Cryptocurrency is a digital asset that can be used to transfer value among peers. You may also hear it referred to as virtual currency due to its lack of physical properties. A distributed ledger records all the transactions that anyone on the network can access. Cryptocurrencies are decentralized, meaning they don’t have any governing body that oversees their actions.
Relationship between cryptocurrency and cannabis industry
Created in 2009, Bitcoin is, so far, the most popular form of cryptocurrency. This digital currency serves to exchange value between peers – with no central authority or banks involved. Blockchain technology allows users to transact freely without a third party intermediary. With the acceptance of Bitcoin by major retailers such as Overstock and Expedia, more people are interested in learning about these new forms of payment.
The Cannabis plant has a history of medicinal use dating back thousands of years across many cultures. With the cannabis industry booming and the continued growth of the legal cannabis market, there’s also a growing number of challenges for cannabis businesses to overcome. The most prominent challenges are those that stem from the illegality of cannabis at the federal level. This leads to complicated issues for both new and existing dispensary owners. However, despite these difficulties, the cannabis industry has reached a market value of $10 billion. Cryptocurrency and blockchain technology have allowed cannabis businesses to operate more freely within the boundaries of US law.
If you’re curious about how cryptocurrency affects the cannabis industry, keep reading for some important information.
A cash-only business
Cannabis has only been legalized at the state level, which means that banks won’t work with marijuana businesses because they don’t want to mess with federal regulations. Cash is an obvious alternative, but it comes with its problems. The most pressing concern is theft — both during transportation and on-site.
Criminals can target Cash-heavy businesses because they know they’re carrying large amounts of money. It doesn’t matter if you search for dispensary near me or convenience store; cash attracts criminals like moths to a flame. This puts workers at risk in addition to hampering business operations because all that cash must be deposited somewhere else. Cryptocurrency offers the solution
Limitations of Banking Laws
First, we must understand how cryptocurrency works to know why it’s such an excellent fit for the cannabis industry. Cryptocurrencies are not controlled by any financial institution or government. As a result, they are not directly impacted by economic downturns. They cannot be manipulated by anyone with access to specific codes like banks can do with more traditional currencies. Cryptocurrency also allows users to transfer funds without incurring additional fees in the process.
As you can imagine, these qualities make them attractive to investors everywhere — especially those who have been burned by conventional banking methods in recent years. For example, most banks will not offer cannabis-related businesses accounts because marijuana is still illegal on a federal level in the United States. This means that dispensaries have no way of taking credit cards or allowing their customers to use checks as payment methods. However, some banks have attempted to offer services, but only under certain conditions like preventing credit and debit card transactions or limiting withdrawals and deposits to avoid triggering federal laws.
Paying for goods or services
Instead, digital currency makes transactions and tracks them in a public ledger called a blockchain. Dispensaries have tried accepting digital currencies in the past, but the results were not promising due to technical issues and other obstacles. However, with new cryptocurrencies entering the market, the cannabis industry embraces digital currencies once again.
You’ll notice that there are no logos for Mastercard, Visa, or Discover on the countertop where you pay for your goods. That’s because of the lack of banking services available to cannabis retailers. They can’t open checking accounts, accept credit card payments or write checks because they could lose their bank accounts at any time. Cryptocurrency is one solution that may provide an opportunity to keep money flowing through legal channels. The cannabis industry has caused a significant increase in sales, thus being one of the big drivers of this market. In fact, some business owners can only get paid this way.
Cryptocurrency has a long way to go before it can be considered mainstream. However, it has already made some waves in the cannabis industry. Specifically, cryptocurrency has made it easier for brands and consumers to engage with each other which is benefitial.
