Cannabis Coins: The Future of Cryptocurrency in a Red-Hot Field
The advent of cryptocurrency has given rise to the idea that we may one day have one universal currency. However wrong or right that might be, what is also clear is that the different types of alt-coins that exist today number in the thousands. Cryptocurrency has thus created a dichotomy of opinion when it comes to the future of universal currency. Nevertheless, an interesting twist to this debate is the growing number of industry-specific alt-coins. There are coins for everything from the gun industry to the adult entertainment industry, and even for bananas.
One particular industry that will likely eat up large swaths of the alt-coin market is the cannabis industry, a hot topic for cannabis lawyers in Los Angeles and the rest of the country. Cannabis alt-coins could potentially allow the American cannabis industry to reach new heights by streamlining the transactions process in the midst of marijuana’s continued federal illegality (as well as continued illegality in many states). Some of the early heavy hitters in this space have included: PotCoin (POT), CannabisCoin (CANN), DopeCoin (DOPE), HempCoin (THC), CannaCoin (CCN).
Cannabis coins are an interesting case study. Many of them launched in 2014 to capitalize on Colorado’s legalization of marijuana but have laid relatively dormant compared to many other popular alt-coins. However, these cannabis coins boast unique features that may one day help increase transaction productivity in the cannabis industry.
Transaction speeds. Some cannabis coins boast transaction speeds of 40 seconds, blowing away BitCoin’s process speed of approximately one hour on average. The lull for the larger coins has worried many investors that the lag encourages fraudulent transfers since Bitcoin features insecure passwords, autonomous users, and a general lack of comprehensive regulation.
Proof-of-Stake instead of Proof-of-Work Concept. Certain cannabis coins, such as PotCoin, have transitioned to a proof-of-stake concept, which allows a person to mine or validate block transactions according to how many coins are owned by that person. This model solves a problem that major coins like Bitcoin may one day run into, which is the day when mining will slow due to a lack of rewards for mining, the result of Bitcoin’s proof-of-work model that rewards the miner that verifies the legitimacy of any Bitcoin transaction block, without personal limit. The problem creates the possibility of a 51% attack, which occurs when a miner or mining pool controls 51% of the computational power of the network and creates fraudulent blocks of transactions for himself or herself while invalidating the transactions of others in the network. The proof-of-stake concept limits a miner to mining his or her percentage share of the coin. Theoretically, this makes the coin more trustworthy, an advantage for cannabis coins adopting the proof-of-stake model including PotCoin.
Industry diversification. Many cannabis coins seek to satisfy different areas of the cannabis market, seemingly allowing for one or several cannabis niche markets to thrive under the alt-coin transactions model. For example, HempCoin is designed almost solely for the purposes of the farming and dispensary industries, leaving other coins to tackle individual transactions. Meanwhile, the newcomer Paragon seeks to provide regulatory solutions for the “fractured cannabis industry.”
Overall, the possibilities for improving cannabis transactions with cannabis-based alt-coins are intriguing considering the growth of technology and lack of regulation in the space combined with the exponentially growing (legal) American marijuana market.
For specific advice on how to navigate the cryptocurrency universe, the cannabis industry, and the intersection of the two, please contact ADLI Law Group.