There is an opinion that the legalization of marijuana and the growing interest of investors in cannabis projects has caused an outflow of investments from cryptocurrencies.
The fact is that cryptocurrencies and cannabis actually attract the same kind of investors and traders. As a rule, these are young people from the generation of millennials, not burdened by a large fortune, but ready to take risks. They buy up the shares of Tesla, invest in cryptocurrencies and are interested in projects related to the legalization of cannabis — this is how a typical 25-year-old millennial investor looks. While the cryptocurrency market was in turmoil and the Bitcoin price was falling, many of those who had used to invest in cryptocurrencies or organized ICOs began to invest in projects producing fertilizers, hydroponics, growboxes and all kinds of vitamins for cannabis cultivation.
A bit of history
It must be said, the disputes about cannabis have been on for almost half a century. At first, cannabis was widely used in industry and medicine, until marijuana was forbidden in the US after a massive anti-cannabis campaign in the thirties. In 1961, the UN signed a convention on narcotics. Since then, marijuana has been considered a drug and banned in most countries of the world.
Several years ago, the debate over cannabis intensified again. The first country to completely legalize the use of marihuana was Uruguay. In 2016, the use of cannabis for medical purposes was authorized in more than 25 states of America. In early 2018, marijuana was legalized in Canada. Now the use of marijuana is partially permitted in the Netherlands, the Czech Republic, Georgia, Spain, Portugal, North Korea and some US states.
Cryptocurrencies and cannabis
The current trend is that the governments of most countries of the world mitigate the ban on marijuana. For the young and ambitious millennials it is a chance to jump on the “cannabis” train and take up a new niche. Although investing in cannabis is still quite risky because of its illegal status, it does not stop them.
In my opinion, there is no contradiction or confrontation between the market of cryptocurrencies and marijuana. They have too much in common, ranging from common participants and ending with the uncertain legal status. Moreover, the market of cryptocurrencies was initially closely associated with illegal and semi-legal business. Suffice it to say that the popularization of Bitcoin started from the Silk Road site, where, among other things, drugs were sold. Although the project was closed in 2013, cannabis still attracts cryptoenthusiasts, as evidenced by the large number of blockchain startups with names that speak volumes like PotCoin, CannabisCoin and others.
If now there is a drop in the investors’ interest in cryptocurrencies, this is not related to the legalization of cannabis. Rather, it is the result of a general decline on the cryptocurrency market. It can be expected that some adventurers, who a year ago tried to earn easy money on ICOs or cryptocurrency trade, will now be engaged in projects related to the growing of cannabis. However, the decrease of hype and the number of scammers and investors aimed at obtaining rapid excess profit on the cryptocurrency market can benefit companies with real developments. In the end, any development takes time, and many projects that are aimed at creating a product will begin to bring profit to investors only after two or three years. This is normal for the venture capital market, but absolutely unacceptable for those who expect to receive instant superprofit after buying some cryptocurrency or altcoins.
I very much hope that due to the legalization of marijuana the cryptocurrency market will be at least a little safer from scam and swindlers.
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What does the legalisation of cannabis mean for the cryptocurrency market? was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.