Editor’s note: Roger Huang is co-founder of ThoughtBasin, an edtech startup that connects students with organizations looking for difference makers. Follow him at code(love).
It started with one evocative name shouted into the phone from one developer to another: “Potcoin!”
The Founding Fathers had to work for years to craft a Constitution that would grant the government the power to “coin money.” However, three developers in the frozen north, who were only able to provide me with pseudonyms because the businesses and investors they’re associated with would frown upon their new venture, had, within weeks, gone from uttering that single word to creating a cryptocurrency.
Hasoshi, Mr. Jones, and Smokemon 514 (“gotta smoke em all!” he shouts) united online to develop Potcoin, an online Bitcoin-like currency that can be used to store value. It launched on January 21, 2014 — at 4:20 p.m. The Potcoin team is defying conventional banks, money laundering authorities, and the DEA in order to build out a safer way for marijuana dispensaries to deal with daily transactions.
MT.Gox and Bitcoin might have had their problems, but that hasn’t stopped a bunch of alternative cryptocurrencies from trying to steal the spotlight. In this brave new world, Internet trends have become a viable means of supporting real-world causes. It was dogecoins that sent the Jamaican bobsled team to Sochi, Auroracoins that helped the Icelandic people escape from economic disruption, and if the trio of Potcoin developers has its way, it’ll be Potcoins that will help you buy the recently legalized marijuana in Colorado and Washington.
The Potcoin team is defying conventional banks, money laundering authorities, and the DEA in order to build out a safer way for marijuana dispensaries to deal with daily transactions.
Why not use good old Constitution-coined money? The problem, as Smokemon points out to me, is that the conventional financial systems in those states are slow to deal with change. With federal law and the prohibitive Controlled Substances Act still technically hanging over state law, conventional businesses view marijuana as something to be distrusted. Dispensaries that make their living growing and selling a now-legal product are confronted with the reality that the system in place is treating them the same way it always has: with apathy at best, and with malice at worse.
While a fair amount of skepticism regarding a new line of legitimate business may be warranted, the degree to which marijuana dispensaries are effectively cut off from banking services forces them into desperate situations. Ironically, a ballot measure intended to reduce violence over the illegal drug trade may be resulting in more because of this gray line, as robbers stream into legal dispensaries that they know must be carrying a large amount of cash on hand.
A digital age requires digital solutions. Potcoin can act as a proxy for the banking system that has abandoned marijuana dispensaries. Knowing that most of their cash reserves will be digitized, robbers may be less inclined to visit dispensaries, and a safer, more prosperous, and more credible marijuana trade will be able to benefit both growers and consumers.
That is, if you believe in the magic ingredient holding the system together — trust.
As we saw with Mt.Gox, novel innovations sometimes have a way of going askew. Pressed on this point, the Potcoin team assures me that “whenever there is money involved, there is a higher level of accountability.” They hasten to point out that they are not the only ones in the trade of crafting cryptocurrencies for marijuana, but that they are the only ones making an extensive effort to create a public community of users, including their own custom subreddit. They believe that exposing themselves to public censure, and having a strong community with diverse views, holds them in check.
The team itself is an odd but likeable bunch. They’re all startup entrepreneurs who have crafted several successful businesses. For example, Mr. Jones went through a series of personal struggles, at one point almost losing everything, but is now the founder behind a multi-million-dollar company. Together, the team helped raise money for Snoop Lion’s charity for kids: he’s giving them a video shout-out. Smokemon hastens to point out that they all defy the living stereotype of the lazy pothead: Everybody on the team smokes, and everybody on the team builds lots of cool new stuff. He himself is a “high-functioning pothead.
Their contribution to the pet cause of many technologists may ultimately go beyond defying authorities. Smokemon starts getting to the larger point of the possibility of destigmatizing hemp products. At this point, I push him for the larger picture behind Potcoin — the “why” that defines its ideals. Do they want to end the war on drugs?
The answer comes quickly: “Yes” says Smokemon.