Ecuador must embrace blockchain technology

Ecuador must embrace blockchain technology.

The first step to do so is to set up a consortium of a new development bank, in combination with a number of government agencies to open a research center to study the intersection of blockchain and quantum computing technologies.

The cryptocurrencies such as Bitcoin and Ethereum create a unique opportunity that needs to be addressed. Ecuador must set up a foundation or Association that can assist to build out a research center with the goal of making it an incubator for cryptocurrencies based technologies. The goal is to create an International Automated Clearing System for cryptos.

The focus of this consortium is to research the application of Bitcoin, Ethereum and all the other cryptos to the public administration sphere.

Blockchain: A unique opportunity.

Ecuadorian homegrown middleware platform for token generation should actually form a core strategy for mass digitization of the entire Ecuadorian economy and administrative layer.  A clear example is what Russia is doing with “Waves” which is a platform by the National Settlement Depository that is using to build a trading platform for cryptocurrencies on open exchanges. Ecuador must move quickly to do the same to change the way capital flows through the country from outside Ecuador and from Ecuador to the world in a very big way.

Defense Against an uncertain future.

The reality is that the dollar is collapsing as we speak, so, from a geopolitical perspective, it’s not hard to see where this is going.  The only possibility for the United States to save the dollar will be to
“reset” the value of gold and silver if the USA has gold and silver in their vaults. Chances are that it does not have any but if it does then hopefully is real and not tungsten washed in gold. Ecuador must initiate a strategy and must find ways to fortify its financial system from external attack. I believe strongly that the United States can use foreign exchange markets or simple expulsion from SWIFT to manipulate several nations. That is the nuclear option for the United States to bring the wayward countries to heel.

It was last used by the U.S. with the sanctions placed on Iran in 2012. It didn’t have the desired effect of overthrowing Iran’s theocrats but Ecuador and Venezuela are much more vulnerable.

With the Ecuadorian economy getting weaker by the day it will be harder to get loans and too expensive to issue bonds, so it must create strategies that could work. It becomes imperative for Ecuador to take advantage of this opportunity. If Ecuador takes a lead in Latin America and in fact becomes a pioneer if it applies a platform to exchange cryptocurrencies for Ecuadorian silver and gold. In other words, Ecuador must take advantage of the fact that the biggest issue right now for anyone that owns bitcoin, Ethereum and several other cryptos has become the inability to convert their electronic money into paper money. Hence, a billionaire in bitcoins is faced with a 40% capital gains taxes that have been imposed by the USA government. Now I do not know about you but if I was to have a billion dollars in cryptos I do not want to give $400 million of that to Uncle Sam no matter how patriotic I may feel. So, I researched and found out that other nations have done the same. That means that if Ecuador facilitates the use of cryptocurrencies to buy Gold and Silver and at the same the use of a debit card that can be used against that Gold and silver then billions can be “invested” in Ecuador.

For weeks now, we’ve been getting very mixed signals out of several governments about cryptocurrencies.  On the one hand we see some governments are embracing the new technology while at the same time other nations are going on the warpath against them.

Because of that there is a lot of confusion in people’s minds as to what the endgame for cryptos in Ecuador looks like.  I’ll try to clear this confusion up giving you my plan and strategy with what I know.

But, suffice it to say, the application of Bitcoin, Ethereum and other cryptos is an opportunity that could reenergize the Ecuadorian economy.  Give me a few minutes and I’ll explain why.

Unique Crypto Law

A nation without laws is avoided by investors all over the world as if there was a plague on a nation. As a matter of fact, Ecuador should know this since the absence of a proper law of Foreign Investment has been the main reason that several foreign investors have avoided Ecuador for more than a decade. A very clear investment law is necessary. So foremost we must enact a law that will be efficient to attract foreign investment and a law that would facilitate the exchange of cryptos into Silver and Gold. Cryptocurrencies, can have great benefits to an Ecuadorian economy that needs the type of decentralization and disintermediation cryptos offer, but right now they operate in a legal gray area around the world.

So, the goal with a new and bold Ecuadorian official crypto-policy must be to stamp out the illegal activities. The biggest problem of cryptos is that it could be used for money laundering, terrorist activities, mafia financing, human-trafficking, etc.  If a proper law in enacted then we can use simultaneously the technology to modernize Ecuador’s internal capital handling capabilities.

This is what the crypto-sucre should be all about.  It is a way for Ecuador and Ecuadorians to provide a gateway between the crypto-world and the so-called real one.  The huge possibility of attracting its use by creating the gateway to make all those cryptos reality. It ensures that this new form of monetary system properly tracks capital flow through the Ecuadorian economy.

By taxing crypto currencies, The United States and Russia have imposed capital gains taxes on those that cannot provide a paper-trail of ownership. The rate of capital gains in the United States is 40% that means that those so-called billionaires will actually have to give 40% to Uncle Sam and to Putin. Ecuador has the opportunity to incentivize the development of low-cost crypto-payment systems to exchange cryptos into Ecuadorian Silver and Gold and use that as backing to use a debit card to buy goods.

The Ecuadorian Capital Invitation

Ecuador must invite investment capital into Ecuador that is legal.  Ecuador should provide incentives for legitimate businesses to operate in Ecuador in whatever currency they like as long as that business is transparent. The key is to offer a 7% capital gains transaction. In other words, if crypto currencies owner pays only 7% capital gains in Ecuador, and then only 7% on credit on their card, then in reality Ecuador could gain 14% on trillions of cryptos because no one else can offer that.

The crypto-sucre then could provide the means by which to convert, transaction-cost-free, any national ‘fiat’ currency into cryptos and into Gold and silver to pay bills, taxes and the like.  This is in direct opposition to how the U.S., for example, treats cryptocurrencies.

The 2014 I.R.S. rule that classified Bitcoin as ‘property’ means that every Bitcoin transaction, no matter how minor, creates a potential “capital gains” event.  It means that buying a cup of coffee at Starbucks in Bitcoin is taxable for both the person buying the coffee (capital gains on the sale) and Starbucks when they go to sell those Bitcoins, buy dollars and pay salaries, order supplies, etc. In reality there will be double taxation but because one time is applied to the person that bought and the other to the merchant they will do it anyway.

It’s the main reason that capital that has moved into cryptocurrencies is trapped and isn’t moving back out.  It’s why anyone invested in cryptos may become a prisoner and lose the investment if it tumbles down. By providing a means to move such money Ecuador can make a killing. The ICO market has exploded.  Billions in profits actively looking for new investment opportunities without paying taxes.

It’s also the main reason why Amazon and many merchants have not started using Bitcoin.  It could become a very expensive proposition under the current rules.

Therefore, the necessity for Ecuador to create a crypto-sucre structure that could help dispense the problems and using blockchain help billions of transactions.  Bitcoin, Ethereum and other cryptos then can be allowed to have a fast, efficient way to become Gold and Silver and be spendable without the hassles.  

There is no avoiding crypto currencies and is a matter of figuring how they can all coexist side-by-side with paper money without worrying about the threat of double or even triple taxation, unless you earned your money in the filthy criminal world. If Ecuador charges 7% capital gains to any cryptocurrency and allows the cryptos to buy gold and silver that will stored in Ecuador central bank and that becomes the cryptoGoldsilver card which people can then use to buy anything.  This new system will bring massive amounts of money and while that money may not go into the Ecuadorian economy, but it will leave a nice 7% coming in and 7% staying parked in Ecuador.

Ecuador Embraces its Own Cryptos

Ecuadorian politicians that called Bitcoin as a Ponzi scheme truly made fools of themselves. While it is true that crypto currencies can become an avenue for money laundering it has become evident that all those currencies are being used in the USA, Russian and everywhere.

The usage of crypto currencies then requires a strategy and that simply is to allow people from all over the world to use a platform to be able to exchange easily among cryptocurrencies and convert them into Gold or silver.  This could help Ecuador gain prestige and that in turn will help bring investment.

Russia and Putin for example have taken very bold steps toward the usage of crypto currencies such as Ethereum and WAVES which are both platforms designed by and built for Russians. In reality what I am asking to do is for Ecuador to create a Center for an International Automated Clearing System that will work and implement using blockchain.

That way Ecuador or at least a Bank founded in Ecuador and allowed and approved by the Ecuadorian government could provide a platform to act as facilitator and Infrastructure as a Service system for the next generation of internet-based applications.  Cryptocurrencies in a sense are nothing more than “operating systems” In many ways not that much different than windows or Facebook.  We can create then that next generation forex exchange as well as providing an easy platform for issuing new public/private equity to millions of cryptocurrencies around the world.

I propose this system be called GALAPAGOS and it will be an Ecuadorian base Money Exchange to trade cryptocurrencies and their derivatives.  It will act at the gateway for all of the currency exchanges.  So, it will not matter if people have dollars, Bitcoins, Euros or Ethereum anyone could buy and sell their paper or cryptocurrencies for Gold and Silver and then use a debit based on that to use for whatever they want.

A perfect system

Imagine then that money will flow to Ecuador and it will be money from pension-fund investors that maybe attracted to make 7% guaranteed to earn 7% backed by Gold and Silver. Imagine Crypto billionaires that could avoid paying 40% capital gain taxes and turn their money into real Gold and Silver.

This is an investment that we can’t pass, this is a unique opportunity and monumental chance to make Ecuador a country positioned in such a way that poverty could be erased. Bitcoin, Ethereum and other cryptos could become the seeds of our wealth.

Capital will always flow to where it is treated best. Given the tenuous situation in the global financial and political systems, Ecuador’s has lost competitivity due to the US dollar, but this opens an opportunity that no other country can offer by being dollarized but capable of applying its own rules. What investors all over the world need is the confidence of being able to get their electronic and even their paper money into a safe investment backed by Gold and Silver and then use it to be able to spend it.

We must build confidence

There is a building process to gain confidence of investors in any investment. Any American investor will love to have the ability to have a truly secure investment backed by Gold and Silver and at the same time be able to use a debit card to access that money anytime they want or need arises. It is precisely that ability to be able to use their true wealth that can let them buy company’s stock or bond offering directly.  At the same time if we were to implement Riqueza Comunitaria then they can get paid dividends.

Of course, the greatest benefit to keep your wealth into Gold and Silver is that people will be able to convert them into any currency they like and avoid paying taxes.

That’s not really possible now, especially with sanctions.  If it is possible, it’s expensive and a major hassle.  I am a smart man but I need the very best people around me to make this a reality. This will make Ecuador the Switzerland of the world and while many nations like the United States and Russia continue their own aggressive moves made as the United States tries to deal with a dying dollar and fights dirty against Iran, Saudi Arabia all along claiming that they are the one that are cheating, when in fact the USA has been dumping their toxic debt, inflation and deficit in the rest of the world under the pretext of an investment. Make no bones about it, the current economic situation is complete the USA fault.

Now we must rise to the occasion and we must understand that providing a platform by which capital can enter Ecuador that is barred through normal means now is key to surviving the next decade.  It’s not our responsibility to protect our children and as investors we must help the government to enact the best laws.

First-mover advantage is important here.  If Ecuador develops blockchain technology and embrace it in a relatively tax-free way, it won’t matter who is ‘regulating’ the so called decentralized market of cryptos.

What will matter is that Ecuador treats its crypto-investors better than everyone else and makes a little money to facilitate that privilege.  In the fight for global capital flows, you don’t have to be perfect, you just have to be slightly better than everyone else.  Arbitrage will take care of the rest.

A tax-free crypto exchange will become the most sought-after app that the crypto-market has been looking for to take it to the next level.

My name is Germánico Vaca I am the creator of Riqueza Comunitaria, an economic system that created the possibility to erase poverty in Ecuador and other nations. I have also envisioned a unique way to jump start the system. We need to implement it as fast as possible and to do that we need to move fast.

We need the use of a super computer is imperative to help manage the economy due to the current challenges of today. Temporarily we need to set up headquarters at Yachay University and we must create the department of Economy, Science and Technology. I own a building in Ibarra and I intend to set it up there, such center will form part of a broader digital initiative being undertaken within Ecuador’s government at the behest of Ecuadorian president Lenin Moreno. The government offices involved must be the Ministry of Economic Development, the Ministry of Finance and the Ministry of Communications and Mass Media.

Ecuador needs to be first to provide a service unequal in the rest of the world.