This is opinion editor Michael Markle, member of the San Juan BitDevs meetup.
Puerto Rico has seen everything from currency devaluations, asset confiscations, natural disasters, colonialists and independence struggles 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 decentralized money that can give starving Puerto Rico the independence and identity it deserves.
Currency History in Puerto Rico
In 1889, Puerto Rico suffered a 40% currency devaluation, crippling the Puerto Rican economy. This was caused by the United States creating the Colonial Bank of America and declaring the US dollar the legal tender (official money) of Puerto Rico, replacing it with the peso.
American Colonial Bank in Old San Juan.
However, in 1899, a peso was worth only 60 cents, meaning Puerto Rico’s local businesses and its citizens lost 40% of their wealth overnight to causes completely beyond their control. This resulted in Puerto Ricans borrowing from American Colony Bank in an attempt to maintain their net worth. However, high interest rates made it very unlikely that locals would be able to repay their loans, causing many Puerto Ricans to default on their debts. As a result, the bank seized their assets (usually their land these days).
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Response from the US Central Bank in 2020
This chart represents all the dollars in the US and Puerto Rican economies. Source: M2 (M2SL), FRED, St. Louis Fed (stlouisfed.org).
Puerto Rico uses the US dollar as legal tender and is vulnerable to the consequences of reckless monetary policy, including inflation (inflation), and has already experienced a major currency devaluation (as noted above). Looking at the 2020 portion of the graph above, during the COVID-19 pandemic, the US central bank flooded the market with dollars by printing about 20% of the total dollars in circulation in the economy. Money printing has devastating consequences for local economies, especially for low- and middle-income families. Money printing results in a wider wealth gap as goods and services become more expensive. Home prices and food prices are rising rapidly in Puerto Rico.
Boquerón, Puerto Rico
The legacy of Pedro Albizu Campos
Who was Pedro Albizu Campos? A person who values human freedoms, the right to privacy, his sovereignty, independence and well-being.
He grew up in the Machuelo Abajo section of Ponce, Puerto Rico. Incredibly well-educated, Campos graduated from a top school in the United States and could speak six languages. He was that guy who led by example, showed up every day to lead, instilled values, dreamed big and ensured inclusion regardless of class or status. He was a true people’s man who understood the power in others and did not need to depend on anyone.
During his time, the freedom and independence of Puerto Rico was in particular focus. Understanding Puerto Rico’s deep history is crucial to understanding why he chose this focus. If Alibuzu Campos were alive today, he would be a bitcoiner. I encourage everyone to read The War on All Puerto Ricans by Nelson A. Denis for the full story.
Albizu Campos talks to sugar cane workers
“Albizu also used his legal skills to create a series of bonds registered on Wall Street. These bonds were an investment in the Republic of Puerto Rico and could be redeemed from the island’s treasury on the day of independence. The first bond offering was $200,000 in $10, $50 and $100 increments.”
Albizu Campos speaks at the University of Puerto Rico in Rio Piedras
Albizu Campos at Sixto Escobar Stadium
Banking without a bank
Puerto Rico has approximately 3.2 million residents, and many estimate that 36% of its population is unbanked.
Photo credit: Javi Cintron
When individuals do not have access to proper banking or financial services, the consequences are devastating. Bitcoin not only allows anyone to open a bank account, but also allows anyone to be their own banker.
Why Bitcoin?
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Bitcoin is:
- Decentralized: Bitcoin is the first form of money in human history that is not controlled by any individual, corporation or government.
- Open: Bitcoin allows anyone to participate in the network. It does not recognize race, borders, religions or any cultural identity. On a deeper level, it doesn’t even recognize people or age.
- Unauthorized: Bitcoin does not require permission from a government or third party to store or transact value, meaning the only participants in a financial transaction are senders and receivers. No banks, PayPals, Venmos, ATH Móvil, etc. does not participate. You do not need permission to open a savings account.
- Non-forfeitable: With Bitcoin, your wealth is protected for generations to come. This is possible only through encrypted keys (passwords) that you 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 never be spent.
- Transparent: Bitcoin’s transaction ledger is available to anyone at any time. The currency release is known and cannot be changed. The Bitcoin network checks the ledger every 10 minutes to ensure that all participants are operating within the network’s rules.
- Absolute scarcity: Bitcoin is definitely scarce. Only 21 million bitcoins will be available. Bitcoin cannot be duplicated, duplicated, counterfeited or double-spent. Bitcoin is the perfect unit of account.
- Future Growth: Bitcoin allows Puerto Ricans to become individually sovereign. Bitcoin separates money from the power of the state, just as the separation of church from government led to the great enlightenment in the 18th century. We cannot rely on trust systems in individuals, institutions or governments to control our financial destiny. Bitcoin is invalid – check everything.
Love to Puerto Rico
My inspiration for writing this piece came not only from being a bitcoiner, but also from being a native of Puerto Rico. I love the people, the communities and the values instilled on this island.
Puerto Rico offers Act 60 for businesses and individuals from the United States who can move to the island and set up business there, allowing them to pay no capital gains tax and only 4% income tax as long as they spend 51%. The time they lived in Puerto Rico.
Now to be clear, Act 60 gives Puerto Rico great value and should be passed. However, on the contrary, Act 60 provides an open invitation to bad actors and fraudsters who can get away with their scams in the form of failed projects/affairs without tax implications. During the crypto bull market of 2021, I personally saw that Puerto Rico became a hotbed of individuals launching cryptocurrency projects and selling dubious financial innovations to everyday investors, only to burn those who made money by walking away from projects with large amounts of investor money. invested with funds earned from working in real jobs that provide real benefits to the world. There are countless examples of this, which provide context and understand why many locals are unhappy with cryptocurrency.
Bitcoin is not crypto, Bitcoin is not a Ponzi scheme, Bitcoin is not an individual or company, Bitcoin is not a beneficiary of Act 60, Bitcoin is not colonialism, Bitcoin is not grafted by the government. Bitcoin is money, Bitcoin is freedom, Bitcoin is independence, Bitcoin allows every Puerto Rican to have the personal prosperity that so many natives have fought and died for.
Bitcoin is Puerto Rico’s chance to have an independent identity that allows its citizens to be 100% self-sovereign. Adapting the bitcoin standard would be of great benefit to places like Puerto Rico. Learn what Bitcoin is, educate others, become individually sovereign, and start building the Puerto Rico your ancestors envisioned.
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This is a guest post by Michael Markle. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.