I Survived the Eternal Boy Playground, But Will Puerto Rico?

“Everyone’s a burner now.”

My eyes opened wide. He probably thought I was going to kiss him.

But it was just the sentiment, the way it clashed against the scene. Outside one of the most popular clubs in San Juan, locals were being swiftly displaced by a newer, more exotic crypto enthusiast.

Sure, there was the normal dichotomy, button-ups and slacks, graphic tees and jeans, but another faction of the movement has emerged in Puerto Rico. Silver rings, steampunk vests and wide-brimmed hats; they probably wore them “on the playa.”

The playa. Puerto Ricans might understand that to mean the beach, but that’s not what they mean. No, these people mean more than 4,000 acres of alkaline dust, they mean the Black Rock Desert.

Burning Man.

They mean fucking Burning Man.

***

How did we get here? Certainly it happened fast, a mutation caused by the swift billions of 2017’s great crypto bubble. Still, one man perhaps has become synonymous with the shift, a child actor turned digital currency hype man named Brock Pierce.

Donning a top hat of sorts (a Queen of Hearts and a U.S. dollar bill stuck in the brim), it’s clear Pierce went to Burning Man and that he’s brought the burner aesthetic back with him to bitcoin.

I thought I would be happy about that.

And it might be fine if they had come back with a more well-rounded view of the world – but alas they came back still extreme capitalists, now with “sacred” geometrical shapes and a love of rainbows to add some innocence to their money grabs.

These are the same people who think the government should get the fuck out of the way so they can (figuratively) rape and pillage throughout the land as they see fit. The people who think others are inherently selfish and never do anything just out of sheer compassion or love, the kind that think the best system is one that pits people against one another for the greater good.

It’s nauseating, excruciating at times.

And so when I heard about Pierce’s commune in Puerto Rico, first profiled in The New York Times, there was a part of me that thought, this could be positive.

Burning Man stands for things that I’m generally interested in – radical inclusion, self-reliance and self-expression, as well as community cooperation, civic responsibility, gifting, decommodification, participation, immediacy and leaving no trace.

If (at least) one of those sounds like it doesn’t mesh with the ethos of the cryptocurrency community, it’s because it doesn’t.

***

I suppose it would be enough if they kept quiet and left others the hell alone.

But alas the burners of Puerto Rico need a show, and what they chose to erect is Blockchain Unbound, a sub-standard multi-day conference held in early March. Sure enough, the talk of the event was everything but what the suffering people of Puerto Rico need, a thesis on how the commodification of everything is coming, for the betterment of all.

Brock Pierce’s wife, an entrepreneur named Crystal Rose, even took the stage to spit out a bunch of nonsense about blockchain islands and human clouds, evoking even the late Stephen Hawking in explaining her project, Sensay, which as far as I can tell is all about commodifying everything you do and say online.

Cue Hawking turning over in his very fresh grave…

Taking notes, I was bewildered by how incoherent the explanation was, but tons of people clapped at the end, making me think, “maybe I just don’t get it.”

But having been in the industry since 2012, I do get it.

These entrepreneurs can basically say whatever they want with a few buzzwords sprinkled here and there – and after seeing the rise of cryptocurrency prices over the years – others will buy in whether they understand or not.

A Puerto Rican business executive hinted at this when he told me he was at the conference because he was interested in how blockchain could benefit the agriculture industry. According to him, people just kept saying blockchain will help, but no one would really give him the nitty-gritty of how or why.

You’ll forgive me if I wasn’t surprised.

Untaxed crypto

That all of this is an elaborate exploitation of Puerto Rico should be immediately obvious. But who knows? Maybe everyone is just in on the ruse.

From what I can tell, the government there is open to the idea of crypto-rich investors relocating to the U.S. commonwealth under the guise of trying to “save Puerto Rico.” But what it’s really about is the tax benefits.

See, Puerto Rico, while a U.S. territory, still gets some sovereignty in deciding its tax structure. As such, recently the territory passed major changes to Act 20 and Act 22. As of July 2017, Act 20 gives businesses a flat 4 percent corporate tax rate on any business income sourced in Puerto Rico, and Act 22 states that individuals and businesses will pay zero – yes, zero – capital gains taxes on assets acquired after moving to Puerto Rico.

Not bad, especially for crypto investors such as Pierce, who would otherwise have to pay upwards of 20 percent capital gains tax on their crypto investments on the mainland.

Crypto folks aren’t the first to have their eyes turn to dollar signs because of Puerto Rico’s lax tax laws. For some time, even before the changes, Puerto Rico’s tax laws have been less cumbersome than those in U.S. states, and a number of businesses (hedge funds for instance) have relocated to the island, at least on paper.

But today, it’s the crypto industry that’s getting a warm welcome.

“The government is very pleased you all are here,” said Manuel Laboy Rivera, Puerto Rico’s secretary of economic development and commerce, during the morning keynote on March 15.

During his talk, Rivera, who holds the second-highest government seat on the island, announced a new advisory council that brings together government leaders and crypto entrepreneurs in an effort to spur the development of blockchain technology on the island.

And later, George Joyner, the Commissioner for Financial Institutions for Puerto Rico, went so far as to claim, “In a few years, we won’t be able to imagine our lives without blockchain, just like we can’t now with our cell phones.”

According to Rose, one of the main benefits of moving to the island is that Puerto Rico’s politicians have been amazingly accessible and optimistic.

And many attendees echoed Rose’s sentiment as they moved from conference to conference, event to event as part of what was labelled #RestartWeek, with a mission of “celebrating culture, rebuilding the vibrant past and envisioning the future.”

Celebrating culture, huh? Brock Pierce and crew are converting a closed-down children’s museum into a commune, and until then are renting out a 20,000 square-foot hotel called the Monastery.

In walking through the streets of San Juan and driving around the island, I can tell you, lavish isn’t really the culture of Puerto Rico.

***

But it’s the culture the crypto community will bring to the island, no doubt.

While #RestartWeek ran a series of volunteer programs, which included bringing art supplies to the local Boys and Girls Club and cleaning up the beaches, crypto enthusiasts seemed all too unaware of what constitutes a basic human need, the kind of you might have after living through the worst natural disaster in the island’s history.

And it was another kind of woe-is-me white suffering that got the most airtime at the event.

“Banking here in Puerto Rico is ridiculous, for everyone, and [for people in the] the crypto space, it’s pretty much impossible.”

The comment from an audience member piqued my interest. The man sounded irritated, and while the panelists reassured him, he’d already started a movement. One after the other, men stood up during the Q&A session not to ask questions but to whine about the indecency of the island as a habitable place for crypto businesses.

Supposedly the airports are shit. Instead of a normal three-hour layover for a connecting flight, one guy had to wait eight hours. The indignity.

And then, the ultimate insensitive complaint:

“If I had to choose between electricity and internet, I’d light a candle.”

Is there no empathy in this space anymore? None?

By some estimates, more than one-third of the Puerto Rican population is still without electricity. And this jackass was saying he’d take internet over electricity.

Raul Vidal of Omnia Economic Solutions, a consultancy that specializes in Puerto Rico’s Act 20 and Act 22, said, “It will get better. Four months ago this place was a wreck.”

He continued:

“We’re not xenophobic. We want all you Americans here.”

I wouldn’t.

***

Elsewhere at the event, hypocrisy was in fashion – even the conference’s line-up had a number of speakers, some of whom lived on the island, who didn’t seem to understand anything about the commonwealth.

Yaron Brook, an entrepreneur and chairman of the board of the Ayn Rand Institute (excuse the massive eye roll) used his time onstage to make the case for making Puerto Rico more closely resemble Hong Kong.

“People ignore what made Hong Kong, Hong Kong,” Brook said. “It was a little fishing village. What did the British do to bring about this vibrant place … to make it what it is today? [They] established the rule of law, protected contracts and left people alone.”

There’s just so much wrong with that statement, and the whole premise of this talk generally.

It’s an apples-and-oranges comparison first of all. And it overlooks some serious nuance in the history and growth of both places – like the fact that Hong Kong’s growth has caused serious waste and pollution problems.

“We know how to get rich,” Brook continued.

It’s not giving tax breaks to some and not to others (“but please keep the tax breaks” he said, laughing), “it’s about the government staying out of the way.”

More cheers.

“Free markets. They work. They work everywhere they’re tried.”

Whoo hoo. Clapping. More cheers.

Cringe.

A question from the audience: “How do you make sure the wealth gap doesn’t grow between all the local Puerto Ricans and these entrepreneurs coming here?”

Damn. And I was about to lose all faith in humanity.

Brook began, “Lowering the income tax would be a good place to start.” He continued, “I’m looking for a research analyst right now. I would love to hire a Puerto Rican. When we come here, we will employ people.”

One person? One research analyst?

Later in the day, Rose is talking about how, by virtue of having an internet-based business, her whole team is dispersed throughout the world – the chief technology officer, in fact, lives on a beaver farm in Canada.

“It doesn’t really matter where you’re at, just matters that you are connected to other awesome human beings,” she said.

So you’ll have to excuse me that I don’t buy this “entrepreneurs will bring jobs” bullshit.

Brook concluded with something that for me, someone who despises mass consumerism and the adoration of money above all else, was the last straw. Don’t come here because you pity Puerto Rico or to provide charity, he said, “You should want to come here for your own profit.”

Fuck this. I’m going to the beach.

The Messiah

It’s amazing how calming the ocean can be. After a couple hours bobbing in the cool water and drying off in the sun, I decide to give the conference another go.

“Were you just here to make a lot of money or actually here to affect change?”

Nail meets head as Melinda Moore, co-founder and CMO of iConsumer, takes her panel to task. “What if [the crypto markets] lost another 50 percent, would you still be here?”

The answer was pretty clear.

They’re here for the tax incentives, because the government is stroking their egos, because they’re fucking rich.

And let’s face it, that’s who Pierce has brought to the island. The guy has had one foot in questionable activities since he stopped acting. Not least of all, he was business partners with a man who would later do time after admitting to luring five minors across state lines for sexual purposes.

It’s a well-detailed story. Without laying out the whole fucked-up scenario as many people haveBrock Pierce helped found Digital Entertainment Network (DEN), an online streaming service, with Marc Collins-Rector and Chad Shackley.

According to Buzzfeed’s June 2014 in-depth report of “The Hollywood Sex Abuse Scandal,” DEN was run out of Collins-Rector’s Los Angeles mansion, and it was here where the three men would host lavish parties where Collins-Rector and allegedly others sexually assaulted dozens of teenage boys.

Pierce himself was named in one such sexual-assault lawsuit (although the case was eventually dropped).

Not long after Brock Pierce joined the Bitcoin Foundation as a board member, a number of other board members resigned in protest to these past dealings.

His response to the controversy in 2014: “It’s 15-year-old news at least as it relates to me. And anyone can sue anyone for anything they want.”

Still, that’s the way Pierce operates – always evasive.

(Pierce was contacted by multiple people at CoinDesk several times for comment on a whole host of topics related to cryptocurrency in Puerto Rico but did not return requests.)

***

Cut to present day and Pierce has made himself a revered figure in the cryptocurrency space, primarily by cutting checks. Lately though, it seems he’s more about cutting loose.

Whether it’s backing the latest questionable blockchain project, EOS, investing in a project called Tether that’s been accused of propping up the crypto economy, or his association with a cryptocurrency conference that Wired exposed for dosing attendees with marijuana, there seems to be a high correlation between Pierce and controversial projects.

In Puerto Rico, it seems he’s applying the strategy now to full-on municipalities.

And that might be the fate of what Pierce and crew were calling “Puertopia,” a phrase the Times pointed out translates to “eternal boys’ playground,” by moving to the Caribbean island to build their businesses.

If it weren’t for the fact that Puerto Rico is a U.S. commonwealth, the venture would seem exactly like colonialism – the policy or practice of acquiring full or partial political control over another country, occupying it with settlers and exploiting it economically. Wait, no, actually it’s still colonialism.

“You’re Puerto Rican? So we’re gonna talk later, because now I am too,” said Crystal Rose after a question from the audience.

I nearly choked.

Rose is not Puerto Rican, and saying that she is just because several months ago she moved to the island for the tax benefits is offensive.

***

Later on, I summon the courage to query the locals for their thoughts.

I’m talking to the waiter about life in Puerto Rico and he makes it clear that he believes being under U.S. rule is “more like an occupation.” They don’t get to vote for the president, they deal with silly regulations – The Jones Act for one – that tend to hurt their economy and foremost, they’re just very different culturally than mainland Americans.

I decide now’s an alright time to ask about cryptocurrency. And he passes our conversation to the bartender.

The bartender had done pretty well for himself, investing in ether when it was only $27 (it’s currently around $395, according to CoinMarketCap). But he studied finance in college and thinks he’s in a better position to understand cryptocurrency, at least more so than some others he knew.

“They didn’t know what they were doing,” the bartender says, alluding to bitcoin’s correction, where the price dropped below $7,000 after nearly eclipsing $20,000 back in December.

This has always been true, though, in the cryptocurrency space. Some people get in not knowing what the fuck they’re doing and have lost big money because of that.

It’s not necessarily the industry’s fault, although they sure do herald cryptocurrency as the savior of all the things. But maybe what’s more irritating about this whole “crypto is gonna save Puerto Rico” narrative is not that some will get burned because they don’t know what they’re doing.

The most irritating thing is that crypto entrepreneurs with fat pockets are waving cash in front of the faces of Puerto Ricans (who still don’t have electricity or running water) and pretending like all they have to do is invest in crypto and voila, they’ll have the personality of the sleepy creepy cowboy from the future,” sipping expensive wine on the rooftop of monasteries and living the life.

Later, during dinner, a middle-aged white man who came to the island to help rebuild (he puts up telephone poles) starts up a conversation.

He needs some advice from two young women, close to his daughter’s age. See, he heard his daughter was stripping and he wants to either shut off the electricity back in the mainland neighborhood where the strip club is or send her $5,000.

My partner in crime here on the trip, Sam, is against it and so am I really, but I’m having trouble articulating why. As I suck down the last of my margarita it hits me. “Money doesn’t actually solve problems,” I say. “It just enables people to do what they already want.”

Put another way, money only intensifies people’s existing inclinations. It doesn’t change them.

I’ve struck a chord there, as Sam and I discuss what we would have done with $5,000 several years ago when our inclinations were not to travel the world and understand life in its crazily diverse perspectives.

The man rouses me, asking, “Do you think that’ll work here?”

“What? Crypto?”

“Yeah.”

“Well, it depends what you mean by work. But ultimately, no,” I say.

“I agree. You have to be comfortable to invest in something like that,” he says, adding:

“If you don’t have running water or electricity, you’re not comfortable, how do you invest in that?”

I’m willing to be proven wrong.

Positive island vibes

mauritus, harbor

mauritus, harbor

That said, some people were more positive than me (surprise).

Take Josue Acquino, a certified public accountant and director of Ataraxia Technologies, who expressed his view that events like Blockchain Unbound could really help make a difference in Puerto Rico.

“We are very happy to have the event in the island and to build Puerto Rico as a center of excellence for blockchain technology with the help of the crypto community,” he said.

But in conversations over drinks, many of the people I spoke with voiced concerns over the real reason crypto entrepreneurs were flooding to the island, and whether their efforts will really help fix the economically dire situation.

I thought about covering the conference straight. I thought about excluding all the history I know about Brock Pierce and all the ridiculous antics I’ve seen over the past five years. I did, because I’ve watched as a whole host of people call out the crypto industry’s bullshit and nefarious characters and yet those projects and people are still around, still being glorified.

And it makes you think: Will this even make a difference? Will it change anything?

I thought this through while having a glass of wine in the Airbnb. There were only a couple channels we could get on the TV there – but one was Comedy Central so Sam and I were watching “Rick & Morty” reruns.

Maybe I should just be agreeable, likeable, I thought. Maybe then I’ll get invited to the commune.

On the screen, Rick clinked a glass. Season two, episode 10. He’s at Birdperson’s wedding and is about the give the best man speech. I remembered liking this speech.

“When I first met Birdperson he was uh … “

Rick trailed off. I looked up from my laptop; this is where it gets good.

“Look, I’m not the nicest guy in the universe. Because I’m the smartest. And being nice is something stupid people do to hedge their bets.”

Ahh fuck it then.

That’s how these people thrive. They count on us to be polite.

CoinDesk was not invited to the commune.

Puerto Rican flag on bitcoin image via Shutterstock, and Vanderbilt Condado lobby view image via CoinDesk. 

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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