How blockchain is transforming Puerto Rico
Almost exactly one year ago, Hurricane Maria destroyed Puerto Rico, leaving inhabitants of the archipelago to endure the scramble to reinstate order amid the unprecedented turmoil, tension and uncertainty. Hurricane Maria was recorded by Australia’s ABC News as being “…one of the worst natural disasters in US history, devastating the island of Puerto Rico and destroying the entire power grid.”
Whilst citizens of the tormented area are still recovering, crypto investors and blockchain enthusiasts have set-up shop in urban areas of Puerto Rico. Their aim, it seems, is to establish an area similar to that of Silicon Valley and transform tech, business and infrastructure in the process.
The key to success for many of these tech start-ups has been the introduction of a crucial piece of legislation — that, and the island lifestyle, no doubt.
On 17 January 2012, Puerto Rico enforced ‘Act 20’, or the Export Services Act, which allows those who live there for a minimum of six months of the year, to avoid paying many state and federal taxes. The intention behind Act 20 was to incentivise newcomers looking to set-up businesses in Puerto Rico, stimulating economic growth on the island. Act 20 means business owners only pay a flat 4% corporate tax rate.
Que es blockchain?
Reporters from The Guardian and other top-tier media outlets have been publishing accounts and mini-documentaries on this sudden fintech flight to the Caribbean and the resounding summation from locals is one of either indifference or negativity. Journalist Eric Campbell says;
“Ask any Puerto Rican what blockchain is and the chances are you will get a blank stare.”
Most people on the ground haven’t heard of the technology (which is the case in many parts of the world, as the blockchain concept filters down from founders to wider society), the majority of whom are still recovering from damage left by the hurricane.
These co-existing priorities (entrepreneurial pursuits vs. securing shelter) have sparked contention between expats and islanders, amid a backdrop of relaxed taxation laws and the endeavor to, in their own words, “Help the people of Puerto Rico through the use of blockchain technology.”
Neo-colonialism
This offer of ‘help’ was not well-received by attendees of a meet-up between nationals and American crypto newcomers in a Puerto Rican city. Locals were angered by the lack of concern for those who perceive foreign investment as a form of neo-colonialism.
Kinesis, a monetary system which aims to be adopted by people everywhere, will need to understand these risks when entering emerging markets.
Amidst these conflicts, interest in crypto and blockchain remains high worldwide, with incubators being built almost everywhere from Nigeria to the Netherlands.
Solving real world problems
Kinesis already has the ability to solve real-world issues, providing a solution for those who want to spend and send money, but are hindered because they are based in regions that face instability due to a lack of infrastructure. Within such regions, many lack access to the type of commercial banking that the west takes for granted. The Kinesis Monetary System (KMS) requires a simple identity check, no credit checks and both digital and physical access to any gold or silver users might purchase.
Participants in the KMS have the ability to trade in digital precious metals, rather than traditional fiat currencies. The KMS also makes it easier for merchants and traders to exchange goods and services in economically-impoverished areas.
Users of the system will be paid a monthly yield on their holdings of the Kinesis currencies, proportionate to the amount of Kinesis debit card transactions that take place around the world — whether they’re buying a Starbucks in San Francisco or patronising a local vendor in Puerto Rico.
