through Cotton Coin gives them time to take precautionary measures and therefore, save the crops.
The unforeseen impact of this is that Country 2 still is able to produce as per its annual target and therefore, is able to meet global demand in a better way. Any demand shock would be minimal.
In a situation devoid of cotton-coin, both Countries would have been affected by the pests leading to high amounts of crop-loss and therefore, supply shortage and price spike. In other words – volatility.
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So, who are the great minds behind Cotton Coin?
Here is a snapshot of the team behind Cotton Coin, of course, our very own Piotr Leib, is also one of them.
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Summary
Cotton Coin is a great example of a humanitarian effort empowering the participants and therefore, making a sustainable business model as much as livelihood. A farmer gets paid instantly for his produce, the supply chain can trust people based on reputation, authorities can enjoy visibility and frame sustainable policies, and international and domestic markets can appreciate the end-product in their hands and can trace them right up to the source. These are all but few of the things that Cotton Coin enables.
It sure is a promising solution and will definitely improve the lives of millions of farmers!
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It is also recommended that readers understand more about Cotton Coin through any of the following informative resources.
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This article is a review of the Cotton Coin blockchain in response to 
Image Courtesy: Cotton Coin Resources