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"Hey, look at the stocks!" It was a Thursday at the end of September in the Colorado offices of the technologies of Leafbuyer, a small technology company focused on cannabis. Like most startups, it is a bit obsessed with the price of shares, which has a staff member assigned to monitor. This day was going mad.
Usually, Leafbuyer's shares would make between 200,000 and 300,000 exchanges in a day. This day there were three million at noon. To close, he traded valued at $ 10 million, finishing more than 60 percent.
So, what happened? That morning, the company had published a statement saying that, in the end, it would use blockchain, a fashionable digital accounting system that evokes images of cryptocurrency millions and unbreakable security that is used everywhere, from real estate to the 39; immigration. Furthermore, it is increasingly used by cannabis companies in various ways. Feeling that Leafbuyer would use it, the markets had more or less immediately lost their collective mind.
Blockchain is a new technology little known but much discussed.
"When we make a press release, sometimes there is no reaction," says Kurt Rossner, the company's CEO, a friendly middle-aged serial entrepreneur with a technological background. "Obviously in this case, there was a significant reaction."
Blockchain is a new but little-known but much-discussed technology that attracts different people in different ways. Such investors are part of the digital infrastructure that allows cryptocurrencies like Bitcoin to exist, and in any case they irrationally associate any use of it with huge jumps. Computer programmers and cryptographic experts – the kind of people who more or less consider something safe or trustworthy – actually rely on the blockchain. And business owners like this is a relatively easy way to implement to grab a forward-looking technology hype.
The cannabis industry, like many others, is recently seeing an explosion of companies claiming to implement blockchain in one way or another. But even veterans in the industry are perplexed about what it means exactly.
"Blockchain is still a very early technology.People who say they do it, I do not really know what they're doing or what's going on," says Rama Mayo, the co-founder of the cannabis agency Green Street, a company that received celebrity for cannabis for musicians such as Snoop and the game. "I have no idea what the applications are for this [in cannabis] it could be. "So why are the cannabis companies embracing the blockchain, and is it helping them find innovative ways to do something other than hypothesizing themselves?
Blockchain technology is based on ideas that go back to the 70s, when an informant named Ralph Merkle invented a way to record a series of transactions that shows that each subsequent transaction is related to the previous one. These lists, called Hash Trees or Merkle Trees, take up a very small amount of data, making it easy to store and transfer. And this information is public: anyone can consult this list and verify the transactions. As simple as it may seem, this is really the heart of the blockchain: just a safe and public way to track transactions.
To understand its use, imagine ordering something through a bidding site, which tracks all of its sales and shipments through blockchain. The site would record on the blockchain that you gave him $ 40 for a shirt Bart Simpson bootleg (very nice, good job). Then the site records that the seller has notified the payment, the seller records the delivery of the package to FedEx and FedEx records every phase of the shipment, from the reception in Los Angeles to a handling facility in New Jersey, and finally to your apartment in Brooklyn .
"Blockchain is essentially this distributed database that everyone has a copy of," says Gordon Haff, a technology evangelist at the software company Red Hat Inc., where he works with blockchain. "It is a distributed trust that is immutable."
"The only reason [blockchain] it exists that the parties involved do not completely trust each other ".
Nothing above is particularly difficult to do, or indeed it is not currently underway. But with blockchain, nobody involved in any part of that transaction can falsify the data or alter it in any way once it has been entered. This means that it is safe and faithful to a level of certainty that also satisfies people with computer security research graduates. This might seem useless now – are we not already tracking the shipment? But since every aspect of our life becomes potentially vulnerable to hacking or erasing, keeping your personal data safe in a way that is literally invulnerable – let's say your bank or health data, or your immigration status – it becomes more important than ever. It is also, crucially, transparent: anyone can independently verify everything that has been recorded in a blockchain.
Haff states that one of the main advantages of blockchain is that it allows secure registration of documents without the need for a reliable third party. "This is very common in the financial sectors, if you think about things like warranty agents or companies that provide settlements for payments," he explains. "The only reason they really exist is that the parties involved do not trust each other completely, so they have a third party that says" yes, you paid for it " . & # 39; The general idea of the blockchain industry is that you can eliminate those third parties, reduce costs and potentially speed up transactions. "
Perhaps the most famous application of the blockchain is in cryptocurrencies like Bitcoin, a digital coin invented in 2009 by an anonymous computer scientist (or group of scientists) who works under the name of Satoshi Nakamoto. It continued to be adopted around the world, regularly rising and ruining in value. Even today, in a historical crisis, the global bitcoin market is worth about 60 billion dollars, according to CoinMarketCap, at the time of printing.
Blockchain is so integral to cryptocurrencies that many people do not understand the difference between the two. Blockchain is the only way to provide a secure, public and reliable way to store transactions that are worth a huge amount of real money. Cryptocurrency would not work without it; if the cryptocurrencies are the train, blockchain is the binaries – the digital ledger that everyone trusts to keep track of their digital money.
But blockchain can track down more money. In theory, anything that can be inserted into a computer as a series of transactions can be traced through the blockchain. Credit card companies to immigration companies are trying to find ways to use blockchain, like many companies working in cannabis. But separating companies that are really doing something that benefits from the blockchain from those who simply use it as an order can be difficult.
Take Paragon, a pot startup that is supported to apply cannabis blockchain technology. He launched his blockchain-based cryptocurrency, Paragon Coin (PRG), and opened a 4,300-square-meter sunny coworking space in Los Angeles, ParagonSpace.
"The Blockchain is about [transparency]. And that's what we need in the cannabis space. "
It should "bring transparency to this sector – or really to the industry, be it food, drink, cannabis, vote", says CEO Jessica VerSteeg, formerly Incredible race competitor. "Really, this is about blockchain, and that's what we need in the cannabis space."
Given the close association of the blockchain to cryptocurrency, it is natural to assume that Paragon is using the blockchain to help other cannabis companies store or move money. This also has a sense of the real world, as companies working with cannabis often have difficulty finding banks to work with, since the pot is still illegal in the United States.
In fact, Paragon's white paper, the document explaining how they intend to use blockchain, encourages investors to consider the PRG as a digital currency with which they can purchase and sell physical marijuana and transfer money outside the traditional banking regulations. However, the company subsequently renounced these claims, saying that it exists primarily to facilitate transactions within its blockchain, and not as a digital currency. This discrepancy between the white paper and implementation is extremely common among blockchain companies. However, the initial offering of its cryptocurrency by Paragon in October 2017 generated sales of $ 12 million tokens for investors worldwide.
Challenge the logic that people would pay money in a system that exists only to solve obscure cryptographic problems. Investors should expect to get something from it. But what?
VerSteeg brings to the fore the lives of a PRG investor in a country where cannabis is not legal, which he told Versteeg that he believes "by donating crypto and exchanging crypt and being part of Paragon, will help the legalization of cannabis on another level ", VerSteeg says. "There are other people who think it's their donation to the cannabis industry.
"Perhaps this could be a catalyst that helps to legalize cannabis".
But nobody knows if the PRG can directly achieve one of these objectives. "Perhaps this could be a catalyst that helps to legalize cannabis," says VerSteeg. He later clarified by email that the PRG is not related to the value of marijuana. "It is not anchored in anything, our blockchain is tailor-made for the cannabis industry, is developed with the regulatory landscape and the needs of consumers in the industry."
If VerSteeg seems sorry to admit that people who have invested money in PRG have considered a monetary investment, he has good reasons. Under the Securities Act of 1934, it is illegal to sell anything that can be conceived as an investment without first registering with the SEC or requesting an exemption. Paragon did nothing, and when VerSteeg spoke Rolling Stone At the beginning of October 2018, Paragon ICO was investigated by the Securities and Exchange Committee as an illegal and unregulated security.
From that interview, Paragon settled with the SEC, allowing anyone who bought PRG to request a refund. The company must also pay a fine of $ 250,000. The PRG value peaked around $ 0.92 and is currently around $ 0.06. Paragon denies that the PRG was a security and consented to the penalty without admitting or denying its conclusions.
Paragon claims that its true goal in the use of blockchain is to create a safe system to monitor the growth and transport of cannabis, indicated in the sector as "traceability from seed to sale". Check with the strength of the blockchain that any voltage purchased was verified by the farmer, a laboratory, and did not leave the sight of any loader along the way. Development and implementation and the seed-to-salt system honed by industry are the target of many cannabis blockchain companies. Leafbuyer is also trying to develop a system like this. Even IBM has recommended blockchain for this task in a document prepared for British Columbia as Canada has prepared to legalize the pot. Any company that implements this system is achieving huge revenues in perpetuity, becoming in fact the international organization responsible for ensuring the quality of cannabis.
Many uses of the blockchain in the cannabis industry are thus, once the layers of hype and technobabble break away: very simple things done at any time in other sectors, but applied to weed, a wild capitalist west without functional infrastructures. Many companies are hoping to build that infrastructure by creating simple, necessary and extremely profitable systems.
In principle, these systems are ready to be implemented today, says Haff of Red Cap Inc. The seizure, he says, is "getting everyone in the ecosystem to accept the use of a common platform". It could be logical for everyone in the cannabis sector to adopt some common blockchain solutions, but which ones and who will decide to absent themselves the type of government mandate? Heavy lifting will not be carried out in the laboratory, but at the bargaining table. "I think technical problems can be solved," says Haff. "The hard part is people."
