This is an opinion editorial by Michael Markle, a member of the San Juan BitDevs meetup.
Sources: Puerto Rican flag and Bitcoin logo
Puerto Rico has seen it all, from currency devaluations, confiscation of wealth, natural disasters, colonizers and fights for independence, all in less than 100 years. Before that, Pedro Albizu Campos fought for Puerto Rico to have its own identity, its own independence and its own sovereignty.
But now the world has a decentralized money that can provide Puerto Rico with the independence and identity that it has been starved for and deserves.
The History Of Currency In Puerto Rico
In 1889, Puerto Rico suffered a 40% currency devaluation, crippling the Puerto Rican economy. This was caused by the United States setting up the American Colonial Bank and declaring the U.S. dollar as legal tender (the official money) of Puerto Rico, changing it from the peso.
However, in 1899, one peso was only worth 60 cents, meaning the local businesses of Puerto Rico and its citizens lost 40% of their net worths overnight from causes totally outside of their control. This resulted in Puerto Ricans, attempting to save their net worths, borrowing money from the American Colonial Bank. However, high interest rates made it very unlikely that locals were going to be able to pay back their loans, causing many Puerto Ricans to default on their debt. The result was that the bank seized their assets (in these days, typically their land).
The Response From The United States Central Bank In 2020
This chart represents all of the dollars in the U.S. and Puerto Rican economy. Source: M2 (M2SL), FRED, St. Louis Fed (stlouisfed.org).
Puerto Rico uses the U.S. dollar as its legal tender and is vulnerable to the consequences of reckless monetary policy, including the expansion of this money supply (inflation), and has already experienced major currency devaluation (as noted above). Looking at the 2020 section of the chart above, during the COVID-19 pandemic, the United States central bank printed about 20% of the total dollars circulating in the economy, flooding the market with dollars. Money printing has devastating consequences on local economies, especially for lower- and middle-income families. Money printing results in a wider wealth gap with goods and services becoming more expensive. Home prices and food prices in Puerto Rico are rapidly increasing.
The Legacy Of Pedro Albizu Campos
Who was Pedro Albizu Campos? A man who valued human freedoms, the right to privacy, self sovereignty, independence and prosperity.
He grew up in the Machuelo Abajo section of Ponce, Puerto Rico. Incredibly well educated, Campos graduated from a top-tier school in the United States and could speak six languages. He was that guy, he led by example, showed up every day to lead, instilled values, dreamed big and provided inclusiveness regardless of class or status. He was a true man of the people, who understood the power within others, recognizing that they don’t need to be dependent on anyone else.
During his time, his focus in particular was Puerto Rico’s freedom and independence. Understanding the in-depth history of Puerto Rico is crucial to understanding why he chose this focus. If Alibuzu Campos was alive today, he would be a Bitcoiner. I encourage everyone to read the “War Against All Puerto Ricans” by Nelson A. Denis for the full story.
Banking The Unbanked
Puerto Rico has about 3.2 million residents and many are estimated to have 36% of its population unbanked.
Photo credit: Javi Cintron
When individuals don’t have access to proper banking or financial services, the implications are devastating. Bitcoin not only allows anyone to open a bank account, it allows anyone to become their own banker.
Why Bitcoin?
Bitcoin is:
- Decentralized: Bitcoin is the first form of money in the history of human existence that is not controlled by any individual, corporation or government.
- Open: Bitcoin allows anyone to participate in the network. It doesn’t recognize race, borders, religions or any cultural identities. On a deeper level, it doesn’t even recognize humans or age.
- Permissionless: Bitcoin doesn’t require permission from a government or third party to save or transact value, meaning that the only participants in a financial transaction are the senders and receivers. No banks, PayPals, Venmos, ATH Móvil, etc. are involved. You don’t need permission to open a savings account.
- Unconfiscatable: With Bitcoin, your wealth is protected for generations to come. This is made possible by encrypted keys (passwords) that only you may know. It cannot be frozen, seized or stolen from you. If you die without a contingency plan, your bitcoin will die with you and can’t ever be spent.
- Transparent: Bitcoin’s transaction ledger is available to anyone at any time. Issuance of the currency is known and cannot be changed. Bitcoin’s network audits the ledger every 10 minutes to ensure all participants are operating within the rules of the network.
- Absolute Scarcity: Bitcoin has absolute scarcity. Only 21 million bitcoin will ever exist. Bitcoin can’t be replicated, duplicated, counterfeited or double spent. Bitcoin is the perfect unit of account.
- Growth In The Future: Bitcoin allows Puerto Ricans to become individually sovereign. Bitcoin separates money from the power of the State, just as critically as the separation of the church from the government was in the 18th century, which led to the great enlightenment. We can’t rely on systems of trust in individuals, institutions or governments to have control over our financial destiny. Bitcoin is trustless — verify everything.
Love For Puerto Rico
My inspiration to write this piece came from not only being a bitcoiner but from being a local of Puerto Rico. I love the people, the communities and the values that are instilled in this island.
Puerto Rico offers an Act 60 decree for business and individuals who can move form the United States to the island and establish businesses there, which enables them not to pay any capital gains taxes and only a 4% income tax as long as they spend 51% of their time in Puerto Rico.
Now, to be clear, Act 60 provides tremendous value to Puerto Rico and should be embraced. However, on the contrary, Act 60 also provides an open invitation to bad actors and scammers who can walk away from their scams in the form of failed projects/businesses without tax implications. During the 2021 crypto bull market, I saw personally that Puerto Rico became a cesspool of individuals who launched cryptocurrency projects and marketed their questionable financial innovations to everyday investors, only to walk away from the projects with large sums of investors’ money, burning those who invested with funds earned from working real jobs that provided real benefits to the world. There are countless examples of this, which provide context and makes it understandable as to why many locals may have resentment toward cryptocurrency.
Bitcoin is not crypto, Bitcoin is not a Ponzi scheme, Bitcoin is not an individual nor company, Bitcoin is not an Act 60 beneficiary, Bitcoin is not colonialism, Bitcoin is not instilled by the government. Bitcoin is money, Bitcoin is freedom, Bitcoin is independence, Bitcoin allows every Puerto Rican to have the individual prosperity that many locals have defended and died for.
Bitcoin is Puerto Rico’s chance to have an independent identity while allowing its citizens to be 100% self sovereign. Adapting a bitcoin standard would provide tremendous benefit for places like Puerto Rico. Learn what bitcoin is, educate others, become individually sovereign and start building the Puerto Rico your ancestors envisioned.
This is a guest post by Michael Markle. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.