PotCoin

PotCoin (code: POT^[2]) is a peer-to-peer cryptocurrency which exists with the aim of becoming the standard form of payment for the legalized cannabis industry.^[2] PotCoin is an open source software project released under the MIT/X11 license and was technically nearly identical to Litecoin until August 23, 2015, when Potcoin changed to POSV similar to Reddcoin. PotCoin is not managed by any central authority and provides a decentralised solution for the transfer of value. As of August 2014, PotCoin has received mainstream media coverage from agencies such as Fox Business,^[3] Vice^[4] and TechCrunch.^[5]

History

PotCoin was released on January 21, 2014, via GitHub by three entrepreneurs from Montreal, Canada, who hoped to create a cryptocurrency that would be adopted by the legal cannabis industry across the world.^[2] A week after launch, PotCoin had enough interest to merit multiple mining pools and on January 30, was added to a newly launched cryptocurrency exchange named Cryptorush allowing trading between Bitcoin and PotCoin.^[6] During February and March 2014, PotCoin gained mainstream media attention due to the large community and expanding development team. On February 17, Chronic Star Medical, a supplier of cannabis foods, was the first merchant to announce they would be accepting PotCoin as a form of payment.^[7] By the end of March, PotCoin was added to three cryptocurrency exchanges that account for the largest trade volume to this date^[8] and the development team had announced that they had secured their first seed-round investment.^[9]

On April 9, 2014, the PotCoin development team revealed their identities for the first time when co-founders and developers Joel Yaffe and Nick Iversen delivered a talk about PotCoin at the New York Cryptocurrency Convention.^[10] The team also announced that they would be present in Denver on April 20 for the 420 counterculture holiday. On April 19, 2014, PotCoin witnessed a dramatic rise in price, taking its market capitalization over 1 million USD^[11] for the first time, fuelled by excitement around the April 20th counterculture holiday. On April 20, PotCoin experienced its first major crash with the value halving in one day due to speculation by investors.

The market capitalisation then sunk to a low of $244,000 on May 22, 2014. On May 27, PotCoin ATMs were made available for use in two River Rock Wellness dispensaries in Colorado which was regarded as a major milestone and helped overturn the downtrend in price leading to an all-time high market capitalization of $1,860,000 on July 1. Additional details are available on www.Potcoin.com^[11]

Early 2015 showed dark times for Potcoin. The original development team broke apart and left for various reasons. At this point the community tried to rally Potcoin away from death as a community-driven coin. PotLabs, a group of people who had helped to develop many things for Potcoin in the early years, took charge of the push to keep Potcoin alive and moving forward.

On August 23, 2015, Potlabs released an update for Potcoin, one that was very anticipated. With this Potcoin began its move to the POSV algorithm. Over the next few weeks there were some issues with the network getting up to speed. Many cryptocurrency exchanges also froze their Potcoin wallets waiting to see what would happen. Within a few weeks the network began to get up to speed and when exchanges were notified they began to unfreeze their wallets allowing normal transactions to resume.

Overview and specification

Much like Bitcoin, PotCoin is based on a public ledger known as a blockchain.^[12] PotCoin was originally a fork of Litecoin-QT but with key differences including a shorter block generation time, a quicker halving schedule and an increased maximum number of coins.^[13] Before PotCoin was publicly released, 55 blocks were mined for checkpoints. The initial block reward (the number of coins rewarded for solving a block whilst mining) was set a 420 PotCoins but on June 1, 2014, the block reward was halved and currently stands at 210 PotCoins.^[14] Mining can be performed by hardware including CPUs, GPUs and more commonly scrypt ASICs. On August 23, Potcoin changed mining algorithms from Scrypt to POSV, a proof of stake algorithm designed to reward not only the ownership of coins but also transactions.

Usage

Wallets

A PotCoin wallet is used to store, send and receive PotCoin and is the equivalent of a physical wallet for transactions. Addresses are generated with a private key which can be used to redeem wallet contents and a public key which must be used by the payer to send PotCoins to the payee's wallet. The public key is a unique identifier of 26–34 alphanumeric characters and is commonly known as one's address. PotCoin wallets can be desktop software or mobile application or can be hosted on the Internet.

PotCoin-Qt is an open-source PotCoin client that can be used as a desktop client for regular payments or as a server utility for merchants and other payment services. The PotCoin-Qt client is a fork of Litecoin-Qt and binaries are available for Windows, Mac and Linux. Electrum-Pot is an open-source wallet that can be used as an alternative to PotCoin-Qt. The Electrum wallet differs in that a remote server is used and so an end-user does not need to download the blockchain. A single wallet can also be used on numerous devices by using a secret seed.

There are numerous online services dedicated to hosting PotCoin wallets allowing users to store PotCoins remotely and access through a smartphone. Many online services host wallets on their servers enabling users to deposit and withdraw a balance from their website.

The use of physical items to store a private key is known as cold storage with a common example being paper wallets.^[15] To redeem and send PotCoins held in cold storage, the private key must be imported into and electronic wallet.

Buying and selling

PotCoin can be traded online at numerous digital currency exchanges for Bitcoin, Litecoin, Dogecoin and Darkcoin. As of November 8, 2014, Cryptsy accounts for 91.7% of the trading volume, Bittrex 8.12% and seven other exchanges contributing towards the other 0.18% of trading volume.^[16] There are also sites that facilitate private and local trades with LocalPot being a notable example.^[17]

Spending

As of November 8, 2014, there are 44 merchants accepting PotCoin as a payment method for products or services.^[18]

Charitable fundraising

Snoop Youth Football League

On February 16, 2014, the PotCoin community paid $500 to Snoop Youth Football League, a charity set up by Snoop Dogg. The Snoop Youth Football League is 501c3 non-profit organization that gives inner-city children between ages 5 and 13 the chance to participate in youth football and cheer.^[19] It took the community two days to raise the required 55,000 PotCoins.^[20] A video message was posted by Snoop Dogg thanking Nick Iverson, a PotCoin developer, for the contribution and bonus prizes were sent to a number of community members.^[21]

Cannabis Health Service

On June 6, 2014, 18500 PotCoins were paid to the Cannabis Health Service, an organisation based in the UK, after a community on PotFunder.^[22] The Cannabis Health Service was founded by Colin Davies, a prominent activist with the aim of helping patients who believe, or have found, cannabis to be beneficial for the treatment of their illnesses.^[23]

FRAXA Research Foundation

On July 8, 2014, a check for US$2000 was presented to the FRAXA Research Foundation after a community fund-raising initiative through PotFunder.^[24] The fund-raising campaign was pioneered by PotCoin team member Russell Thomas who has a son that suffers from Fragile X syndrome (a form of mental retardation and the leading known cause of autism^[25]). FRAXA is a 501c3 non-profit organization whose mission is to find effective treatments and ultimately a cure for Fragile X.^[26]

Healthy Hopes

On August 2, 2014, 32578 PotCoins were paid to Healthy Hopes after a campaign on PotFunder.^[27] Healthy Hopes are a charity whose mission is to provide safe access to medical cannabis to seriously and chronically ill patients who have no hopes of legally obtaining the medicine they need where they live.^[28]

References