PotCoin Fever Has Arrived: the Virtual Currency of Marijuana

"If there's one Industry built to have its own coin it's definitely the cannabis industry." BitcoinSeedstore posted on its Twitter account. It's because the industry struggles against moral, legal, political, economic obstacles etc., and all or most of them revolve around money generated by cannabis or money that would no longer be generated if it were legalised. The challenge is to construct a solid and feasible legalisation step by step and the PotCoin may be key.

Currently in the United States, due to a provision in the Controlled Substances Act, banks that lend money to legal marijuana sellers run the risk of losing the loans if the borrower defaults. This is because federal legislation still considers this activity illegal and can deny the security insurance to banks, in addition to pursuing them judicially. In an attempt to mitigate the problem, the Obama administration approved a new set of guidelines for banks. However, unfortunately, the new rules do not actually offer them the necessary legal protection.

Therefore, marijuana dispensaries are forced to regularly operate in cash. For many, this means being vulnerable to theft. How do you keep hundreds of thousands of dollars in safe boxes, and then transport them to pay taxes at the nearest Department of Revenue? For some locals, having to constantly deal with cash has resulted in their closure of the business

Stay calm ladies and gentlemen. The PotCoin has arrived.

Photo from cryptsy

PotCoin was developed in January of this year by three anonymous people whose pseudonyms are Hasoshi, MrJones and Smokemon 514. According the PotCoin website, "PotCoin has been designed to empower, secure and facilitate the Cannabis community's daily transaction and thus consolidate this now legalized industry, by effectively satisfying the demand it has generated. As users and supporters entrust PotCoin, its credibility, stability and security will increase along with this exponentially growing market and community." Just like Bitcoin, users can get PotCoins by buying them on an exchange pool or through the so-called mining network and then keeping them as a sort of online wallet.

Does PotCoin work?

So far, this crypto-currency can already be a relieve for marijuana sellers who handle cash all day, in addition to offering an alternative system to traditional money, which is the centre of drug trafficking, power struggles and bribes. However, PotCoin may not be reliable for several reasons:

BitCoin's extreme price volatility over the past year. Source: Coindesk

Volatility: Despite being a good idea, PotCoin has its risks. Since it is not widespread, its value is still highly volatile and much less stable than its brother Bitcoin.

Absence of responsibilities: In light of the recent disappearance of 400 million in Bitcoins from the Mt. Gox exchange centre (and its resulting bankruptcy), investors may be wary of any crypto-currency. 

Federal regulations: The same barrier that created PotCoin may cause it to collapse (if laws are changed so that marijuana transactions and loans become legal throughout the country).

Time will tell if PotCoin becomes another phenomenon like its brother Bitcoin. Currently in Spain, there are several grow shops that accept PotCoins as a payment method, and make no mistake, there will soon be many more.