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Why Vanuatu, a Pacific Island, is Using Bitcoin to Sell its Citizenship

Why Vanuatu, a Pacific Island, is Using Bitcoin to Sell its Citizenship

Why Vanuatu, a Pacific Island, is Using Bitcoin to Sell its Citizenship

The Pacific nation of Vanuatu, a Commonwealth member country with a strong passport that allows its citizens to travel to 113 countries including Russia and European Union states, has officially begun to accept Bitcoin as a payment method for its citizenship.

For decades, many countries and islands in the Pacific, Europe, and the Caribbean have been offering a program better known as citizenship by investment, providing foreigners opportunities to obtain their citizenship through investments.

Some countries like Vanuatu and St. Kitts have unique citizenship programs that enable foreign investors to fund government-supported industries and organizations to obtain their citizenship. St. Kitts has been offering its citizenship and passport to investors that are willing to provide grant of $200,000 to its sugar fund, or invest more than $400,000 in its real estate industry.

Vanuatu has been offering a similar program to investors that are exploring secondary passports for investment, business, and retirement purposes.

As the EU and Russia have emphasized in the past 12 months, many countries and governments are concerned with the usage of Bitcoin in underground economies and criminal activities. But, James Harris, managing director of the Vanuatu Information Centre Network, stated that the government of Vanuatu is convinced that Bitcoin is not a form of criminal money, because of its transparent and decentralized nature.

"There remains some suspicion surrounding the use of crypto-currency in financial transactions, and some fears that it can be related to undesirable activities. In fact, the opposite is true, as crypto-currency exists in a fully traceable ledger where the entire history of its creation and trading is visible," he said.

Governments have started to consider Bitcoin as a payment method for large transactions such as Vanuatu’s $200,000 citizenship by investment program because the Bitcoin blockchain network eliminates the necessity of intermediaries and third party service providers in processing payments. Traditionally, through conventional financial systems and networks, the transfer of transactions worth $200,000 are likely to cost thousands of dollars, submission of various documents, and weeks of processing time.

A study by TimeDoctor revealed that a $100,000 transaction is likely to cost over $4,500 in most countries, including the US and Australia.

“It doesn’t cost a bank $4,000 to send $100k overseas and transfer the money. The banks are taking advantage of the fact that you, the customer, doesn’t see this fee. The fee is not declared, so the customer does not pay attention to it and think it’s somehow a normal or legitimate cost of transferring money. Australian banks are particularly aggressive in charging hidden fees,” the study read.

For countries like Vanuatu, it is significantly easier and simpler to receive transactions in Bitcoin that do not require the involvement of global banking systems. For this reason, Switzerland's Lucerne University of Applied Sciences and Arts, a public Swiss education institution, have also begun to receive Bitcoin payments.

Author : Joseph Young

Joseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.

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