In early 2014, around the time retail cannabis stores opened in Colorado, news reports heralded the arrival of a digital currency for the legal cannabis market. PotCoin was supposed to allow consumers to buy or sell marijuana anonymously without using cash. At least one dispensary installed an ATM linked to the cryptocurrency.
And then PotCoin fell into obscurity. Within months, the headlines and news stories dried up. PotCoin has been live since its 2014 launch, but it’s failed to drum up a serious following. The currency was eventually taken over by a new set of administrators, including the developer of PotWallet, a PayPal-esque service created to make using PotCoin more practical.
Hype springs eternal, and now, more than two years after the vaporware debut of PotCoin, there may be reason for it to flow anew. With what the company characterizes as “substantial” new investor funding, PotCoin’s administrators are overhauling the currency. “There was a lack of IT manpower,” said David Amitrano, a pseudonym for the chief technology officer of the mysterious Montreal company behind these ventures (PotCoin’s leaders, like many cryptocurrency creators, put a premium on privacy). As with Bitcoin, PotCoin is open-source, so improvements can come from the company’s administers or via public submissions.
The company has no mobile app at the moment, but Amitrano says one is in the works for Android, iPhone, and Windows. The company says it’s on the verge of making public announcements about improvements to its products, but it hasn’t yet set a date to do so. “Pretty soon,” is all Amitrano would say.
“There could be a social aspect to using it by people who want to support the industry.”
Among other internal changes, the company acquired its own data center in Montreal. “We’re going to own 100 percent of our hardware and our network,” Amitrano said. “Everything is being refactored. Our biggest concerns are reliability, scalability, and security.”
Amitrano said there is no way to know how many users own PotCoins, or how much money the currency adds up to in the real world. Chatter in online forums—like its own, and one on Reddit—is sedate, as is activity on Facebook and among its 437 Instagram followers. On its website, PotCoin lists just 12 businesses that accept the currency. PotWallet has been available since its debut about a year after PotCoin, and today has around 3,000 active users, Amitrano said.
Both PotCoin and PotWallet can be used without fees. Consumers pay zilch. PotCoin promises transactions within just 40 seconds, a speedy clip compared with BitCoin’s 10-minute slog. That’s one of the things that makes PotCoin most promising, said Shad Ewart, a community college professor in Maryland who teaches one of the country’s only cannabusiness courses. Fast transactions would be imperative for a customer-merchant payment service, he said.
The industry-specific nature of PotCoin may be attractive to consumers who want to see their money bolster the sector, Ewart said. “There could be a social aspect to using it by people who want to support the industry.”
At the moment, $20 will net you 2,500 PotCoins, but the currency is volatile. That’s due at least in part to speculation, which Ewart believes helped drive down the price after the 2014 launch.
But with some form of cannabis legalization on the ballot in nine states this November, will anyone actually need a cryptocurrency for cannabis? Federal legalization of cannabis in the United States and Canada would erase the banking problems that make PotCoin seem appealing. But banks so far don’t appear willing to make that jump, as evidenced recently by two of Canada’s biggest lenders shunning all cannabis-related businesses. So there’s that.
“There’s all these advantages for the cannabis industry, because they get hit with a lot of fraud” and get stuck with chargeback, in which dispensaries owe credit card companies for fraudulent charges, Amitrano said. While most dispensaries still can’t accept major credit cards, apparently that’s a credit card company’s way of thanking dispensaries for their business. If dispensaries don’t like it, they can ditch the plastic—or the heaps of cash—for PotCoin, he said. “That’s the beauty of it.”
Ewart cautions against getting too feverish, at least until PotCoin gains many, many more users—beginning with merchants. “I’m a little leery,” the business professor said. “They need to get more merchants on board. If they do that, the people will follow. Because why would I want PotCoins if I can’t use them?”
Cryptocurrency aficionados may take interest in another huge change made to PotCoin: It’s no longer minable. It now runs on a proof-of-stake system whereby users earn 5 percent to 7 percent interest on their currency. To cut out a lot of geek-speak, mining is the process that creates new units of some cryptocurrencies, including Bitcoin, but is frowned upon by many because it puts a strain on computer hardware.
PotCoin’s description on its Facebook page says it’s “aspiring to become the standard form of payment for the legalized cannabis industry.” For now, put the emphasis on “aspiring.”