Categorized | Bitcoins

Bitcoin offers Solution to US Marijuana Industry

How in the world do you connect the concept of Bitcoins - an uprising form of digital currency marked by it’s decentralized system – to selling/buying medical Marijuana in the United States?

Well, it happened at the start of this year when the U.S. government decided to ban credit card payments for pretty much every Marijuana dispensary in Colorado, one of the first states to legalize Marijuana. In a short amount of time, many (large!) private investors have shown interest in this new and upcoming market. While February 14th banks were cleared to accept any marijuana business-related transactions, they still are very hesitant to drive any marijuana business until the industry is fully legalized.

Cash… and Bitcoins!

Until then, every dispensary is forced to only accept cash… or Bitcoins. As you may or may not know, Bitcoin is a fairly new, digital currency that is generated by computers running special software. This software is constantly mining for coins by performing complex mathematical calculations.

The rules in the Bitcoin software state that every Bitcoin mined will result in a more complex mathematical problem to be solved in order to mine the next Bitcoin. This process is repeated millions of times, with an ever increasing difficulty, making the digital currency go up in value over time.

Those who manage to obtain a Bitcoin, or a small fraction of a Bitcoin, can exchange the digital data associated with the Bitcoin for actual money. And here’s the fun part: at the moment of writing, a single Bitcoin is worth over  £ 260 GBP.

Marijuana sales pointing at a 2.3 billion (USD) revenue

But why can dispensaries accept Bitcoins when other forms of digital payments like Credit Cards are no option? The answer is that Credit Cards are linked to bank accounts and Bitcoins are not. In fact, the concept of Bitcoins relies partly on a decentralized system, as opposed to the classical monetary system that relies on the growth of the economy, banks and governments.

It’s becoming more and more obvious that recreational Marijuana is a big deal, at least in Colorado. Various businesses are jumping the bandwagon, each trying to pick a piece of the pie through different channels. Anything from recreational gadgets, to bitcoin supporting marijuana seed suppliers and marijuana growth assistance software, you name it. According to the National Cannabis Industry Association the predictions of medical and recreational Marijuana sales point to an astounding $ 2.3 billion US Dollars at nationwide at the end of this year.

That’s a lot of money, and a lot of cash. It’s somewhat understandable that banks and Credit Card companies are hesitant to enter this kind of market with so much digital money  floating around, and on top of that banks are fighting with federal laws and legal issues revolving around medical/recreational Marijuana. Surely the market will find common grounds with these kind of revenues.

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