In 2014, Michail Shliapnikov, a Russian farmer, launched Kolion, his own agricultural token. Originally referred to as monopoly money, the Kolion has developed into a powerful tool to several advanced agricultural projects, from a blockchain based market place to an alternative pension plan. The creator of Kolions discusses it with our Chief Editor.
Q) You launched the Kolions (KLN) as agricultural cryptocurrency several years ago. How did you formulate the tasks back then, and what did you manage to accomplish by now?
Five years ago, we had a simple goal, to find an alternative to loans by banks that were then going for over 20% a year, and to governmental subsidies with a complex application procedure. There were no precedents to lean upon, I had to create own model and test it in real life. It turned out that we found a solution to the above problems, without understanding details. But the mission to attract “reasonable means” has been completed. Much later we arrived to calculations and drew findings. In fact, the Kolion was the world’s first cryptocurrency that developed from virtual economy to real production of commodities.
Q) Please describe the current KLN ecosystem, what are the main projects, products, volumes?
Today KolionovoSystem is a lab for innovations, productions and social activities. Further to the initial goals of fundraising, we have applied the Kolions to local governance, community economics, to exchange trading, to social and pension benefits, into ensuring security, to agricultural cooperation, and into gamification.
Our priority is in the production of agricultural products with profile in crops. We have developed own model for sustainable farming of poultry, calve, fish, fruit and vegetables. We have introduced Kolions into processing, preservation and sale of agricultural produce. We have developed a rather unique loyalty system to our clients. A major external agricultural association has been successfully integrated into our ecosystem. Based upon our own smart contracts and oracles, we have developed blockchain based games and lotteries. For the last two years, we have been running a pilot on an alternative pension plan to be paid by employers to agricultural workers with use of cryptocurrencies. We have initiated social, environmental and volunteer actions. Our ecosystem now includes TOS Kolionovo, an open self-government for the residents of the village that aims to improve their life quality and safety standards.
Kolion (KLN) is now among the world’s top cryptocurrencies and is traded on several exchanges with a daily volume of several tens thousand dollars. In China, direct conversion of Kolion to Yuan has been achieved.
We progress in all above directions, and we receive assistance from people that reside in many countries, the people who are in it not for hype, but for the potential use of our tools in their daily lives.
Q) Which blockchain platform do you use and why?
We do not follow any particular framework, hence there are no limits in our decision making process and in our research. Since 2015, when we got into blockchain and bitcoin, we are in the process of permanent search. We follow virtually every piece of news in this area, and look for new opportunities to employ them to our purposes, to fulfill our tasks.
In 2016, we did the IPO of the Kolion based on Eercoin. In 2017, one of the first ICOs on Waves. A bit later we have successfully tested the IEO model. We tested Stellar, Ethereum, Tron and other chains.
A unique market-creation model for traditional and decentralized exchanges has been developed, it is operational and in use for quite some time already. We have included and employed smart contracts and atomic swaps. However, search and study into new solutions and tools goes on.
Q) At first, the authorities objected to your digital certificates, I recall the reportage on the court hearing by Meduza.io. What is the attitude of the Russian authorities to your project now, in the context of the recent amendments on digital assets to the Russian Civil Code?
I still don’t understand the motivation of the State Prosecutor and all governmental bodies that were suddenly so excited against our small and local village game. Huge expenses by the government state were incurred to prohibit the Kolions on paper colonies, with total cost of print under one hundred dollars. The only finding of eight hearings, from the local district court all the way up to the Supreme Court, was that the Kolions, as “surrogate money”, pose danger to the financial system of the Russian Federation. What kind of construction it is then, if a private currency by a peasant can bring it down?
We have easily bypassed the prohibition, with transfer of the Kolion from offline to online, the space with no governmental restrictions back then.
Until now, our currency has not been accessible to authorities, although there have been repeated attempts by the Prosecutor’s Office and the Department For Economic Crimes to conduct an investigation and control it.
I am not following closely the multi-directional comments by Russia’s politicians and officials with regards to cryptocurrencies. In my view, they resemble the attempts to regulate winter or summer time, that’s been going on for years. Regardless of the wishes and the votes by the MPs, the sun rises and goes down over the country for billions of years at a certain time. It is the same with the technology.
I would be completely satisfied with the status quo or with competent research from responsible representatives of the government. But not with an interference or an attempt to ban.
Q) How many wallets with Kolions are at the moment, what dynamics do you observe, is their number growing and at what rate?
The Kolion is not static. We add new, useful features and halt those found to be harmful. Today, our system encompasses three of the four versions of the Kolion (the one on paper is prohibited on the territory of the Russian Federation). In 2019, a new version is planned, KOLION v.5.0. About three thousand people in the world own Kolions. However, the specific features of our currency makes it of virtually no interest to speculators. Stability, reliability, connection to real produce, all these inherent feature of Kolion are more interesting to long-term investors, partners, researchers, customers and friends. On one hand, it is a disadvantage as we fall out of the interests to the overwhelming majority of people who want to make a quick buck on the hype. On the other hand, it allows us to consistently and prudently conduct interesting and surprising experiments in various fields.
Quantitative growth of investors into such a model is less important than qualitative collaborations. Today, for example, it is interesting and promising to work with pension funds that are eyeing blockchain technologies. We have had a two-year experience in the alternative accrual in this kind of savings.
Q) Blockchain in agriculture is basically about the possibility to trace the origin of a foodstuff on the blockchain. What other features of the blockchain in agriculture do you see? What demand is there, in your opinion, for agricultural marketplaces, where consumers and retailers can buy directly from manufacturers, thus reducing the number of intermediaries? How does you ecosystem you create fit this into this concept?
It is difficult to evaluate. We run a rather modest in size, a local project, tied to one private farm and one village. Recently, there have been many revolutionary applications of blockchain technologies in agriculture. No working examples so far though, as far as I know. Although we modeled several tools of this kind, and they are in demand, but volumes are insignificant. Product tracking “from field to counter”, certification, cost reduction, loyalty program, direct cooperation are needed and wait for solutions. For example, we managed to establish our own prepaid pre-order scheme. It is a dream to any manufacturer in the world. But before a public presentation, it requires a careful study by independent experts. Hence, it would be wrong of me to present it now.
Q) Tokenization in agriculture, futures for agricultural products – how can Kolion help here? Tokenization of agricultural cooperation and self-government, how exactly does these initiatives develop?
Applying tokenization in socio-economic reality, albeit in one separate location, is obviously the way to develop. Today we use Kolions in various field pilots. However, it is early to discuss their success, I need more time and professional presentations. I think it is important not only to descrive a theory, but to analyse our practical exercises by third parties. Not only to talk about this or that function, do not to proclaim and elaborate on opportunities, but to implement them. In 2016, a barrel of our locally produced 12-year-old moonshine, that was recorded on a blockchain as a joke, suddenly became known and were instantly repurchased by investors.
Q) Blockchain based fractional ownership, do Kolions have their role here? If yes, what can you do with it? If not, are there any plans to develop into this direction?
We considered this possibility, the traditional participation in ownership, as is joint-stock companies, was somewhat complemented by the Kolions. Though a Kolion is a utility token, it is possible to use to ascertain a share not in our enterprise, but in a production module, for example, in a smokehouse, an apiary, a chicken сoop. What’s even more funny, it is technically possible to own or to rent half a chicken or a quarter of a cow. The dividends in this case won’t be cash bonuses, but products, eggs, milk, cheese. And it is in demand.
Q) Do you look into the future of tokenization in agriculture with optimism or rather with pessimism? What do you look forward to, and what on the other hand shall be approached carefully?
As in any business, in-depth studies are required, and it takes time. I don’t believe that the bitcoin hype will become a driving factor to tokenization of everything. The wave of enthusiasm will subside, and the detailed research will go on. The use of blockchain technology is not always justified. This is not a magic wand. I support step-by-step movement, openness and freedom of choice. For example, the alternative pension scheme that has been in use here in Kolionovo for two years demonstrated right and significant results, in contrast to the government-run pension schemes, that are in the state of permanent reforms. But it does not mean that our scheme shall be recommended for application everywhere. One should identify interested groups and foundations who will be ready to study, test and implement it as an open experiment. Time will show if it is the right way to go.
We are interested in such a cooperation in this area, as well as in other areas. We will be glad to share all our case studies with new partners and investors, both for satisfy their interest and for them to obtain benefits.