Why Cryptocurrencies Backed in Cannabis Are Destined for Failure

Currencies can be backed by anything that has value. The earliest forms of currency were livestock and cowrie shells (the longest used currency in history), which pre-date metal coins. The first metal coinage was made in China around 1,000 B.C, and was made primary from base metals (like copper or bronze) rather than precious metals (like silver or gold). In another 500 years, coins evolved to be made from silver and other precious metals. From there, the concept of money evolved further from things with actual value to things which had intangible value, and that was the birth of fiat currency, a currency backed by the faith that governments will make good on their debts.

That formerly unshakable faith in the governments of the world is quickly crumbling for many around the globe, and those skeptics of government fiat are turning to new currencies, backed by things much harder to corrupt than governments, data. Bitcoin was the first cryptocurrency to be backed by the blockchain, an unalterable, encrypted yet transparent digital ledger. Due to the "mathematical difficulty of tampering the unique IDs encrypted into each block in the chain makes Blockchain immune to fraud."

Stop for a moment and take that in. We now have a currency that is immune to fraud, even livestock wasn't immune to fraud (take the example of cattle rustlers). You may be wondering, if a blockchain is just a collection of encrypted data, where does the value come from? If you are wondering that, go ask the RIAA or the MPAA how valuable data is, and remember that so-called pirated data was so valuable that it got entire websites shuttered. Not only does the blockchain provide a fraud-proof source of currency, it also is highly valuable in today's data-driven world, and likely to only become more valuable over time.

But not all cryptocurrencies are created equal, not all are supported by a blockchain, and some are backed by less conventional commodities. For example, take Cannabis Coin, a cryptocurrency backed by "pharmaceutical grade cannabis."

While it may sound like a great idea at first, since there is a lot of money to be made in the thriving cannabis industry, this makes about as much sense as backing a currency in wheat right before prohibition was repealed. The cost of cannabis is artificially inflated because of the black market, once it becomes legal the price will plummet, as will the value of any currency backed by it. Historically, there are reasons why currencies are most often things like metal or shells that withstand the test of time, rather than things that were perishable or consumable. Think about it. Cakecoin is a lie, and a terrible idea.