The fight to legalize Marijuana is gaining ground. As of November 2020, medical marijuana is legal in 35 states and D.C., while 15 states and D.C. have legalized recreational usage. These numbers are expected to grow as more states explore ways to decriminalize the plant. Keep in mind, though, that marijuana is still illegal at the federal level, which makes it complicated for anyone conducting financial transactions even in states where pot is legal.
Businesses and operators selling and/or distributing recreational and medical pot are still barred from using banks for their transactions because of federal legislation. The development and use of marijuana-specific virtual currencies have ramped up in order to fill the hole in this market. Cryptocurrencies make it easy for people in the marijuana industry—or simply those who want to buy some weed—to carry out transactions. While bitcoin has become widely popular in the virtual currency space, there are a few alternative cryptocurrencies catering specifically to the pot sector. Read on to find out more about the top five cryptocurrencies on the market.
Although marijuana is legal in many states, the U.S. federal government hasn’t decriminalized the drug.
Launched in January 2014, PotCoin was one of the earliest cryptocurrencies for the marijuana industry. It was designed to solve banking problems for people looking to transact in legal marijuana. Trading of PotCoin takes place directly between people without using a bank or clearinghouse. Its creators wanted to capitalize on Colorado’s legalization of marijuana and even installed a PotCoin automated teller machine (ATM) at a marijuana dispensary in Colorado.
But the currency failed to make a huge mark, remaining in the shadows until June 12, 2017. A press release and a video of former NBA star Dennis Rodman sporting a potcoin.com shirt in North Korea gave PotCoin a shot in the arm. By funding Rodman’s trip, not only did PotCoin re-enter the media spotlight, but its value also shot up 76% in just one day, according to coinmarketcap.com. As of November 2020, its market cap was close to $1.5 million—a big jump from $81,547 in February 2014. One PotCoin was worth $0.006564 on Nov. 9, 2020. The coin was up about 21% year-to-date.
The supply of PotCoin is limited with, you guessed it, 420 million coins. More than 224 million are in circulation. It trades on three markets and also transitioned to proof-of-stake, which allows people to mine or validate block transactions according to the number of coins they hold. An important caveat is that PotCoin claims transaction speeds of 40 seconds, which are pretty impressive compared to those of bitcoin.
The cryptocurrency announced some new features at the beginning of 2019, including HD Wallets, a reduction in synch times, and promising faster network synchronization to help boost the user experience.
Pot-based operators and consumers can use marijuana-specific cryptocurrencies for their transactions since banks cannot legally conduct pot-related business.
CannabisCoin was also developed in 2014, just a few months after PotCoin. It is a proof-of-work, peer-to-peer open-source currency and, like Potcoin, was aimed at easing transactions for medical marijuana dispensaries. While it initially gained popularity, it has failed to deliver for investors.
So how does it work? CannabisCoin promises to convert cryptocurrency directly into marijuana. Under the name CANNdy, there is a line of medicines and marijuana strains grown for the specific purpose of exchange at the rate of 1 CannabisCoin to 1 gram of medication.
Marijuana-specific cryptocurrencies also use virtual wallets to hold and store coins, just like regular cryptocurrencies.
The total supply of CannabisCoin is set at 91.8 million, with over 77 million in circulation. The currency’s market cap was $366,005 as of November 2020, according to coinmarketcap.com.