The number of questions about this one is going off the charts, so I’ll look into it for you — even though it’s related to not one but two bubblicious sectors that are designed for the manipulation of investors, so I might get a little grumpy. Bear with me.

Here’s a little tantalizer from the top of the ad…

“Right now, we are living through not one… but TWO of the most profitable market explosions of all time.

“Cryptocurrency… and marijuana.”

That’s what has Gumshoe readers all hot and bothered about the latest pitch from Matthew Carr for his VIPER Alert service — the idea that somehow the ridiculous trading spikes of marijuana stocks and cryptocurrency prices could be combined into one super-duper extra-huge gain.

And, sez Carr, he’ll “guarantee” you a 2,500% gain on this excitement (don’t get too excited… more on that in a minute). You really couldn’t come up with a better story to lure an investor — two hot trends that taste great together!

So you can probably guess that I’m planning to be a bit skeptical here, as usual. Here’s some more of Carr’s ad, to give you a taste of what we’re being sold:

“As you probably know, California just fully legalized recreational pot use… And this market is projected to surge six times bigger than Colorado’s. Then there’s the Canadian and European markets setting up to be 8 1/2 times larger…

“So you’re going to see pot stocks rocket even higher….

“The main commodities exchanges both launched bitcoin futures recently… the NYSE just applied to list not one but TWO bitcoin ETFs… and Goldman Sachs is setting up their own crypto trading desk.

“It’s clear cryptos will also have a mammoth year in 2018.

“But instead of trying to predict which market will be hotter… crypto or pot…

“I’ve discovered a way to supercharge your returns by playing BOTH at the same time.”

He calls it a “Crypto Pot Trade” and, naturally, the promise of gains is extraordinary… more from Carr:

“The Crypto Pot trade I’ve discovered could alone hand you up to $1.1 MILLION.

“And best of all, with this much potential, you could get started with a small stake and still transform your golden years.

“In fact, I’m going to guarantee the chance of at least 2,500% in the coming year on my Crypto Pot recommendation.”

Just to check the math for you there, to get to $1.1 million you’d need to start with a pretty large investment — even if he’s right about the wildly aggressive 2,500% gains he’s “guaranteeing,” you’d have to start with $40,000 to get to $1 million. If you have enough to bet $40,000 on something this wildly speculative, which you know in your heart has a really strong chance of falling to near zero overnight, then you’re not the kind of person who probably believes ridiculous predictions from investment newsletters. Even pricey ones, like this VIPER Alert (currently $1,597).

And yes, in case you’re wondering, that “guarantee” is easily offered and easily backed up… but it still doesn’t really mean anything. They back up that “guarantee” that the VIPER Alert will present the opportunity for 2,500% returns this year by saying that if they don’t get to that, they’ll give you your money back.

Ha! Just kidding.

Of course, they’re not going to give you your money back if they’re wrong, and they won’t give you a 2,500% return if they’re wrong, either, or make good on your losses if it turned out to be a terrible idea. They will instead give you another year for free — Carr says this puts him “on the hook” for $1 million in free subscriptions if he’s wrong, which somehow is supposed to make us believe he’s really personally committed to this idea and that he thinks this “guarantee” means something… but we know, of course, that offering a free year of an electronic newsletter costs them exactly nothing in marginal costs, and if they actually mail you a paper copy it probably costs them about $20 a year.

This is what I like to call the, “I guarantee you’ll like it, and if you don’t like it I’ll give you twice as much!” promise. Don’t like that yogurt flavor? Here, have another! It’s the same, so you probably still don’t like it… but it’s twice as much!

To be fair, they’ve gone a step further and said that if you still don’t like it, your pro-rated subscription fee can be transferred over to another Oxford Club newsletter… so you could get another flavor of Oxford-ness if you prefer. But, again, the sale is done and you’ve paid for their advice and their “guarantee” really means “I guarantee that The Oxford Club is going to keep your money.” As we’ve seen in lots and lots of newsletter promos over the years, “guarantee” may cause you to think of the happy little word, “refund” … but they don’t mean the same thing.

And, of course, they have “only 250 slots” available to send in your $1,597 fee — so hurry!

Man, I’m feeling kinda snarky today. Maybe that’s because so many folks asked about this “Crypto Pot” idea, and because it seems like such a transparent money grab. There is, of course, no real connection between “marijuana” and the possible advantages of a distributed ledger… other than the fact that bitcoin has been used since its inception as a way to semi-anonymously buy drugs online. This is just a “there have been two bubbles in the recent past with crypto stocks and marijuana stocks… wouldn’t it be fun if we could smush them together and inflate a super-crazy bubble?!”

So if you want to dabble in this kind of magical thinking, go right ahead — you’re a grown-up, and sometimes people do win the lottery… but please don’t think of it as the real retirement savings you need to be making, or that you can’t save enough for retirement so you have to gamble on finding the next wild bubble stock. Keep in mind that just $250 a month for 25 years, thanks to compound interest, turns into $200,000 in future spending power (that’s at 7% annual returns, roughly the 1950-2016 average after you take out inflation)… so if you’re relatively young and you waste too many of those “$250 a month” investments on wild speculations, you get further and further away from long-term returns that you need for retirement.

If you can’t afford to be investing substantially more than $3,000 a year in saving for retirement, by the way, you should probably run, don’t walk, away from every investment newsletter, especially these expensive “exclusive” or “upgrade” services that cost a lot more than what you might spend on your local newspaper or on a few books or magazines. Try not to spend more than 1-2% of your investable savings on research and advice and investment newsletters and management fees — most folks can’t afford that indulgence, and spending too much for advice is just asking for low returns, whether it’s a foolishly high expense ratio on your mutual fund or a $1,500 newsletter you’re using to inspire the management of a $20,000 portfolio.

Sorry, I have a tendency to lecture when I’m feeling grumpy. I should get back on track… you do still want to know the name of this magical “Crypto Pot” recommendation, yes?

Here are some more clues:

“Due to one event coming on July 1, my research shows the crypto and pot markets are going to collide… and we could see Crypto Pot gains hit the THOUSAND or even TEN-THOUSAND percent mark over time.

“It will soon be all over the news.

“This single Crypto Pot investment combines these two markets…

“Turbocharging their profit potential.”

More details from the ad…

“In short, the Crypto Pot investment I’m talking about is a cryptocurrency…

“One that’s specifically designed to solve a HUGE problem specific to the marijuana industry.

“I’m talking about banking.

“This industry desperately needs financial services.

“Checking accounts… payment processing… currency exchanges.

“Because here’s the thing.

“While some states and municipalities have legalized weed, there are still strict regulations about pot at the federal level.

“And that often means pot companies can’t use banks to handle their finances – or even accept credit card payments.”

And you can already guess what’s coming next…

“BUT a new Crypto Pot currency is set to solve all of that.

“As Investopedia notes, ‘Cryptocurrencies are making it easy for people in the marijuana business… to carry out transactions.'”

“… now that the industry is really starting to take root around the world…

“A Single, Dominant Currency for the GLOBAL Marijuana Industry

“Crypto Pot is positioned to be the “reserve currency” for everything pot-related all over the world. The team wants ‘agricultural goods and services around the world to get priced using the crypto.'”

Well, geez, that means it’s gonna work! My plan should work, too — I “want” all transactions around the world to be made in GumshoeCoin, which I have not yet developed but have a “white paper” for on a post-it note somewhere on my desk, and I will work on it as soon as you send me $100 million (Dear SEC: Just kidding!)

Isn’t it great how different stores use different money? I love how when I go to the grocery store, I use my FruitCoin… and how when I go to the doctor I pay in MedCoin, and that I get to use GasCoin when I fill up at the pumps. This is way better than when we used to use one currency for everything, right?

Said no one ever.

So let’s be clear: There are at least a half-dozen marijuana-themed cryptocurrencies… but there is no reason to use “Potcoin” or “Hempcoin” or whatever the hell else someone dreams up to be the next currency. If the blockchain works to create a viable transactional cryptocurrency that can handle retail sales to the satisfaction of buyers and sellers (which itself seems to be a bit of a stretch, still), you don’t have to have a different currency for each sector of the economy. If a marijuana retailer needs to use something other than credit cards because banks don’t like to deal with illegal businesses, they don’t have to use hempcoin or potcoin if, say, bitcoin or ethereum or whatever future crypto could work just as well or better and possibly also be a viable currency that makes sense for the non-marijuana parts of your existence.

Yes, perhaps there’s a future real application for blockchain — but so far it still stinks as a transaction system on any measure of real-world convenience, cost, or service, and any blockchain-based currency that does end up being useful for transactions, or as a real alternative to the established bank networks, would be fine for everything. If there’s one sector of global commerce that lends itself to “winner take all” business plans, it’s currencies — and having 1,000 different upstart currencies does not mean that any of them will end up being used. Save your blockchain for something it’s good at, whenever you find that, instead of trying to identify niche applications that all do essentially the same thing (facilitate payments outside of the banking system).

Of course, that doesn’t mean this dumb idea won’t go up 10,000%.

Certainly lots of other dumb things have appreciated remarkably on waves of speculative trading, and sometimes some of them turn into real business or real investments in the end… and, well, I hesitate to admit this, but sometimes I’m also just wrong and totally misunderstand the appeal of a business plan or investment. That’s the beauty of what Warren Buffett calls the “no called strikes” advantage: You don’t get charged for avoiding investments you don’t like or understand.

But anyway, what you wanted was the name of the actual coin, right? Thinkolator sez, after reviewing all the clues dropped in the ad, that Carr is teasing HempCoin (chosen abbreviation: THC), which seems to be one of the four or five most talked-about marijuana cryptocurrencies (the others I’ve noticed are PotCoin, CannabisCoin, Paragon Coin, and CannaCoin). HempCoin has been around for about four years, so it’s one of the older cryptocurrencies, and it is self-identifying as focused on providing options for farmers and the supply chain instead of retail purchasers… though that seems to be in flux as well, since their website also says they “aim to offer” HempPAY options for retail customers for card-based and online payments.

Like most other cryptocurrencies, HempCoin appears to be traded on cryptocurrency exchanges, but not to actually be in use — the payment services they aim to facilitate seem to be “in development” and “coming very soon.” So perhaps Carr is basing his “must buy now” urgency on the fact that they could have news fairly soon, I have no idea. The development “roadmap” on their website is not currently available (it’s apparently being revised), but they have been tweeting about their coming developments and implying some progress “soon.”

Here’s more from the ad:

“Eventually, everything in the industry could be priced in Crypto Pot.

“Seeds… grow lights… shipping fees… insurance… and yes, retail marijuana as well.

“It has the potential to take over the entirety of the global marijuana industry.

“The pot business is projected to reach $63.5 billion in the near future…

“So even if this Crypto Pot currency is used for just 20% of that…

“You could see 115,300% gains.”

Wait, what? Just from participating in the blockchain network that processes 20% of the payments, you get massive gains? How?

Last quarter, Mastercard processed $1.4 trillion in payments and only earned $3.6 billion in revenue (mostly fees on those payments), translating to $1.5 billion in income. That’s 0.1% of transaction volume turning into profit for what is arguably one of the most efficient companies in the history of the world.

Presumably this HempCoin or whatever would take less of a cut than that, since cryptocurrencies are supposed to get rid of the middlemen and reduce costs, but even if we assume that the overall “income” is the same as on the Mastercard network, that HempCoin network would someday process 20% of this theoretical $63.5 billion in future marijuana transactions, which would be $12.7 billion… and 0.1% is about $12.7 million in “fees” that are somehow, theoretically, shared across this network.

That’s how cryptocurrencies are supposed to work, right? Instead of paying a fee to a central body, like the Mastercard banking network, which shares its fees among the various members who make it work and takes a little profit off the top… the actual peer participants who verify those blockchain transactions (that’s what “mining” is) are compensated by the creation of new “mined” tokens.

So what you’re buying is a piece of a token that will be comparable to the tokens that future facilitators of the network (miners) earn as participants, so you’re effectively betting on how much those future rewards for miners will be worth. Assuming, of course, that it’s a rational system and that it isn’t faced with technical problems or fraud. This is all just generic “crypto” thinking on my part, I have not read the white papers or details about HempCoin, but I assume it’s designed to be more or less standard in structure.

And, of course, the denominator of this whole thing makes a big difference in the daydream numbers you come up with — lots of people are making wild guesses about the eventual size of the legal marijuana market in the US, mostly the level of recreational marijuana sales (since that’s expected to be the huge volume driver), and most of the estimates I’ve seen put the 2019 estimated US marijuana sales at something in the $15-20 billion neighborhood, though the number is heavily reliant on guesses about California. 0.1% of 20% of that is $3.4 million, a lot smaller than $12.7 million… though both numbers, of course, are made up out of whole cloth and presume a massive market share for a product that doesn’t yet exist.

I don’t know if the number of HempCoin tokens to be released in the future is fixed, or what these “Masternodes” are that they say will be the foundation of the network, but according to CoinMarketcap.com the total value of all the current HempCoins is about $27 million (it was about $150 million back in January, so yes, this one has experienced the same boom and bust spike as almost every other cryptocurrency). So if Carr is right and this HempCoin somehow takes a huge share of payment processing in the legal marijuana business, the “market cap” of the coin can probably be considered rational. Those are big “if’s,” in my book.

All of my skepticism is not meant to imply that banking for the marijuana sector is not a problem — it is. That’s why most marijuana dispensaries do most of their business in cash, just like illegal drug dealers do, though they might well have an ATM on the counter to let that process happen without people having to actually walk the streets with a lot of cash.

And things are gradually easing and changing, it appears, even with the continued pressure from Attorney General Sessions — states presumably want rational banking options for the legal marijuana businesses that operate in their state, if only because it makes it easier to track the taxes they want to collect, and there are lots of stories of retail businesses doing work-arounds to accept credit cards, as well as a growing number of local banks that are willing to provide some banking services to marijuana businesses. There are also already plenty of non-cryptocurrency payment options being pushed forward in the retail marijuana space, including PayQwick out West and probably others being hatched as we speak.

It seems to me, though, that marijuana’s success will be the eventual undoing of all the specialty services built up around marijuana’s “semi-legal” status — if we go to full legalization eventually, and the banking system happily starts to deal with marijuana companies, there immediately becomes no reason for them to be thought of as any different from any other retail or supply chain business. As an aside, that’s a potential future problem for the only “pot” stock I own, too — Innovative Industrial Properties (IIPR) is a REIT that uses buildings to provide financial flexibility to medical marijuana growers: Those companies can’t get bank loans or go public in the US, so they do ludicrously expensive sale/leaseback deals with IIPR, which enjoys rents that are double what a comparable building would earn from a different industrial tenant. If conventional financing becomes more available to marijuana companies, I expect those kinds of deals will dry up in the future.

More blather? You got it…

Carr says… “And as adoption of this cryptocurrency continues to skyrocket… its value will go through the roof.”

Which is similar to what lots of people say about lots of different currencies, and it doesn’t mean anything — particularly since “as adoption continues to skyrocket” is a pretty ambitious prognostication to make for a cryptocurrency that, like almost all cryptocurrencies, is not actually “adopted” for any real world use yet at all (other than the real world use of ‘speculating on cryptocurrencies,’ which is the main use of pretty much all alt-coins so far).

So what’s the real reason for this teaser pitch? Honestly, it seems to me that Matthew Carr is just saying that combining two hot sectors will create a super-spike. And perhaps it will, I don’t know — he uses several examples of cryptocurrencies that were somehow mash-ups with other “hot” sectors (Steem as a social media cryptocurrency, Golem as a cloud computing cryptocurrency, Storj as a cloud storage cryptocurrency, or IOTA as an “Internet of Things” cryptocurrency), and those did indeed rise dramatically into this past winter’s cryptocurrency peak.

None of them make sense to me, so I may well just be missing out, and I may just be an old fuddy-duddy. Time will tell, and I’d be happy to hear your comments on the matter using the friendly little comment box below — you can even be a little mean to me if you want, just be nice to each other.

So what do you say? Will HempCoin save your retirement dreams? Will it become the financial backbone of the marijuana industry and rise in value? Let us know with a comment below.

And, of course, we always want to know what you think of the newsletters you subscribe to — so if you’ve ever tried out Oxford Club’s Viper Alert, please click here to let your fellow investors know what you thought. Thanks for reading!