Cryptocurrency is exploding and stupidity abounds as hopefuls and charlatans put up a shingle for investors to throw ridiculous amounts of money at.
One example of cryptocurrency for the sake of cryptocurrency is Potcoin.
It is fairly easy to guess the purpose of Potcoin and yes, it addresses a serious financial issue facing the legalized cannabis space in the US – commercial banks that accept deposits have to carry FDIC insurance and have a primary federal regulator. Since marijuana remains illegal on a federal level, banks cannot and will not except monies connected to the sale of cannabis. The same goes for federal credit unions.
Even though collective credit unions have been approved at the state level, they will most likely never get approval from the National Credit Union Administration (NCUA) because it’s a federal institution.
Potcoin is being touted as the solution and Dennis Rodman, pro-basketball star and professional weirdo, has crawled out of the woodwork to act as spokesperson.
Indeed, cryptocurrency would eliminate the need for banks to accept and process transactions. With Potcoin, operators would no longer have to wait for an armored truck to show up at closing to transport the day’s take to a safer location.
Also as a cryptocurrency, you’ll not only be able to use Potcoin to pay for an eighth of Romulan Haze but you’ll also be able to use it as legal tender for the munchies you’ll inevitably pound down at Denny’s later.
Unfortunately, what makes Potcoin the answer also makes it incredibly redundant.
According to cointmarketcap.com, there are 753 cryptocurrencies in circulation. Potcoin sits 43rd in the list when it comes to market cap – that’s 217 million Potcoins totaling $38.0 million. To illustrate just how far down the pole Potcoin is, Bitcoin sits at number one and has approximately 16 million in circulation for a market cap of almost $45.0 billion.
So, market dominance isn’t going to drive Potcoin. Is there anything special about the company that will set it apart from the field?
Nothing I can see beside Rodman’s bedazzled visage telling me to buy Potcoins.
Let’s look at Potcoin’s mandate for a moment. Yes, it seeks to fill an established need, but let’s examine that need more closely.
What the legalized cannabis space desires is a temporary financial solution that any cryptocurrency can provide because in the end, the federal banking system will acquiesce.
So rather than reaching out for an unknown like Potcoin, operators are more likely opt for established platforms such as Bitcoin, Dogecoin, Monero, and Litecoin.
Cryptocurrencies are exciting, mostly because of the blockchain technology they are built on, but there are some serious issues that still need to be addressed before widespread adoption takes place.
Volatility is a major concern. Since cryptocurrency is decentralized and effectively unregulated, it is subject to arbitrary valuation swings that may give users an initial explosive growth on their investment, but as illustrated by the drop at the end of May which saw Bitcoin lose $4.0 billion – it could strip users of their savings. We won’t even mention the 17% Bitcoin dropped yesterday.
Now, let’s talk security. It is increasingly apparent that cryptocurrency and/or blockchain technology isn’t as secure as everyone would like to think. Take Ethereum for instance. It already had a $50.0 million-dollar fork in its blockchain a while back due to hackers, but then it had two other forks again this year due to security breaches.
The idea of hard forks is also disconcerting. The selling point of blockchains was that they are immutable records. Ethereum is proving that immutability is just a catchphrase and that the system is as flawed and corruptible as current methodologies handling financial transactions.
Don’t get me wrong, blockchain technology is amazing and will not only revolutionize how we do business, but it will also fundamentally change many of the institutions we have come to rely on.
However, it isn’t a panacea for the human condition and there are major technical and ethical issues that still need to be resolved.
So, what’s this mean for Potcoin? It’s a tiny voice in a thunderous din of lackluster me-toos.
Honestly, Potcoin should have a mark on it’s head from a legion of ten-foot-poles, but Rodman has charm and the industry is still running on myth and potential. As a result, Potcoin rose 83.49% in the last 24 hours.
Sounds impressive until you realize it’s trading at $0.179.
Save your pennies – or not. It’s up to you.
–Gaalen Engen
http://twitter.com/gaalenengen
FULL DISCLOSURE: The author has no connection to any of the companies named in this article.