Bitcoin for farmers – Part I

Bitcoin is currently a point of discussion around many braais. With a price of more than R700 000 per coin and an increase of 380% in value over the past twelve months, this is understandably so. This three-part series takes a deep dive into Bitcoin and distributed ledger technology, I explain in simple terms how it how it works and expand on how it can be applied in the food and agriculture sector.

It is not exactly clear what caused the sudden increase in the value of bitcoin, but the fact that companies like Tesla are now also starting to buy and accept these coins may be a contributing factor. The total value of all bitcoins in circulation is just less than $650 billion. To put this figure into perspective: The value of all the shares on the JSE was $1 000 billion at the end of last year. While the price increase is remarkable, the technology driving it and the applications for it are even more exciting.


The technology that supports bitcoin saw the light in 1991 when two researchers proposed a so-called blockchain that could be used to capture and order transaction in a way that cannot be tampered with. Simply put, a blockchain is a special database. A database is a collection of data stored electronically which consist of a collection of tables that house information. Several people can use the database simultaneously to obtain data, add new data or change the existing data. A traditional database is housed on a central computer(s) or server(s) with administrators tasked with managing and controlling access to it.

With a blockchain on the other hand, no single individual oversees it, but the blockchain is managed by a network of independent computers who do not have to know or trust each other. The data is grouped into blocks of a specific size. These blocks are connected chronologically – hence the chain. Every computer (node) in the network has a complete copy of the whole blockchain with the data blocks being organised chronologically, one after the other. If a malicious actor would want to manipulate the blockchain, such an actor would have control more than 50% of the computers in the network so that the blockchain could be altered at the same time. Unlike a traditional database, anyone can have access to the blockchain, but the transactions contained therein are anonymous since only the address of the person relating to each transition is known.


This is where Bitcoin comes into the picture. When someone receives Bitcoin or transfers it to someone else, the transaction is noted in the latest block of the blockchain. To prevent someone from creating fictional transactions or transferring Bitcoin from someone else to him/herself, all the computers in the network compare their record of all the transactions in the block with one another, but only one node in the network can add a new block to the blockchain.

Nodes compete for this by solving cryptographical problems which involve the guessing of semi-random numbers. When a computer in the network solves such a problem and can present proof of this, it can add the new block to the chain, and it is rewarded with a specific amount of Bitcoin (at present this is 6.25 Bitcoin, this will likely halve during 2024).

This reward serves as compensation for the expenses that the owner of the successful computer incurred during the process – mainly electricity and maintenance costs. The energy used in this way is substantial because the degree of difficulty of the problems increases continuously. It is estimated that it is currently more than the total energy use of Denmark.

In the vernacular, the new Bitcoin is mined and the computers solving the problems and called miners. These terms derive from the analogy with goldmines, in the sense that they also must expend energy to mine a new piece of gold. Likewise, the extraction of gold is also getting progressively more expensive as the low-cost reserves are depleted. Unlike gold, the amount of Bitcoin that can be mined is restricted to 21 million, with 18,6 million in circulation already.

In contrast to the comparatively transparent gold mine industry, the origin of Bitcoin is veiled in uncertainty and is not governed by a central institution or company/companies. The inventor(s) of the blockchain as used by Bitcoin merely introduced it under the pseudonym Satoshi Nakamoto and made the code public. Consequently, there are more than 2 000 cryptocurrencies today.


However, crypto currencies are not the most important impact that blockchain technology can have on the world. The biggest benefit is that it enables the creation of an indisputable chronological public ledger of transactions that no one can tamper with – one that is reliable enough to ensure the value of more than R700 000 for one Bitcoin. 

In agriculture, blockchain technology can be used to keep a record of grain and other contracts, to guarantee the authenticity of stud animals, confirm the ownership of cattle since it allows for the creation of a unique and unchangeable digital brandmark, enable the traceability of products in the agricultural value chain and many others.

In addition to agricultural applications, it can also be used to accelerate payments between banks, capture individuals’ medical records and the temperature of vaccines, and establish the ownership of digital assets like music and art. It can even be used to eliminate election manipulation by creating a digital voter’s roll that cannot be tampered with.

Given all of these uses it begs the question why this is not taking place already, however for these benefits to materialise several technical hurdles must first be overcome. That will be discussed in the blog in series of three.


Subscribe to our newsletter

  • This field is for validation purposes and should be left unchanged.

Biofertiliser: From big data to big life

Biofertiliser works, but the circumstances under which it can be optimally utilised are not yet an exact science. Biofertiliser refers to a group of biological products that use microorganisms to increase soil fertility. Biological products are the umbrella term...

Biofertiliser: From big data to big life

Biofertiliser works, but the circumstances under which it can be optimally utilised are not yet an exact science. Biofertiliser refers to a group of biological products that use microorganisms to increase soil fertility. Biological products are the umbrella term...

Biological products: From sidestream to mainstream

Biological product use is increasing drastically, but many unfounded misconceptions still exist regarding this technology. Ask ten farmers or consultants to define conservation-, regenerative-, sustainable- or organic farming,  and you will probably get ten...

Jellyfish eggs with Crispr

The benefits of Crispr technology for agriculture is infinite – from virus-resistant banana cultivars and caffeine-free coffee to drought-resistant maize, and even gluten-free wheat. However, the large-scale adoption of the technology is hampered by regulatory...

AgVentures invests in African software champion

AgVentures, Africa’s leading, dedicated agrifood tech investor, announced an investment in Matrix Software.  Matrix Software is the leading specialist software provider to the meat industry in Southern Africa, with more than 150 clients spanning from abattoirs,...

Bitcoin for farmers – Part III

In the previous two instalments of this series of posts, we looked at the basic principles of blockchain technology, why the large scale adoption and application of it has not realised thus far, and how Hedera Hashgraph can overcome these barriers. The application...

Bitcoin for farmers – Part II

The basic principles of bitcoin and blockchain technology were set out in my previous post. The possible applications of the technology, as well as why it has not yet materialised, are discussed in this post. Blockchain technology at its most basic level makes it...

AgVentures Invests in Online Farmer Marketplace

AgVentures, Africa’s pioneering agrifood tech investor, recently acquired a stake in Skudu.  Consumers are spoiled for choice with online marketplaces but the same cannot be said for the buyers and sellers of agricultural inputs and produce. This market is ripe for...

Jan Greyling joins AgVentures

Jan Greyling is joining AgVentures as analyst in January 2021. Jan holds a PhD in Agricultural Economics from Stellenbosch University and has published several academic papers and book chapters in agricultural development, policy, and technology. Jan worked as...

The future of fruit yield estimation

For years, the fruit industry have had to rely on conducting crop yield estimations through physical counting and extrapolating it to the entire crop. This method of yield estimation achieves inconsistent results. The ability to accurately estimate crop yields...

AgVentures is hiring!

AgVentures is hiring an analyst to assist us in unlocking Africa's agrifood potential by investing in and nurturing innovative and disruptive technologies.


Subscribe to our newsletter

  • This field is for validation purposes and should be left unchanged.
Share This