Hello, Ethereum. Good-bye, Cash.We live in a world where just when you think technology can’t get much more technical, someone thinks up something amazing and suddenly, we are being launched into a new era. Imagine a technology so profound, it may not only eliminate the need for cash currency as we know it today, but could potentially eliminate fraud, reduce the need for banks, and even eliminate the need for contract lawyers. Ethereum is that technology.
Ethereum is a break-thru technology in a unique position to change the way the world does business, and it’s starting with the cannabis industry. Legal cannabis faces challenges with complex compliance requirements, limited banking options, and a cash-heavy system. But, where there’s a will… there’s a way, and the creators of Ethereum have discovered the way through blockchain technology.
Cannabis Transactions of the Past
One of the most significant dangers surrounding the legal cannabis industry involves not being able to use traditional banking methods and forcing cash-only transactions – ultimately leaving businesses, delivery drivers, and even dispensary employees vulnerable to robbery. Ken Berke, President of PayQwick describes one of their client’s experiences,
“A family-owned operation in Washington, typically operated with the father and son doing deliveries while the wife/mother ran the business office. One day, the father and son couldn’t do the deliveries, and the wife was forced to handle it. After her second delivery, she wanted to stop for lunch, but carrying $36,000 in cash made her horribly vulnerable. Suddenly, she realized the danger she was putting her son and husband in each and every day.”
In addition to creating a safety issue for cannabis businesses, business in general is a hassle when you have to pay your bills in cash. Without a bank account, cutting a check for a utility bill, paying employees, or even paying taxes is impossible. While some cannabis-based businesses may find loopholes allowing them to create bank accounts, many times banks will freeze their accounts due to FINCen regulations and SARS flags.
Using a decentralized application built on Ethereum, like PayQwick, provides a simple, compliance-friendly solution which meets all the regulatory requirements of FINCen, protects the cannabis business, and for consumers, it’s as easy as loading a Starbuck’s card.
How Ethereum Works
Bitcoin, a commonly-known blockchain technology is designed to do one thing – operate as a cryptocurrency. Ethereum, on the other hand, is a limitless virtual machine which allows users to create their own operations, called “Smart Contracts,” through the Ethereum Virtual Machine (EVM). These contracts are actually strings of code designed to perform certain tasks when the conditions of the contract are met. For example, PayQwick works similar to PayPal, where each party has a PayQwick account to which they can deposit funds to complete secure B2B transactions. For example,
- A dispensary wants to buy a product from a producer; they create an order [smart contract] for X amount of product in exchange for X amount of dollars.
- When the delivery driver delivers the physical goods, they launch the app from their smart device, enter the manifest number, and the amount of the order.
- The dispensary employee completes the transaction, and the money is transferred from one PayQwick account to the other.
No cash ever exchanges hands. In fact, no cash ever exchanges bank accounts, it only transfers between PayQwick accounts. Plus, the entire transaction which can trace cashflow in reverse, from Sale to Seed, is fully FinCen compliant.
Berke best explains his vision of PayQwick stating,
“For cannabis businesses, PayQwick is a compliance company, first and foremost… with a really sophisticated e-wallet.”
Based on blockchain technology, this type of decentralized application (Dapp) has several advantages because there is no one central source, thus no servers to crash meaning 100% uptime. Rather than running on one computer like traditional applications, Dapps run across a network of nodes making them more stable, more secure, and completely transparent.
Ethereum creates a virtual nervous system on which business transactions are executed based on a certain set of rules. Regardless of what is being exchanged or promised, Ethereum provides a secure backbone to protect all parties involved. In short, by writing a few arbitrary rules, smart contracts automate tasks without requiring intermediaries. Smart Contracts, which are self-arbitrated without any central authority, are fair and objective.
However, resolving the cannabis banking woes is just the start, the future of Ethereum is limitless with use cases including identity and reputation systems, centralized autonomous organizations, file storage, insurance, data feeds and mining, cloud computing, and more. Ethereum technology could ultimately change the way modern society does business.