I started dabbling in cryptocurrencies back in September 2020, after years of my mate talking about it and raving about how much money he was earning.
Within a few months, I got to see the huge spike, starting in January 2021, as we entered a ridiculous bull market, watching Ethereum rise from the $300 mark I had invested at, all the way past $4,000.
I can only dream a bear market brings it down to $300 again so I can invest every penny I own, but I’m pretty sure we won’t see that price again, with early predictions showing that Ethereum will finish the year around $4,500 (currently at $2,500 at time of writing).
But what does any of this have to do with the CBD industry? Well it could heavily impact the CBD industry, so I’ll go into details about different aspects below.
Accepting Cryptocurrency Payments
I have spoken to a few CBD brands recently who are adding Coinbase payments onto their website, so they can receive payments via the main cryptocurrencies, such as Bitcoin, Ethereum and Litecoin.
Why might they want to do this? Well, while the banks are offering around 0.1% interest rates (no wonder the end of the current financial systems look nearer than ever), a payment you receive in Bitcoin may rise in value, so the actual amount you ‘cash out’ could be higher than the selling value.
This is of course if you ‘cash out’ at the right time, but you could leave it to ‘HODL’ (Hold On for Dear Life).
Payment Processing Systems
I have covered this in great detail in my article on CBD payment gateway solutions, where I discuss PayPal’s hard stance on CBD sales via their system, along with many other payment processing systems, which see CBD as a risky asset to be sold.
For this reason, many CBD brands have contacted me in the past looking for recommendations around payment gateway solutions that allow for CBD sales.
You have to remember that the payment processing companies could get into significant trouble if a CBD brand had illegal levels of THC, which could lead to them receiving a large penalty (along with the brand itself).
As it is a controlled substance, many processing platforms simply don’t want to be mentioned in a law case and are avoiding cannabis as a whole.
Understanding The Tax Aspect
This is where it can get a little messy. In the UK, you can earn up to £12,000 in profit from cryptocurrency before having to pay tax, counted as capital gains. I’ve been told this is similar to the USA, but I’d recommend looking into specific details.
But if you’re a company selling CBD oil, this leads to a lot more questions and a lot of head scratching for your accountant, especially if they’re not experienced in cryptocurrency or don’t know the systems their setup on.
But if you’re to convert it back to your usual fiat currency, you will then face a fee (this is significantly less than paying gas fees, but something you do need to remember).
Fears Around Hacks
Bank accounts can be hacked, let’s get that straight. You are however insured up to £85,000 for the money you have in your bank account, so if someone fraudulently takes it, you should see it all return.
But then comes the question what happens if money is taken from your cryptocurrency account. This has happened to people I know, whether via a crypto wallet, on a DEX or a CEX. Not once have they seen the money again, even with CEX’s refusing to help in any shape or form.
This means that, while you may be getting great interest rates, you’re also taking a bigger risk with your finances. Of course, without risk comes no reward, but it is certainly something to consider.
Make sure to write down (probably in multiple places) your logins and, most importantly, your seed phase. If you lose it, you might never be able to log back in and get your money, this has happened to many people before and it’s heart breaking to hear.
CBD Specific Cryptocurrencies
I started researching whether there were currencies specifically setup for the CBD industry, excitedly hoping to find out about some amazing ones that are in place that I could invest in.
Unfortunately, half the ones I could find around cannabis seemed to be abandoned at best, or fraudulent at worst.
I’m sure there will eventually be a weed or CBD based cryptocurrency, specifically setup to be used on CBD websites, complete with a payment gateway solution. To be honest, I’d love to set this up myself, but it sounds like a huge time commitment and not something I can setup in the near future.
One of the most well known is POT (Potcoin), which was launched back in January 2014. It offered a solution for people trying to buy marijuana, with the trades taking place directly between people, avoiding the bank aspect.
Each Pot coin is worth $0.02 at time of writing, with a Market Cap of $4,560,143, making it 1,225th on the list on Coingecko. It reached its ATH (all time high) in December 2017, however it dropped back down and remained relatively quiet until the bull run from January 2021. It’s 132% up on last year so far, however it potentially reached it’s year peak on the 18th April.