“Each Bitcow is equivalent to a pregnant cow, in good condition, approximately two or three years old, of the Aberdeen Angus breed….”
Willy Villagra is the director of OpenBit, a company dedicated to digital business and solutions for farmers. Villagra holds a degree in administration and agrarian economics from the University of Buenos Aires.
OpenBit promotes financial inclusion through the tokenization of real assets, such as BitCow, an asset backed by cattle.
AgriBrasilis – What is BitCow? How is the process of valuation and backing of the digital asset?
Willy Villagra – Bitcow is a digital token backed by a real productive asset, that is cattle. The valuation process of Bitcow is given by the evolution of the price of cattle in the market and also by the increase in the number of Bitcows that those who buy BitCows have every year. This happens because cows, when they have calves, are incorporated into the herd, so the herd number increases and new Bitcows are distributed to participants. Furthermore, as the number of BitCows in circulation is limited, their value tends to rise, as while there is a lot of demand, supply is limited.
AgriBrasilis – How many animals each BitCow equals?
Willy Villagra – Each BitCow is equivalent to a pregnant cow, in good condition, approximately two or three years old, of the Aberdeen Angus breed. Based on these parameters, we used livestock equivalences, as there are times in the herd when there are several categories of animals, that is, calves, heifers, non-pregnant cows, etc.
AgriBrasilis – What are the risks of investing in this asset? What are the impacts on the investment if the animal is slaughtered or becomes ill?
Willy Villagra – As it is an asset backed by the real economy, the risks it runs are fluctuations in cattle prices. If the price of cattle or beef goes up, the price of BitCow will go up too. If the price of cattle goes down, it is also possible that the price of BitCow will go down.
Regarding animal mortality, we work with production rates and this is considered an annual number of deaths that we cannot avoid. When working with living beings, unfortunately there is the possibility of death. In any case, there is a percentage that does not affect the economic result. In the case of an extraordinary event where mortality exceeds the annual average, we take out insurance so that the loss is not significant.
AgriBrasilis – Do investment values reflect market prices, such as the value of live cattle or operating costs?
Willy Villagra – The investment price for buying a BitCow is given by the market price of a pregnant cow, plus the costs of keeping that cow for 2 years. That is, after 2 years, the system becomes self-sustaining and the investor does not need to invest more money. The investment takes place only once. The value of BitCow will always be pegged to the market price of cattle.
AgriBrasilis – How can one benefit from agricultural digital assets? What is the size of the market that already uses these tools?
Willy Villagra – In many countries where livestock and agriculture are important in the economy, such as Argentina, Uruguay, Brazil, Paraguay, Australia and the United States, there is great interest from investors in participating in this sector of the economy.
Many investors do not have the possibility to have animals in the field. Or they cannot dedicate time to it because they have another activity. In this way, they have the possibility to participate, reducing the risks, as they share the benefits and/or losses among all.
BitCow is designed to be replicated in other countries where livestock plays an important role in the economy. The market is growing every day. In Argentina alone, we have around 20,000 accounts open and buy and sell operations are carried out every day.
We are about to start in Uruguay and our goal is to have a partner in Brazil as well. These types of digital products are here to stay, as they democratize access to productive investments for all people.