Co-operatives and Blockchain; A Perfect Match?


When it comes to disruptive technologies, few innovations can hold the candle to blockchain.

The transparent, permanent digital ledger could be nascent technology, but it has evolved significantly to disrupt all sorts of industries. Basically, the technology behind cryptocurrencies like Bitcoin stores a tamper proof ledger of transactions, a feature that makes it useful in most industries, including financial services.

Given its autonomous nature, it’s not surprising that the financial sector has embraced it. While it has real world use cases that are beneficial for banks and the financial sector, a more natural pairing exists; blockchain and co-operatives. It’s not hard to see why; blockchain and co-operatives share various themes. For instance, both are created to serve the interests of their members. Typically, their members constitute groups of people who have come together to meet common economic, social or cultural goals.

The Basics

At their core, co-operatives have a three-pronged distinction; democratic control, shared ownership and member empowerment. Essentially, they are legal entities that are member-owned and controlled. Although they are democratic enterprises, co-ops are governed through a consensus model. As such, they are decentralized as far as leadership goes, as no member can control others simply because they all have equal powers. The same can be said of blockchain technology which is anchored on the concept of decentralization. In its simplest form, it’s a tamper proof infrastructure that’s maintained by a network of participating computers. This allows for automated peer-to-peer transactions that run without third-party intervention.

Co-operatives (co-ops) have a distinct shared risk and reward model, and this is what equalizes all members, similar to a blockchain where members are incentivized to run and maintain the network.  Unlike the blockchain technology, co-ops have been around for centuries. According to scholars, the Rochdale Pioneers is among the very first co-operatives in the world. It was formed in 1844. Historically, co-ops in the agricultural sector have been widely successful, especially those dealing in meat export, dairy and grains. In developing countries, co-operatives have become synonymous with economic empowerment, as they have lifted millions out of poverty.

So, how can the blockchain transform co-ops? Theres no doubt that the co-operative movement has been hugely successful, but co-operatives have their fair share of pitfalls. These include; poor management, lack of transparency leading to leadership wrangles and funding troubles.

Developments in the Field

According to experts, blockchain solves most of the challenges facing co-operatives. Simon Borkin, a programme development lead at Co-operatives UK told Coop News that blockchain provides an opportunity for co-operatives to automate their databases and registers. Given that blockchains are decentralized and distributed, they could help co-operatives to streamline their governance structures. The beauty about blockchains is that they provide an independent and autonomous infrastructure without middle men. This infrastructure delivers more than expected; it automatically manages, accounts for all transactions and arbitrates any disputes, effectively eliminating corruption.

Trust Issues

For most co-operatives, trust is a rare commodity, yet members have to trust that the management will make the right decisions. To cultivate trust, members and the board of management have to meet physically.  Borkin believes that the blockchain could allow co-operatives with dispersed membership to decentralize governance, eliminating the need for physical meetings. Using the blockchain, members of a co-operative can remotely make decisions and participate in the activities of their organizations without worrying about close proximity.

The blockchain really seems like the panacea for ailing co-operatives. Through a distributed ledger that’s transparent, members can hold the board of management accountable by ensuring that they meet key performance metrics. Traditionally, most co-ops have suffered from poor performance especially when one of the stakeholders is underperforming, but is liked by the members. Thankfully, the blockchain eliminates this problem through decentralized accountability and voting.


While the blockchain technology seems to mainly help co-ops to improve on governance, it’s also fundamental when it comes to crowd funding. Generally, most co-ops struggle to raise funds for growth, and few can circumnavigate the gray areas around compliance and legality. The good news is that blockchain allows members to legally raise funds in a transparent and accountable way.

Blockchain jobs in United States and Canada

Advancement for Farmers

For agriculture based co-ops, members can also use the blockchain to track their produce from farm to the market. Importantly, the blockchain is immutable, providing a tamper proof ledger of transactions that is traceable. For farmer co-ops, this is a priceless feature as it allows them to track their produce. They can then improve the quality of their produce, and this translates to better prices, a win-win solution for co-ops and consumers.

According to Rich Meade, the chief operations officer at the American Credit Union National  Association (CUNA), blockchain’s two pronged qualities of scalability and security makes it ideal for credit unions looking to scale. Co-operatives UK programmes development lead, Borkin says that  the blockchain is a shoo in for the co-operative industry, but it has some drawbacks. One of these is around security, as blockchain is yet to be tested at great scale.

Future Trends

All in all, it seems the blockchain is already transforming the co-operatives industry, one co-operative at a time. Given the practical use cases of the blockchain, there’s no doubt that it will reinvigorate co-operatives, providing them with a springboard to jump into the current digital revolution.

Amos is a technology enthusiast who loves to play with words. He has previously with leading media publications including BlackMoguls Magazine, African Business, Business Chief, International Finance Magazine, and He is currently writing for BBHQ.

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