For many people around the world, it’s been somewhat impossible to ignore the recent rising popularity of non-fungible tokens – otherwise known as NFTs.

Essentially, NFTs are virtual tokens that can be used to prove digital ownership of unique items, such as artwork and collectibles. Over the last couple of years, several NFT projects have been launched in the coffee industry.

This raises some questions about the use of NFTs in the coffee sector – what purpose do they serve, and what benefit can this technology offer to coffee supply chain stakeholders?

To find out, I spoke to some coffee professionals involved in a coffee NFT project. Read on to learn more about what they had to say. 

You may also like our article on how technology has changed in the coffee industry over the last few years.

What are non-fungible tokens?

Although NFTs were first created in 2014, they have experienced a recent resurgence in popularity over the past couple of years. In fact, Collins Dictionary announced “NFT” as its word of the year in 2021. So what exactly is an NFT?

To put it simply, an NFT is a unique digital asset that can be purchased or sold online. They are often traded using cryptocurrency – digital currency in which transactions are recorded by a decentralised system for more secure data storage.

Typically, each NFT is one-of-a-kind and has its own unique identifying code. This means it cannot be replicated, nor can it be traded or exchanged for another token or asset.

NFTs can represent physical or digital items, including art, GIFs, virtual avatars, and music. Once purchased, the owner theoretically has exclusive rights to the asset.

The NFT market has become lucrative since its launch some eight years ago, with many now selling for millions of dollars. Currently, the highest price paid for a single non-fungible token is US $69.3 million. Some NFTs are sold as part of a series, in which people can purchase a share of a digital asset.

NFTs are part of the blockchain, which is a system of recorded transactions made through a network. Essentially, it is a digital ledger of transactions that can be shared across multiple computers within a network.

The network system stores data securely so that it is extremely difficult or impossible to change or remove the information once it is recorded. Data stored on the blockchain, such as the price paid for a token or the artist who designed it, can be viewed, but it cannot be amended.

How are NFTs used in the coffee industry?

So, we know NFTs are becoming more and more popular, but what does this mean for the coffee sector?

There is a growing number of NFT projects in the coffee industry, including the Bored Breakfast Club subscription service, which launched earlier this year. Customers who purchase one of the platform’s 5,000 NFTs receive a uniquely-packaged, limited-edition coffee blend.

Dan Hunnewell is a co-founder of Coffee Bros in New York City. The roaster also launched its second NFT project, Crypto Baristas, in late 2021 to support programmes in coffee-growing communities.

“We believe producer-led initiatives are one of the ways to invest in the people behind specialty coffee,” he says. “Each ‘Crypto Barista’ is not only a piece of artwork, it’s also an NFT.

“This means that each token contains a unique, non-interchangeable unit of data stored on a blockchain platform,” he adds.

Each NFT is designed to be a different barista character, with over 60 avatars available to purchase. 

Tony Bui is the Lead Illustrator on the Crypto Baristas project. He tells me about the creative process for one of the NFT designs, Honeywell.

“I wanted to create a mascot and I thought a bear was a good idea,” he says. “However, the team initially wasn’t on board with the original drawing, so I reworked it into a honey bear bottle design. 

“The new design sold out very quickly; those who add honey to their coffee connected with it,” he adds.

Crypto Baristas is currently in its second “season”. Dan explains how the project’s first season helped to support the growth of Coffee Bros.

“With the first initiative, owners of our NFTs had access to life-long perks at our ‘future café’, as well as through our roastery’s website,” he says.

Following on from the success of the first series, Coffee Bros aims to open its first coffee shop in New York City, which the company claims will be the world’s first NFT-funded café.

“We envision initiatives like Crypto Baristas as [a way for consumers to potentially] unlock benefits at their favourite roasters around the world,” Dan adds.

What about NFTs at origin?

With NFTs are generally more marketed to people in economically developed countries, there are understandably now discussions about how they might be used at origin going forward.

This is especially important given the claims of the negative effects of NFTs on the environment – the mechanisms used to verify digital data on blockchain systems are energy-intensive. It’s believed that global Bitcoin “mining” generates more than 75.6 metric tonnes of carbon emissions every year. For reference, this is similar to the national carbon footprint of all of Colombia.

As a result of these concerns, there has been an increasing focus on more sustainable solutions as far as coffee-related NFTs are concerned.

“We launched a coffee project with Cup of Excellence in August 2021,” Dan tells me. “Through the initiative, we spotlighted producers who had grown high-quality coffee purchased at the 2021 CoE Ethiopia auction.”

Each NFT was designed to represent an individual coffee farmer and their respective auction lot, featuring information such as the variety and cupping score.

“The owner of each NFT also received a bag of the respective coffee,” Dan adds.

With potential to reinvest profits into other projects, it’s believed that initiatives like this could support producers in the longer term.

“We are working with Cup of Excellence to identify potential investment partners, which may ultimately lead to developing a ‘Greater Good’ co-operative,” Dan says. “This will allow us to raise funds for coffee-growing communities so they can improve yields and quality.”

Could NFTs help improve transparency?

In recent years, demand for a more transparent and traceable coffee supply chain has been growing. Now more than ever, consumers want to know where their coffee comes from.

Alongside direct trade models, blockchain technology is increasingly being used to make more information available to consumers, such as the price paid to the producer. This information is securely stored on a public ledger, meaning it is permanently viewable but unable to be amended past a certain point.

So, considering they also leverage blockchain technology, could NFTs be a force for improved transparency?

Dan believes so: “Non-fungible tokens are one of the first steps towards a more transparent coffee industry, where roasters can track coffee down to the individual producer or washing station and see how often the coffee exchanged hands, as well as the prices paid.

“The more this type of technology is demanded by consumers, the more likely it will be that other coffee companies [will follow suit],” he adds.

Theoretically, blockchain technology and NFTs can also benefit producers by digitally signing and verifying the integrity of their coffee. For example, Jamaican Blue Mountain Coffee brand Sherwood Forest partnered with a tech firm on a blockchain validation project. 

As part of the initiative, each barrel of Blue Mountain coffee was assigned its own NFT and came with a corresponding QR code. Consumers could then scan a QR code to ensure the beans were authentic.

“We want to tell the producer’s story in a more engaging way for consumers – whether that’s through direct interaction or something digital,” Dan says.

Will this solve problems in the coffee sector?

While the focus on sustainability is promising, it’s uncertain as to whether NFT technology will help to resolve long-term issues in the coffee supply chain – particularly for producers.

Blockchain technology can certainly improve transparency; it allows consumers to be more aware of the prices paid to the producer. 

However, it cannot guarantee that farmers will receive higher prices – potentially providing no immediate solutions to wider problems in the industry.

Although NFTs are still relatively new to the coffee industry, there could well be space for them to grow and develop in the years to come. 

However, as the technology is still evolving so rapidly, and with a number of potential industry criticisms, coffee businesses may be hesitant to start using NFTs. For now, it remains to be seen how much of an impact they will have in the long run. 

Enjoyed this? Then read our article on how coffee producers can benefit from data.

Photo credits: Coffee Bros, Cup of Excellence

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