Puerto Rico enters cryptocurrency game
Editor’s note: The following article originally appeared in the Feb. 15-21 print edition of Caribbean Business.
Despite the volatility and general unfamiliarity with cryptocoins, Puerto Rico is about to test the virtual currency market while a growing number of enthusiastic investors are now helping spur a new industry.
An increasing number of individuals and at least four businesses, including a pizza parlor, taxi-service company and a medicinal cannabis store, are accepting digital currencies as a form of payment. Rodolfo Sessman, president of Puerto Rico Bitcoin and partner at Blockchain Trade Center, is slated in about two weeks to install a Bitcoin ATM machine at a Japanese-owned business in Bayamón. As early as August, P.R. Bitcoin will be launching the Kokicoin, a utility cryptocoin designed to be used to buy products and services.
Businesses are being created around cryptocurrencies. Wateke Research has developed a “mining machine” that will allow individuals and companies to make money by monitoring transactions in the digital currency system. During mining, records of current virtual-money transactions, known as a blocks, are added to the record of past transactions, known as the blockchain.
The local government and private sector are also looking at the benefits of Blockchain, a new technology that challenges to replace all forms of central authority with decentralized, peer-to-peer and open-source trust protocol that is also tamper–proof.
Former Puerto Rico CIO, Giancarlo González, recently founded the Government Blockchain Association (GBA) Chapter, a private membership organization that seeks to assist the government and public sector in implementing and benefiting from blockchain technology and capabilities.
Puerto Rico Gov. Ricardo Rosselló is slated to be one of several keynote speakers at the Puerto Rico Crypto Conference slated for March.
Puerto Rico Bitcoin Traders, as well as Kryptolandia, which is owned by Maryluli Soto and her husband, Jimmy Rodríguez, are educating potential investors about the ABC’s of buying and selling cryptocurrencies.
While many Puerto Ricans view with skepticism the idea of investing in virtual currencies, calling it a Ponzi scheme or relating it to fraudulent “dinars” investment (the currency from mainly Islamic countries), cryptocoin investors insist money can be made despite the volatility of the market that it is the currency of future financial markets.
Led by Bitcoin, a digital currency that came to light in 2008 and is considered the “gold” standard of virtual coins, cryptocurrencies account for about $650 billion worldwide, according to Matt’s Market Insights, consisting of more than 1,966 cryptocurrencies, some of which are used solely to buy products and services, whereas others are an investment.
Forbes magazine has said 2018 is the year in which many cryptocurrencies will grow in value while others will dissappear from the market.
Is Puerto Rico on its way to becoming a crypto-paradise?
A group of U.S. and Canadian investors are exploring the possibility of moving to Puerto Rico to avoid paying federal taxes on cryptocurrencies. The U.S. Internal Revenue Service (IRS) does not require a U.S. taxpayer to include income from sources within Puerto Rico if they have resided on the island for an entire taxable year. Local tax laws provide tax incentives for built-in capital gains for new residents, which make the island an attractive tax “utopia” for cryptocurrency millionaires.
“We should not call it a utopia because this is a global thing,” Sessman said.
Economic Development & Commerce Secretary Manuel Laboy said the laws are there to incentivize the cryptocurrency industry, but he noted Puerto Rico will join other jurisdictions in passing laws to prevent fraudulent uses of cryptocurrencies for money laundering or to commit fraud.
“We believe the blockchain technology is going to replace everything in the future and see the possibilities there,” he said.
The 2008 economic crisis in the United States became the catalyst for the creation of cryptocurrencies. According to published reports, Satoshi Nakamoto, which it is still unclear whether this was an individual or a group of people, published a white paper in 2009 elucidating the concept, technology and source code to implement the blockchain. Along with that, he introduced Bitcoin, the world’s first cryptocurrency.
Sessman noted that cryptocurrencies came to light because individuals were looking for ways to buy and sell products through the internet, in an anonymous fashion, since cryptocoins replace money.
There are cryptocurrencies used as an investment tool, but there are many that are used to buy products. For instance, he noted the Cannabis coin is a cryptocurrency for the cannabis community. Chile recently launched the Luka coin, whose goal is to make mining more accessible to the average Chilean.