Puerto Rico has defaulted on its debt.
Last week, Puerto Rican Gov. Alejandro Garcia Padilla decided to pay teachers, emergency personnel, and other “critical needs” instead of paying back creditors who hold general obligation bonds, CNN Money reported. The Caribbean island was supposed to make an $800 million payment last July 1, but the government said its finances are in “dire” situation with only about $350 million in cash on hand.
Puerto Rico’s decision to default was expected as the island, which has already defaulted three times on other times of bonds, has warned months back that it wouldn’t have the money to pay for its $70 billion debt.
Still, this event, which hasn’t happened since 1933, may place the U.S. territory in a bad light—and at the same time, create opportunities for digital currencies such as bitcoin in the island. How, you ask?
For one, investors can opt to put their money on bitcoin instead of buying Puerto Rican bonds. The popular cryptocurrency has been steadily increasing in value in the past few years. In fact, traders are calling bitcoin a “safe haven” asset that “benefits in times of macroeconomic uncertainty in which its strengths as an investment vehicle whose value is derived solely from a global market are best on display.”
International companies can also use bitcoin as an alternative way to pay their employees. A bitcoin payroll option can help companies cut costs, and at the same time, allow them to pay their workers a little bit more.
Dutch gov’t punts on blockchain with new development campus
Puerto Rico could start taking a leaf out of the Netherlands’ book.
The Dutch Ministry of Finance, which has been keen on blockchain technology, is reportedly opening a development campus focused on bitcoin’s underlying technology. The plan is to attract banks and financial institutions with a goal of developing “prive and permissions distributed ledgers.
Current daily price and transaction volume
On Tuesday, the price of bitcoin climbed to $673.24, with more than 15.73 million bitcoins in circulation.