The cryptocurrency industry and the legal cannabis industry are very different, yet there is a growing synergy between this unlikely duo. There are actually lots of similarities to share between these two. Their youth-biased customer base and the kinds of challenges and opposition faced are part of such similarities. They both face similar sorts of challenges; some of which includes acceptance among other political factors. Legal cannabis and cryptocurrency also both have their major markets in more liberal regions of the world; the United States being one of them.
The business structure run by these two industries are complementary and their alliance would move both industries forward. This article will compare their business structures and challenges plus the areas where they overlap. It will also prove that as the two industries become more widely accepted, their similar structures will work to aid them grow together.
The trials of the legal Cannabis industry.
In about two-thirds of U.S states, marijuana is legal. Yet, a critical look at this industry reveals the numerous challenges cannabis still faces in these “legalized” states.
The legal cannabis industry is forced to make transactions on a cash-only basis. This is because banks and other financial institutions are a federal affair and marijuana is yet to be legalized on the federal level resulting in cannabis companies and cultivators being unable get credits, loans or carry out any transactions with these banks. The newness of this particular market is also one reason why banks are either hesitant or not forthcoming.
The pains of Cryptocurrency
Since cryptocurrency became a public affair decades ago, it is yet to gain a status of reliability and general acceptance. Many regulatory bodies are uncertain about whether to regard cryptocurrency as a source of value or not. This uncertainty has affected business transactions, with many dealers unwilling to trade in cryptocurrency. Cryptocurrency is relatively new when compared to how long cash funds have been in the market, so they are still considered as unconventional tools for finances except in some major cities in the U.S and Asia.
It also keeps waging a legal war because of its anti-authoritarian nature. Satoshi Nakatomo, the founder of Bitcoin explained that cryptocurrency uses blockchain technology. Blockchain contains all the information for verification and circumvents the need for a financial third-party like banks and government agencies. This is what is referred to as its ‘anti-authoritarian nature’. The use of blockchain then raises the legal concern of whether cryptocurrencies pass the Howey test to be qualified as securities or not.
Merging: How do they work together?
Blockchain’s ability to bypass banks and other financial institutions is one of the things bringing crypto and cannabis together into this association. Blockchain has value stored in it and it can be transferred in such a way that it won’t involve any other party. All the necessary information are also stored across the block chain, making it a very useful alternative to the usual old-fashioned bank account.
Because there are no third-party involvements, untraceable purchases of illegal products like drugs and other contrabands could be made. Silk Road black market is a typical example of the first major adoption of the use of Bitcoins. Lots of illegal and untraceable purchases were made.
Cryptocurrency industry and Cannabis industry might be a difficult association at first but they will eventually be of profitable to each other. Blockchain would provide the much required platform for making impeccable transactions for cannabis. Cannabis would in turn bring a supply of a teeming group ready to use the cryptocurrency for transactions, thereby validating it.
Merging: What has been done?
Since 2014, several projects marrying the crypt and cannabis industries together have been looked into. Though none of them has been widely adopted by the public yet, they are all birthed with the same mindset of using the cryptocurrency platform to give cannabis dealers a reliable means of exchange.
Some of the projects are; DopeCoin, PotCoin, CannaCoin, HempCoin and Cannabis coin. Of all these projects, only CannaCoin doesn’t have a market running into millions of U.S Dollars.
The Future for Crypto and Cannabis
At the moment, crypto and cannabis are not there yet when it comes to infrastructure and adoption. Many more countries are yet to declare a legal status across all their states for cannabis and the United States Securities and Exchange has even detached itself from all forms cryptocurrency transactions.
But as the two industries grow; Cannabis providing the customer base and cryptocurrencies making transactions continually transparent, there will be widespread adoption leading to more dependence on the synergy between the two industries.
Author's Bio:
Sunil Gupta is the founder of ACG Digital Marketing a digital marketing company based in India.
