Prospera, a town on the island of Roatan off the coast of Honduras, is a bitcoiners dream. A customized, hybrid city dedicated to bitcoin (BTC): very special agreements with Honduras promised a bright future. It was possible to become an e-citizen and it attracted many foreign investors. Yes, but here it is: the change of government in 2021 puts everything at stake and maybe it’s not so bad after all…
Bitcoin legal tender by Prospera
A controversial law passed by the Honduran government in 2013 allowed companies to create special economic zones: ZEDE. Three of them, they may have their own laws, regulations, courts, police forces, schools and hospitals. They were the founders of the Prospera he seized the opportunity to establish a low-tax, fully privatized city, which focused on financial, technological and medical innovation. will be successful than to return part of the taxes collected (12%) to Honduras and ensure prosperity for its inhabitants. The agreement with Honduras was to guarantee autonomy for 50 years.
Taxation and e-citizenship
In Próspera, taxes are reduced: personal income tax 5%, tax on the sale of goods and services 2.5%, corporate income tax 1% and land value tax of 1%. That’s the size. No other tax is charged (not even capital gains tax).
” What Próspera offers for bitcoins (BTC) is not only a favorable tax environment, but also regulatory certainty that allows people to build with bitcoins without worrying about whether a regulator will ever step in and change all the rules. “, explains Joel Bomgar, president of Prospera, a company registered in Delaware (USA)…
ZEDEs were strongly promoted as a way to stimulate economic development by Castro’s predecessor, former President Juan Orlando Hernandez. But what were the underlying motivations of this corrupt president, who was finally extradited to the United States in April to face drug trafficking charges? In a country ravaged by misery and violence, the Prospera project may seem encouraging at first glance.
All is not so rosy in Prospera’s Kingdom
Prospera international investors presented a libertarian seaside parade, paltry taxes and crypto-friendly regulations. Prospera’s investors include heavyweights from the Silicon Valleyas Peter Thiel (Paypal) or Marc Andreessen (via Pronomos Capital, a venture capital fund that invests in autonomous city projects). After achieving a multi-million dollar fundraising appeal, work on the island began in 2020.
Quickly, the ideal of American freedom is faced with reality: a conflict begins with the nearby village Daffodil rock home to the historic Garifuna community. rest of the world the community of Crawfish Rock reportedly lost access to running water in the summer of 2019. Founder Prospera water is offered pending necessary repairs. But the villagers would have received an invoice in the end! And these should have been paid to the Prospera Foundation (non-profit), strange, strange… And then the tension did not worsen between the parties, the local population for fear of eviction: a viral video shows the founder Erick Brimen accompanied by manu . military police during a speech.
Relief for the local community: the end of the ZEDEs
On April 21, 2022, the newly elected Honduran congress voted unanimously to abolish the ZEDEs. The president Xiomara Castro Honduras said ” he regained his sovereignty. Venessa Cárdenas, one of the leaders of Crawfish Rock, said that she does not mind Próspera becoming a normal tourist area or an economic development site: My advice is: go pay your taxes like everyone else, go get your permits like everyone else, and obey Honduran laws and regulations like everyone else.. »
The miscarriage begins
After investing thousands in the project, we can imagine that the founders of Prospera do not want to give up. A sovereign country against them. It is difficult to know if the intention of the founders is sincere when they talk about including the local population. They claim that some media, such as the Guardian, treat them as cryptologists. They promise that their intentions are sincere and that they wish prosperity for all.
This is not the first attempt to create a decentralized space, we had already talked about the bitter failure of the Ocean Builders. What virgin land could welcome, however bitcoin without the restrictions placed on all the States of the world? Is a Libertarian “Bitcoin State” Viable? The coming years will be rich in lessons, as we will be able to observe how countries like El Salvador, which adopted bitcoin as a national currency (without adopting the libertarian point of view), will develop.
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Subprime, financial crises, galloping inflation, tax havens… Bitcoin was designed for more transparency and maybe finally change the situation. I try to understand this new environment and I try to explain it to myself. The road is undoubtedly long, but it is worth it.