Over the last year or so, we have seen the rise of a new phenomenon known as cryptocurrencies. By now, many of us have already heard about Bitcoin. Bitcoin was the first and still the largest cryptocurrency in the space with a market cap now breaking $41 billion.
As Bitcoin continues to grow and gain real-world adoption as both a payment system and a store of value, hundreds of new digital coins have emerged, each offering their own take on blockchain technology. (See: Bitcoin for Cannabis Businesses: A New Currency for a New Industry)
Many cryptocurrencies are targeting specific industries. There is Chronobank, whose new coin seeks to change the way staffing is handled. There is Musicoin, which wants to become the musician’s currency of choice.
And then there is Potcoin, which looks to change the way cannabis banking, or lack thereof, is handled at the retail level. Potcoin has entered two brand-new markets at a time when both cannabis and cryptocurrencies are spreading at exponential rates.
How Potcoin Works
Unlike many of the coins entering the crypto market, Potcoin fulfills a real-world need. Instead of simply attempting to compete with Bitcoin—which is no small feat—Potcoin looks to help the cannabis industry solve the problem of being, for the most part, unbankable.
Federal regulation in the US continues to prevent the big banks from dealing with cannabis money, and many of the smaller banks follow their lead. There are few banking solutions out there, but they can be inconvenient, meaning not in your state or otherwise not attractive to businesses that are thus forced solely to deal in cash.
Being forced to keep cash on hand is a major hindrance for cannabis companies. That, combined with tight restrictions on taxes and the inability to write-off business expenses that every other industry gets to enjoy, paints a picture of an industry in desperate need of a solution.
The problem of banking has forced many seemingly reputable cannabis dispensaries to skirt the law and open separate “Joe’s T-Shirt Company” type entities to handle credit and debit card transactions. Still, a few shirts on the wall does not a T-shirt company make. Potcoin, however, offers dispensaries and cannabis companies a lawful way to bypass cash and remove the problem of banking while simultaneously participating in the new digital economy.
One of the biggest fears about accepting cryptocurrencies at the retail level is the incredible amount of volatility. As cryptocurrencies are traded on an open market, they do fluctuate in price. But who wants to make a sale only to find out their money is worth 20 per cent less the next day? Over the years, new cryptocurrency-related merchant services have expanded.
Nowadays, Potcoin and a handful of other often-accepted retail cryptocurrencies can instantly be turned into Bitcoin or even a digital version of the US dollar for stability. If the retailer needs to make payments in real George Washington dollars, there are retail-ready, third-party solutions that make money transfer and payments easier than using a credit card.
Challenges with Potcoin
The one feature of using Potcoin and other similar blockchain technologies that should most appeal to cannabis business owners is the direct ownership of the coins. A bank is a third party that bows to the whims of the federal government.
As we’ve seen, banks have no problem handing over bank accounts of those simply accused of a cannabis crime. Cryptocurrencies, on the other hand, exist on the blockchain and can be controlled only by those who possess the private key to unlock their coins. That means that if a dispensary’s business is seized, whether for just reasons or not, no one can take, view, or access the money if it is secured on the blockchain.
Cryptocurrencies are still in their infancy. Still, they have seen their market cap grow from only around $13 billion last year to more than $115 billion. The technology is becoming easier for both customers to use and businesses to receive.
Potcoin and other cryptocurrencies utilize technologies that are only now starting to gain the attention of major financial institutions and even governments. Countries like Japan have already legalized cryptocurrency use at the retail level and it is only a matter of time before their mass adoption makes its way to North America.
It is safe to say that cryptocurrencies are not simply a currency but a new form of technology that the world has never before seen. Solving the banking problems the cannabis industry currently faces is only the beginning.