In 2017, Hurricane Maria devastated the island of Puerto Rico. An estimated 4,000 people lost their lives – more than the 9/11 attacks and Hurricane Katrina combined. Ten months on, thousands of Puerto Ricans lack access to power and safe drinking water – and this year’s hurricane season is just weeks away.
Fortunately, there’s some good news for Puerto Rico: bitcoin billionaire Brock Pierce wants to help.
The 37-year old billionaire now lives in Puerto Rico. Instead of seeing it as a disaster-stricken region, Pierce sees it as a place that can be “a hub of innovation,” according to a report from Australia’s ABC.
“Puerto Rico has the possibility now to be put on the map as a hub of innovation. And the pleasure of bringing essentially the most innovative industry the world has ever seen to a place that normally would have been a hub, that’s a wonderful thing if it works.”
Pierce is best-known in our community for making a fortune in cryptocurrencies like bitcoin. However, prior to being an early bitcoin investor, Pierce was a child actor seen in 1990s Disney movies like The Mighty Ducks. Later, Pierce invested in video games through the Digital Entertainment Network (DEN).
Pierce made his fortune, however, by investing in cryptocurrencies like bitcoin. In 2013, Pierce was a founding partner of Blockchain Capital (BCC), which later launched the cryptocurrency EOS through Block.one. In 2014, Pierce was also elected as Director of the Bitcoin Foundation. As of February 2018, Pierce has an estimated net worth between $700 million and $1.1 billion.
Now, Pierce aims to use that fortune for good. The 37-year old billionaire wants to transform his adopted home.
“Has the internet changed our lives? Have mobile phones changed our lives? The blockchain is something that is that transformative,” Pierce said in a statement. “But you don’t need to understand it in the same way that you know how your phone works.”
Why Could Puerto Rico Become a Hub of Innovation?
Typically, when people think of tech innovation hotspots in the United States, they think of Silicon Valley or New York.
One Australian report on Pierce’s investment put it even more bluntly:
“Ask any Puerto Rican what blockchain is and the chances are you will get a blank stare. Few people have heard of the new technology and more are grappling with low-tech problems, like how to fix their roofs or rig up power lines before another hurricane comes.”
Pierce, however, sees potential in using blockchain technology to empower people to rebuild without relying on governments or banks.
“On the most basic level, it has the potential to democratize the global financial system.”
Pierce believes that having access to simple financial tools is as important as having clean drinking water. By empowering Puerto Ricans to control their financial security, Pierce believes you can create a generation of innovators.
It may seem like an odd concept, but we’ve seen it work in unconventional places like Venezuela, one of the most prolific bitcoin-using countries on the planet. Venezuelans, faced with an economic crisis, are using cryptocurrencies like bitcoin to avoid hyper-inflation and a collapsing financial system.
Could we see something similar occur in Puerto Rico? Pierce certainly sees potential. All you need is a mobile phone to conduct P2P business transactions. There’s no need for a third party to validate transactions. You have a permanent and secure record of every transaction available online at any time.
How could Puerto Rico use blockchain during its recovery?
“Villages could use the software to set up communal building funds and track how every dollar is spent,” explains the Australian ABC.net.au article linked above. “They could install solar power grids and charge each household for how much they use. They could use cryptocurrency to transfer funds or buy goods directly without paying commissions or bank fees.”
The Puerto Rican Government is Effectively Bankrupt
It’s important to remember that Puerto Rico is facing a financial crisis entirely unrelated to last year’s Hurricane Maria disaster.
The United States Congress has ordered Puerto Rico’s government to implement severe austerity measures to start repaying its $97 billion of debt. This austerity program has seen the local government triple fees and tuition at Puerto Rico University while slashing the university’s budget by $269 million. Healthcare, pensions, and public sector wages are also being slashed across the island.
The disaster was caused by successive administrations borrowing excessively to finance spending. This has left the present government “effectively bankrupt”, according to one writeup. Now, ordinary Puerto Ricans are the ones who are forced to deal with that debt.
Businesses that Move to Puerto Rico Get a Huge Tax Break
One of the positive things about Puerto Rico is that businesses get a tax break for moving to the island. under acts 20 and 22 of the Puerto Rico tax code, businesses that move from the mainland United States to Puerto Rico will pay just 4% corporate tax and zero tax on passive income (income from shares and dividends).
This has led a growing number of blockchain companies and other startups to migrate to the island.
As quoted by Australia’s ABC.net.au, the Puerto Rican government’s economic spokesman Manuel Laboy has witnessed “an unbelievable trend in a positive way for Puerto Rico because we are receiving a lot of individuals and companies looking for this special treatment.”
“Initially we were talking about cryptocurrency, but people have discovered that blockchain is a technology, a digital platform, that can be applied for many other things, for example, healthcare, energy, water.”
Bitcoin billionaire Brock Pierce will need to leverage these advantages and others if he wants to turn Puerto Rico into a tech hub.