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Farmers in a Russian Village Use Local Cryptocurrency Kolion To Replace Ruble

 

Banker turned farmer Mikhail Shlyapnikov led the way. Diagnosed with cancer a decade ago, he moved out of the city with the aim of reviving a dying village.

In 2013, Mikhail needed funds to open his venture, a plant nursery and decided to approach local banks to lend him the necessary capital. However, he soon ran into an obstacle that many small businesses face: the high 12 percent interest rate on loans.

Disappointed, yet determined, Mikhail thought why to succumb to the pressures of the banks. From there he set out to create his form of money, ensuring he became his “own bank, government, [and] regulator.” He said,

“I didn’t want to suffocate and be a slave of the banks. So I had to invent my own money. And I did it. I’m my own bank, government, regulator.”

A year later in 2014, Mikhail started issuing paper kolions, but a Russian court soon banned them in 2015. Thus, he began work on migrating the paper-based currency to a cryptocurrency, and in April 2017, raised $500,000 in the now-digital kolion via an initial coin offering (ICO).

Unlike bitcoin, Shlyapnikov’s cryptocurrency, Kolion can’t be mined using a computer. The digital tokens can be bought using a range of other cryptocurrencies, or earned through a process called “plowing”, helping the residents of Kolionovo with farming and construction work.

It’s changing the way people do business in the village.

Meanwhie, the ruble has been struggling in light of economic sanctions against Russia. It’s lost half it’s value since 2014, and Russian crypto-enthusiasts are hoping decentralized cryptocurrencies will help reduce their exposure to the larger national financial system.

Mikhail has over a hundred farmers and suppliers who share the Kolionovo Ecosystem vision, and use kolion for local trade. Due to this mini-revolution, paper money is slowly disappearing from the region. Mikhail spoke to CNN about his currency:

“We now have about $2 million in kolions because its value has jumped since the ICO. The currency is backed by a reserve of 500 bitcoins.”

He added that this could be the only way to integrate cryptocurrencies into the “real economy.”

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