What do Bitcoin and marijuana have in common?

Cryptocurrencies captured the attention of the general public when the industry's market capitalization reached $600 billion last year. The full legalization of the cannabis industry, much anticipated by many US citizens, is also quite popular on Wall Street, with many experts believing that the industry could be worth $75 billion by 2030.

The cannabis and cryptocurrency markets have much in common - they are associated with high risks and legal uncertainty, and government regulators diligently monitor each of them. With the potential of cryptocurrencies and blockchain technology combining with the needs of the growing marijuana market, the two industries working together could help them gain legitimacy. 

At the moment, organizations involved in the sale of marijuana in the United States operate only in cash, since, in accordance with federal law, banks are prohibited from servicing this industry. Because of this, the fiscal service cannot collect taxes properly. Clumsy and unsafe tax collection procedures, during which the holder of funds must cross state lines accompanied by armed guards with a bag containing hundreds of thousands of dollars, does not reflect well on the reputation of cannabis dealers - many of them have had to close, even despite the existing demand in the market.

One of the most famous marijuana cryptocurrencies, PotCoin, was created in 2014 to help cannabis sellers. After NBA star Dennis Rodman went out in public wearing a PotCoin.com T-shirt, the price of this cryptocurrency jumped 76% in just one day. At the time of writing, PotCoin's market capitalization is approximately $10 million.

Last December, the head of PotCoin announced the conclusion of the world's first agreement between a cryptocurrency company and a state-licensed manufacturer and distributor of medical marijuana. Members of the PotCoin community who are eligible to purchase cannabis from WeedMD receive bonuses for using this cryptocurrency. 

HempCoin is also a well-known cryptocurrency created in 2014, but it focuses on exchanges between growers and medical cannabis stores. Along with PotCoin, HempCoin is accepted as a payment method on Stembis.com, a Canadian online marijuana marketplace. Currently, HempCoin's market capitalization is below $10 billion. 

Blockchain is a tool of legality

Advertising of cannabis products is prohibited almost everywhere.. Even though 29 states have already legalized the medical use of cannabis, major advertising platforms like Facebook or Google are unlikely to change their policies on such advertising until marijuana becomes legal at the federal level. Decentralized applications try to find workarounds. 

Cannabis Hemp Exchange or CHEX is a service that provides a trading and advertising platform for cannabis cultivators, producers and brands. CHEX is described as a platform for wholesale cannabis exchange through B2B transactions. Using this service, users can find information, communicate and share their opinions. 

Blockchain company Paragon, in order to create greater transparency in the cannabis supply chain, has created a token that uses smart contract technology. With ParagonCoin, users can make transactions on the platform and also store funds more efficiently. The ICO of the token took place last year and raised $70 million, but many argue that this cryptocurrency is too overvalued. 

The open source blockchain Parachain guarantees the unhackability and efficient operation of the system. Paragon’s “seed-to-sale” solution will help stores and customers be confident in the quality of the final product. Each step in the supply chain is conducted and recorded by responsible parties - such as growers, producers, transport companies, and scientists who conduct product tests in laboratories - and recorded in a smart contract. 

Cryptocurrencies and cannabis are a match made in heaven

Logistics and supply chain management are among the most potentially important functions of blockchain. Efforts to bring more transparency and accountability to the cannabis industry are a positive trend for the entire market. Medical marijuana shops have been successful in rebranding the drug by educating their customers about the positive effects of certain strains, but laws are needed for the cannabis industry as well... 

Blockchain-based solutions like Paragon’s “seed-to-sale”, or social networks dedicated to marijuana, or stores that sell medical marijuana for cryptocurrency - all of them have a positive impact on the industry and on creating a suitable environment for both buyers and sellers.

According to cointelegraph.com