Lately, all anyone can talk about is the blockchain. That shouldn’t come as no surprise. In an unprecedented move for cryptocurrencies, Bitcoin jumped past the $10,000 mark. At time of writing, the digital token pushed past the $11,000 level, driving more credibility to theories that Bitcoin could even hit six digits.
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Naturally, the vast majority of blockchain enthusiasm is directed towards the profitability angle. In less than one year, investors saw a ten-fold increase in their Bitcoin holdings. Other cryptocurrencies, such as Ethereum or Litecoin, saw similar or even greater gains. The more prices remain stable at these elevated levels, the more likely that the “FOMO” trade, or the fear of missing out, will push newcomers to the sector.
But largely ignored amid the public hysteria for cryptocurrencies is the actual revolution that the blockchain will spark. At its core, the blockchain will replace many of the business and financial functions that are required in modern economies. As a result, early practical adopters of this technology will have a substantial leg-up against the competition. This dynamic presents a natural opportunity for the emerging cannabis industry.
Consider that the primary dilemma of business interactions is trust; that is, business cannot be conducted without each party in a contract trusting that the other will make good on their end of the deal. Trust becomes even more complicated when dealing with untrustworthy entities (for example, subprime loans). In the cannabis industry, trust is paramount. This sector is still considered a pioneer market, and the lack of trust is problematic.
As we have seen, though, with the blockchain technology, decentralized public ledgers have the capacity of overcoming traditional barriers. For instance, the Ethereum blockchain operates with the “smart contract” concept, replacing the need to trust human arbiters in contractual disputes. In this manner, members of the cannabis industry could theoretically reduce their attorney and administrative fees.
The ability to generate cryptocurrencies also has profound implications for the cannabis industry. Under the current tax code, Bitcoin and other cryptocurrencies are considered property, not financial securities or currency. Further down the line, marijuana companies could create a self-sustaining economy, away from the watchful and greedy eyes of the government.
Such a move would be particularly important for the cannabis industry as the Feds continue to push the ridiculous notion that marijuana is a Schedule 1 drug. That puts cannabis leaves on the same level as hard narcotics, such as cocaine or heroin. These nonsensical and draconian laws prevent meaningful cannabis research, including those for medicinal purposes.
It would be a dramatic turn of events should Bitcoin and the blockchain ultimately finds a workaround to the Schedule 1 challenge. This new-age technology is already upending the staid and hegemonic financial system. It’s about time that our archaic drug laws also receive the same treatment.