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Crytocurrencies such as Bitcoin are used by people who want to make anonymous financial transactions, but now there’s a new kid on the block and it’s aimed right at an economic sector it desperate need of ways to deal with millions of dollars in cash.
The economic sector is the “legal” marijuana industry in the US, and the cryptocurrency trying to tap that market is PotCoin. Actually, it’s not the only one, but it does appear to be the one with the best chance of competing with Bitcoin, according to the Cryptocurrency Times.
Because marijuana remains illegal under federal law, pot shops and related enterprises are largely unable to use traditional financial services like banks and credit card providers to take care of business. The financial institutions are afraid of being prosecuted for money laundering or similar charges by the feds, and while bills have been filed to address the marijuana banking problem, none of them has yet to pass.
Thus, many of these pot businesses are operating on a cash-only basis, which is not only inconvenient, but also dangerous. And since pot businesses lack a non-physical way of completing secure transactions, if there is one industry for which cryptocurrencies make sense, it is the US marijuana business.
According to Azarius, what PotCoin wants to do is connect pot-related businesses and people who want to support marijuana legalization with “an industry-specific crypto-currency” that would allow them to make secure transactions within the industry.
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As with Bitcoins there is no central bank distributing or controlling the money stream. Instead PotCoin flows through a decentralized peer to peer system. The PotCoin system is not only independent, but also runs globally.
You can generate your own wallet online. There you will receive both a private and a public address. Once people start transferring PotCoins to your wallet, you will be able to spend them on cannabis products all over the world.
Can PotCoin take a bite out of Bitcoin’s wallet? It will be an uphill battle. Bitcoin is longer-established and trades at a higher value than PotCoin. But PotCoin is narrowly focused on the marijuana industry, and that may make it a desirable choice for pot businesses and the people who want to support them and the broader goal of legalization. The battle of the cryptocurrencies is on.
Phillip Smith is editor of the AlterNet Drug Reporter and author of the Drug War Chronicle.