Bitcoin has come a long way from the early days of the Silk Road. I recently went to Boulder, Colorado and documented one of the first ever legal Bitcoin transaction buying cannabis, showing that Bitcoin’s Silk Road use cases can live on outside the confines of the darknet.
The cannabis industry has been booming in Colorado ever since its legalization in January 2014, with dispensaries popping up just about everywhere you look. Recently, I made a visit to one of those dispensaries in Boulder, a small city tucked away in the foothills of the Rocky Mountains just 45 minutes outside of Denver. I didn’t visit just any old dispensary, though. This pot shop, called Helping Hands Herbals, has set themselves apart from the hundreds of others in the state by enabling customers to buy marijuana using Bitcoin.
People paying for cannabis with Bitcoin is hardly a new phenomenon. You see, Bitcoin earned a reputation for being “criminal money” in its earlier years in large part because it was used in the Silk Road, a drug marketplace on the darknet that was founded in February of 2011. Silk Road users adopted Bitcoin as a medium of exchange because it gave them the freedom to operate outside the realms of the traditional banking systems, enabling safe and secure transactions that weren’t possible before.
In that regard, not so much has changed. With federal laws still restricting retailer access to bank accounts, Bitcoin and other cryptocurrencies present an attractive alternative to cash. As I found out at Helping Hands Herbals, paying with cryptocurrencies is pretty easy too. I simply scanned a QR code, typed in the payment amount, confirmed the transaction, and I was good to go. No third parties, no banks, and no credit card companies charging 2-4% fees to the retailer.
8 years and change since Bitcoin became the currency of the Silk Road, I made the first legal Bitcoin transaction to buy weed ever on record. Progress.
After making the purchase, I sat down with shop co-owner, Brooke (@bitcoinmom), and we discussed her motivation for accepting cryptocurrencies at the dispensary.
She starts by explaining some of the inherent dangers of running a cash-only business, which brings with it extra operational costs such as armed guards and high-end safes for storage. Simply put, digital currencies are a lot easier (and cheaper) to secure than cash. As such, Brooke thinks that it’s something more cannabis businesses should consider:
“Until the banking laws change and a lot of these cannabis businesses can get bank accounts, crypto is the perfect solution.”
Still, there are some obvious reasons why other dispensaries have been slow to come around. For one thing, it’s only a very small percentage of the population that owns cryptocurrencies at this point, meaning that most customers are stuck paying with cash regardless of whether or not the shop has a crypto payment option.
Perhaps even more difficult to overcome is the fact that most present-day cryptocurrency holders see crypto as an investment and are reluctant to part ways with their holdings for an everyday transaction. Fortunately, Brooke and her husband have a couple of clever solutions to this problem which should incentivize more customers to start paying with crypto at Helping Hands Herbals.
One solution is to encourage customers to use the Cash App to pay with Bitcoin by offering them a 10% discount if they do. This presents a win-win scenario, as the shop benefits from the added security and relative ease-of-use of storing the crypto, while the customer saves money when they buy bud.
The solution I liked the most, though, was something which should make it far easier for any Bitcoin enthusiast to part with a portion of their portfolio. As Brooke explains:
“If you come to our store and spend your Bitcoin, we’ll mark the price of Bitcoin when you paid. Then, if Bitcoin goes down in value, good for you… you got more bang for your Bitcoin. But if Bitcoin goes up in value, when you come back, we’ll split the difference with you and give you back half of the profits as store credit.”
For example, somebody who spends $100 of BTC at the dispensary when BTC is worth $5,000 would get a $50 credit if they come back when BTC is worth $10,000.
With a deal like that, Helping Hands Herbals makes a strong claim to being the best dispensary that accepts Bitcoin (and other cryptocurrencies) not just in Colorado, but across the entire globe.
Based on Bitcoin’s recent price surge, I’m looking forward to going back soon to take advantage of some of that store credit.
Want to show your affiliation to the cult of Bitcoin without being obnoxious? We’ve got low-key Bitcoin merchandise available for sale now, including the Bitcoin Moon tee worn by Kurt when he visited Helping Hands Herbals. Take a look!