My last blog on “Digital Transformation in Agriculture” concluded with the hopeful outlook that increased awareness of nutrition, new ideas by creative minds and the use of innovative technologies could initiate an effective, disruptive change in the world food problem.
A few days ago, I came across an auspicious heading of an article in the founding scene (“Can the Blockchain make sure there is no more hunger soon”) on the ATFS project, “World’s First AgriTech & Food Science Project”.
The project persues a comprehensive solution to the growing food crisis of the world by providing technological advances in agriculture (Smart Farm 2.0), new income and supply systems (blockchain-based marketplace), and a tolerable alternative to meat consumption. WOW!
A 47-page white paper outlines the scope of the project and the financing approach quite clearly. The scope of the project is extremely ambitious and a huge content-related, technical, organizational, market-technical and financial challenge.
The planned technology deployment for the realization of the project in the 3 above mentioned areas is listing no less than IoT, Big Data, Deep Learning, Robotics, Synthetic Biology, Biotechnology, Food Science, Smart Contracts, Blockchain Technology, Information & Security and Payment Gateways.The 4-person founding team from South Korea consists of 3 experienced VC, investment banking, fundraising and financial management executives and a CTO.
The project is to be financed by a so-called Initial Coin Offering (ICO), which is to generate USD 68 million in advance through the sale of ATFS tokens from 10 January to 9 February. Initially, it was planned to allow the acquisition of the tokens only via the crypto-currency Ether (ETH). Due to the current weakness and continuing high volatility of cryptocurrencies, ATFS is currently converting the acquisition of tokens to USD.
The Ethereum Platform – Blockchain and Smart Contracts – is the technology of choice in implementing the electronic marketplace for food trade. The ATFS Token itself is not operational cash for the operation of the platform, but a tradable, dividend-entitled share in ATFS Lab., Limited, founded on the Cayman Islands.
The Blockchain is to take over extensive tasks in this project to make the trade of the food safe and transparent. Guarantees of origin, product information, transport procedure and conditions, as well as finally the settlement of payments via cryptocurrencies are to be managed counterfeit-proof with the Ethereum technology.
It would be great if this project was successful, both for the world food problem and the climate, as well as for the initiators and investors.
Of course, like any project, this also carries with it the classical risks of implementation and, above all, market acceptance (consumers!) – in this particular case against a powerful and well-established food industry and its eco-system, with which the project competes here or has to go to cooperation. Also, Beyond Meat is already a supplier of vegetable meat substitutes in the USA.
In my opinion however, a huge risk hides behind the very controversial ICO financing approach.
In 2017 there were about 150 ICOs worldwide, which recorded about $ 3 billion just before the end of the year. ICOs have three possible models for investors to make a profit:
1.Participation in the company (similar to shares but without stock exchange supervision, voting rights or other rights)
2. Some kind of voucher or right to use something with these coins in the business model of the company (for example, permissions for services)
3. Profit sharing (e.g. via dividends) depending on the percentage of coins the investor holds (model of the ATFS ICO discussed here)
However, the actual profit is currently very different for most IOCs. Once the coins are issued to the investors at the end of the fundraising phase, they become tradable on the crypto currency marketplaces and become a speculative object. It can be observed that these coins often increase exorbitantly in their commercial value. There is not much to hear from the projects behind. Progress is rather rare or not at all transparent. The ICO seems to have served its purpose. Thus, on a project idea, a speculative bubble has been set up, where investors and probably initiators of the IOCs will try to make their profit thru currency trade at the right time.
Of course, there are not only black sheep, but you should look very carefully if the initiators are serious and have a chance to really implement the actual project.
It is to be hoped that the ATFS project is not a black ICO sheep and that the bold initiative to improve the world food problem would be a success. In any case, I will continue to watch the development of this project with great interest.