In the last few years, the rise of digital currencies has disrupted traditional financial systems. Bitcoin, which aims to be the equivalent of digital gold, led this new genre of digital assets, yet it is far from being the only or last such currency. A long term store of value that can be transferred from one person to another, anywhere in the world, is sure to turn some heads. As the world of digital currencies, otherwise known as cryptocurrencies, continues to grow, unique digital coins are being created to target specific industries, including the cannabis industry.
PotCoin, which famously sponsored Dennis Rodman's June 2017 trip to North Korea, started in 2014 as a potential solution for a sticky situation created by the federal prohibition of cannabis. As U.S. cannabis businesses cannot easily access traditional banking systems, digital currencies like PotCoin and PotWallet offer a unique opportunity to avoid them entirely. PotCoin works similarly to Bitcoin but is geared specifically toward the cannabis industry. In order to see how a digital currency can solve the problems of the cannabis industry, a little technical background must be laid out.
The biggest problem with digital cash in the past has been theability to easily duplicate the digital asset. Cryptocurrencies' major breakthrough is a concept called digital scarcity. The idea that a digital piece of information could be unique and not duplicatable is truly revolutionary in computer science. The way this happens is through a decentralized network of computers that verifies each transaction, and can easily detect if a transaction was tampered with or attempted to be duplicated. The verification mechanism to confirm all transactions around the world is what gives digital currency its perceived strength.
Banks and financial establishments that administer payment processing, general banking, business services and more are not allowed to handle cannabis money as it is still illegal under federal law. The inability to deal with banks has led many dispensary owners to seek out alternative banking solutions so as to avoid having piles of cash lying around. Digital currencies solve multiple problems in this domain. As digital currencies are transferred from one person to another directly without the need for a third party, there is no need for a bank or intermediary. Digital coins are stored in an online wallet and can be accessed only by the owner of the wallet's private key, or pass code. Digital coins also eliminate the need to keep cash on hand and thereby reduce the odds of financial trickery or, more importantly, armed robbery.
With many people hoarding Bitcoin, believing it will be worth a million dollars or more one day, alternative currencies like PotCoin are finding their niche. PotCoin in particular has an advantage over many other digital currencies moving into specific fields as there is a distinct need for alternative payment sources in most cannabis businesses. Having to deal with large amounts of cash should be nerve racking for everyone. PotCoin excels in what are called micropayments. There is a debate over whether Bitcoin should be stored and saved or used to buy coffee in daily transactions. PotCoin upends the debate and allows you to make payments as low as a few cents, avoiding the need for Bitcoin entirely.
The high fees from credit card merchants make some transactions just not worth it for the retailer.
The transaction fees in PotCoin are literally pennies, even on large transactions. This is the biggest advantage that digital currencies have over traditional methods of making payments or sending large amounts of money around the world. To send a wire transfer to another state may take three or four days and cost as much as 20 percent. Digital currencies displace old systems of money transfer by making global financial settlement instant and low cost. The combination of instant settlement, no need for third parties and the ability to ditch cash could qualify PotCoin as a potential solution to an age old problem.
The disadvantage that cryptocurrencies have is a lack of widespread adoption by consumers, even if 2017 has been the year of cryptocurrencies with more people learning about and using digital coins. Many just haven't been exposed to cryptocurrencies, while some may have been scared away by horror stories of years past, when Bitcoin exchanges had a reputation for being hacked. As more time passes and attention is brought to cryptocurrencies like PotCoin, adoption will inevitably follow. Other concerns include potential fraud, instability and limited oversight, and the future is uncertain with federal regulations likely to emerge in the near future. Likewise, the value of PotCoin currency could crash when/if the traditional banking sector opens up to the cannabis industry. Nevertheless, the value of PotCoin is up exponentially this year, going from around a penny per coin to about 10 cents as of July 2017. (Track its value here.)
Cryptocurrencies are a new form of technology that the world has never seen before. It displaces old systems and forces consumers to adapt to a new way of doing things, which is probably why early adopters tend to be very tech savvy. It will take time for cryptocurrencies like PotCoin to gain a foothold in the market, but a University of Cambridge study in 2017 found that nearly 150 cryptocurrency companies now exist covering 38 countries, and between 2.9 million and 5.8 million individuals are current active users.