In Kolionovo, a town 130 Kilometers away from Moscow, Russian farmers and small businesses are increasingly making payments with a local cryptocurrency, ditching fiat for digital money.
Planting the Seed of Revolution
Leading the way is banker turned farmer Mikhail Shlyapnikov, who introduced the small village to cryptographic form of payments after a bank ordeal led him to look for alternatives.
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.
Jaded, yet determined, Mikhail had his eureka moment – why suffocate and be a slave of the banks? From there he set out to create his form of money, ensuring he became his “own bank, government, [and] 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).
You’d be disappointed if you set out to mine kolions: Mikhail’s cryptocurrency is fully pre-mined, and only earned via helping the residents of Kolionovo in construction and farming activities, in a process called “plowing.”
An avid Karl Marx devotee, Mikhail fancies himself as an “agro-anarchist,” and says that his digital currency is the foundation of the “Kolionovo Ecosystem.”
Impressively, Mikhail has over a hundred farmers and suppliers who share the Kolionovo Ecosystem vision, and use the digital money 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.”
Russia’s Cryptocurrency Push
Russia’s current financial state and a host of other factors, such as high technical education and cheap power, have led to a boom of cryptocurrencies in the country.
In 2014, the Rouble lost over half of its value, as Russia was hit by plunging oil prices and Western sanctions. Due to this, cryptocurrency enthusiasts like Mikhail show bullish sentiments towards digital assets and even consider it as a means of insulation from the financial system.
Russia’s legal framework is accommodating towards the volatile asset class as well. In May 2018, the country approved the first cryptocurrency legislation draft and stated that the asset class is indeed a store-of-value. In the same month, the country’s largest bank announced tests of a state-backed ICO, a first for the world.
As reported by BTCManager, Russian hotels announced that they will accept the pioneer cryptocurrency bitcoin in the run-up to June 2018’s FIFA world cup, saving tourists from the hassles of exchanging their money.
In the first week of July 2018, it is expected that the country will formally release a cryptocurrency framework, as demanded by President Vladimir Putin. Putin earlier warned his ministry that “those who ride the technological wave will advance, others will drown.”
In the midst of such major developments, the citizens of Kolionovo have modest goals. For them, cryptocurrencies are a means to survive any future financial crisis. As for Mikhail, he has no plans to augment this token’s use-case:
“I don’t want to expand because it will bring obligations I’m not ready for. I’m not ready to save the world or even Russia, I want to be comfortable, and I want to share this comfort with the community.”