The remarkable thing about governments is their persistence
in pursuing failed policies of ancient generations regardless of the harm
caused to present constituents. Fortunately a bit of imagination sidesteps the
lumbering posture of slow-moving and dim-witted dinosaurs.
A case in point is the US Federal Government’s refusal to
clarify banking regulations for States that legalized recreational or medical
use of marijuana. The consequences of inaction mean large amounts of cash
dangerously moving from point to point without a home in either the underground
or the above board economy. Fortunately
it is a relatively simple problem to solve for the most inexperienced payment
system architect, although tragically, the legal marijuana industry has yet to
employ one.
The basic ingredient for the payment solution is a large
building in a remote location with sufficient guards, gates, and guns to make
any armed attack against the facility (without the equivalent of an army
division) unsuccessful. Members of the industry, (let’s call it the Aging
Hippy’s Benevolent Fund or AHBF) then take their cash and deposit it there. The
depositor owns their cash; the industry owns and manages the facility. The AHBF hires the staff and equipment
necessary to account for funds from the moment members place cash on deposit to
the moment members remove it.
Once the funds have found a home, the AHBF creates a cyber
currency by issuing electronic cyber currency to their customers. Marijuana purchasers do not buy marijuana
directly they buy an amount of cyber currency which is the exact same as
purchasing a Bitcoin and therefore completely unambiguously legal. The consumer
payment can come from any electronic account including bank accounts. Once the consumer has their non-reputable
certificate of value securely placed on the electronic medium of their choice,
it is relatively simple to transfer that certificate to a marijuana provider
that in turn can transmit it the AHBF, which in turn, augments the provider’s
account accordingly.
If the industry just wanted to make a safe haven for their
cash, then the above solution provides the haven and allows customers to
purchase goods without using cash. However if the industry wants to profit from
the innovation then they will provide a secure application that allows purchasers
of the cyber currency to transmit the electronically stored value to any
electronic device; the AHBF will allow their currency to freely circulate. Consumers may redeem the issued currency the
next day or they may never redeem it. Thus issuance provides excess funds allowing
seamless operation of the AHBF facility without a membership fee. Likely they
will have to distribute the profits to members on a periodic cycle.
The AHBF may also want to provide a special large value
currency that allows the industry to move product in needed quantities to
themselves. To do this they can use the
method described above but allow for a special cases. Wampum provides a
solution (please see: http://paymentnetworks.blogspot.com/2014/10/concept-of-large-value-non-fiat-digital.html
for further details)
Next Blog: New
discussion on Fraud, its detection, and industry failure to do so.
