Late this summer, a former Miss Iowa and rapper The Game did what models and hip-hop stars apparently do these days: They launched a new cryptocurrency they hope will one day be used to buy and sell all things cannabis.

On Sept. 15, the founders of ParagonCoin—Jessica Versteeg, who was Miss Iowa in 2014, and her husband, Russian millionaire Egor Lavrov—began offering $100 million worth of ParagonCoins at $1 apiece. Even before the ICO (initial coin offering (or ICO, when a cryptocurrency is first put up for sale) the company had raised a cool $25 million from investors.

“There’s a lot of sound and fury, but it doesn’t signify as much for the cannabis industry as one might believe.”

John Downs, The Arcview Group

And why not? There are more than a few reasons cryptocurrency has been among the hottest topics this year—including Bitcoin’s climb to an all-time high of more than $5,800 in September. There is, it seems, a lot of money to be made in making digital money.

Not that ParagonCoin was the first to have the idea. It wasn’t even the first to target cannabis. Since Bitcoin came out of obscurity around 2010, at least eight cryptocurrencies have emerged with the aim of serving the cannabis economy, a market largely cut off from traditional banking.

Even with catchy headlines, it’s hard to keep track of them all. Remember the cryptocurrency that sponsoring Dennis Rodman’s trip to North Korea? That was PotCoin, which we’ve written about. There’s also CannabisCoin, GreenMed.io, MetalPay, HempCoin, DopeCoin, and WeedCoin.

It might seem a match made in heaven: cash-flush industry rejected by banks meets untraceable monetary system. Yet cryptocurrencies and cannabis have yet to hit it off. From seed to sale, business is still almost entirely done in cash. Despite attractive spokespeople and large dollar figures, the digital currencies have not caught fire with consumers.

“There’s a lot of sound and fury, but it doesn’t signify as much for the cannabis industry as one might believe if they just read the headlines,” said John Downs, director of business development at The Arcview Group, a cannabis consulting firm.

Is it even worth the fuss? Absolutely—at least for whoever cracks the market first, said Cory Flanigan, chief technology officer of Tokken, a mobile payment system that got its start in the cannabis industry. “If someone could gain market share, they’d be the only game in town and they’d be phenomenally successful.”

Why a Cannabis Cryptocurrency?

From a consumer standpoint, the advantages of using cryptocurrency versus cash appear marginal. One benefit, cryptocurrency proponents point out, is low fees—or none at all. But why bother buying cryptocurrency and fussing an app on your phone if you can find an ATM and throw down green? Perhaps that’s why consumers haven’t taken to it. Though cryptocurrency is reportedly accepted at some dispensaries, few people are actually using it.

“We have a bunch of shops that accept DopeCoin, but no one uses it,” says Adam Howell, creator of DopeCoin, which has been available since 2014. “I haven’t seen one actual dispensary or marijuana company use one of these marijuana cryptocurrencies to store their money or conduct daily business. It’s more of a gimmick at this point.”

“You’re looking at a tiny percentage of people who use this technology.”

Sumit Mehta, Mazakali

So what gives?

“Everyone’s here to grab cash,” Howell said.

Flanigan has another take. “It’s kind of flashy, kind of sexy,” he acknowledged, “but I can also appreciate the idea that it makes sense to build a network for cannabis businesses.”

Creating a coin and selling it to the public is a smart way to raise capital—something that’s notoriously difficult to do in the cannabis sector, Flanigan says.

ParagonCoin, for instance, plans to use its newfound cash to establish co-working spaces that can be paid for with its currency. (Paragon didn’t respond to multiple requests for comment, but you can read the company’s raison d’être in its own words in a white paper on the company’s website.)

“It’s a savvy move for fundraising. By building their own coin to sell to speculators, they can raise a bunch of money to achieve their vision,” Flanigan says. If the coins see appreciation that looks anything like Bitcoin’s, businesses will be able to cover rent—and many other things—for a very long time.

Still, does the market really need so many different kinds of canna-coin?

As with any upstart industry, some companies will try in earnest and fail because of regulations or economics. But Flanigan said it seems there’s another category in this industry: “Smoke and mirrors by someone trying to put up enough capital to appear convincing but they don’t really have the wherewithal to implement anything.” he said. “It’s tough to know upfront which is which.”

The Crypto- Conundrum

Worldwide, there are only 12 million users of cryptocurrency, says Sumit Mehta of the firm Mazakali, publisher of cannabis industry report Mazakali Green Paper. “Compared to numbers of bank accounts and global GDP, you’re looking at a tiny percentage of people who use this technology.”

It may be possible that cannabis cryptocurrencies have floundered not because the technology lacks appeal but simply because the technology is new to so many people.

Not that wider adoption would necessarily solve all of cryptocurrency’s problems. No matter how many consumers might adopt it, they would all face the same issue when converting digital coins into US dollars: questions from the taxman about the money’s origins. Users have to disclose their identity and the source of the funds in order to avoid running afoul of the law.

“How do you get around that?” Downs said. “There’s no way. It’s a fatal flaw.”

“To think a marijuana coin is going to pioneer getting people to use cryptocurrency is a mistake.”

Adam Howell, DopeCoin creator

All this makes for a conundrum the cannabis world has yet to crack: If the sector wants to be treated like any other legitimate industry, should cannabis really embrace currencies that allow business to take place in the shadows?

“By its definition it takes away the ability for the government to exercise monetary policy,” said Mehta. “I don’t know that it’s wise to embrace something that takes away the power of the government if we’re trying to play nice with it.”

As far as regulators go, there’s some ambivalence: Washington state has given its blessing to the use of cryptocurrencies in the state’s legal cannabis market. At the same time, lawmakers have also proposed banning it.

“It feels like the cryptocurrency solution is a little bit of fool’s gold in that you’re just going to draw additional regulatory scrutiny and have more eyeballs looking more closely at you,” Downs said.

Here’s another question to which not everyone agrees: If you want a cash alternative, why is it necessary to have a cannabis-specific cryptocurrency rather than all-purpose one like Bitcoin or Ethereum? That’s a head-scratcher for Mehta. “I don’t fully understand why that matters,” he said.

Howell said he believes cannabis and cryptocurrency have a bright future together, but that the future has yet to arrive. “Once we hit the tipping point where Bitcoin is mainstream, I can see altcoins following suit,” he said. “But to think a marijuana coin is going to pioneer getting people to use cryptocurrency is a mistake.”

Why Blockchain?

Though they are not the same thing, cryptocurrency is often mentioned in the same breath as blockchain. A blockchain is a secure, encrypted ledger—a verified trail of information that can be attached to anything, from money to a cannabis plant to a jar of mayonnaise.

IBM recently made a splash with news it’s eyeing blockchains as a way to track cannabis.

While blockchains are useful on their own for tracking any kind of transaction or the movement of products, they make an ideal foundation for cryptocurrencies. Indeed, every cryptocurrency is built upon a blockchain, meaning all are tracked by an immutable ledger. And instead of being hosted on a central server, as bank ledgers generally are, blockchains are hosted on numerous computers. The redundancy of the system means they’re not dependent on a central entity, and it makes them far less susceptible to hacking.

Any expert will agree: Blockchains are nearly certain to revolutionize the way products are tracked, regardless of the industry. The technology is as likely to follow coffee beans as cannabis buds. In what will likely be a highly regulated industry, it’s easy to see the applicability to cannabis: a secure trail of information—useful to both regulators and customers—that follows a plant from seed to sale.

It’s not just startups getting into the blockchain game. Tech giant IBM recently made a splash with news that it’s eyeing a place in the legal cannabis ecosystem as the producer of blockchains to track cannabis. The company reportedly submitted a proposal to the provincial government of British Columbia to create a blockchain-based tracking system.

What’s up With All the ICO’s?

For anyone thinking of investing in an ICO, consider this: With all the headlines and fast money that cryptocurrencies have been making, it’s not surprising to learn that a Nobel-prize winning economist believes they’re currently experiencing a bubble. And someone who really knows what they’re talking about when it comes to scams—the Wolf of Wall Street guy, Jordan Belfort—says digital currencies are “a massive scam of the highest order.”

On its website, Forbes includes this almost comical caveat with every story about cryptocurrencies:

Ed note: Investing in cryptocoins or tokens is highly speculative, and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.

For better or for worse, the SEC is also eyeing overseeing ICOs, which could change things dramatically.

Will cryptocurrencies be the banking solution the cannabis industry is looking for? Maybe one day. But with so many questions—and other emerging alternatives for cannabis banking—that day may never come.

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