Catalonia + Blockchain: A Blueprint

On October 1st, the world watched as Catalonia went into turmoil-mode, fuelled by an independence vote and subsequent violence by Spanish police forces. 90% of Catalans who went to the polls voted to secede from Spain, with 43% of Catalans turning out to vote. Since then, Catalonia seems determined to gain its independence, while the national government of Spain denounces Catalonia’s call for sovereignty as illegal. Many of the Catalonian-based banks have relocated to Madrid or locations abroad, as Spain has threatened Catalonia’s financial services industries, and most notably, the accounts of individuals supporting the movement to secede from Spain.

As a blockchainer, it’s hard not to see the opportunities that Catalonia has regarding adoption of blockchain technology as both a weapon and a shield against impending financial punishments from Spain and its potential (albiet, most likely temporary) exodus from the EU as a result. Of course, it is still very unclear what will happen next regarding the relationship between Spain and Catalonia, but with that uncertainty, here are some areas that Catalonia could find solace through the wonderful world of blocks and chains.

1. Central Bank and Catalan Cryptourrency

If Catalonia becomes a soveriegn entity, it will need to develop a central bank (or decentral bank), of which it has neither. In a world in the middle of a cryptocurrency revolution, where super-powers such as Russia have announced launching their own cryptocurrencies while China is investigating such measures, Catalonia has an opportunity to pioneer in this area, leading a global financial renaissance (pumps fist). By starting a currency that is based on blockchain technology, the issues associated with currency forgery become essentially non-existent (see North Korea’s Super Dollar). This is due to cryptographically linked and globally variable transaction histories. The world of taxes would be forever revolutionized as citizens could literally see their funds travel through government systems into expenditures, which could make citizens active in witnessing, understanding and participating in combating corruption, stopping pork barrel spending, and becoming more engaged in their societies.

For some reason, watching where your money goes, gets you more involved. Would love to see that in the U.S. With Catalonia going at it alone, this could be incredibly uplifting and shed more light on policy and economics in a way for everyday person to get involved. Magical things can happen when citizens really get behind their countries financial situation (see the 1998 Korean Citizen Gold Movement). Furthermore, with a cryptocurrency on a public ledger such as Ethereum, people could easily trade into investment vehicles on the blockchain without intermediaries with little to no minimum investment; this could be be a major boost to public investment by citizens (especially young ones), uplifting Catalonian industry such as the chemical, automotive, and tourism sectors that drive the economy. Additionally, the central bank would be the sole entity that could produce coins to control inflation, but with smart contracts, the central (or decentral) bank could automate monetary policy. All financial activity would be on a shared ledger, whereby inflation and quantitative easing could happen on a rules basis governed by a democratic process of economic stakeholders. Watch out Fed.

2. Apostille Processes

One of the other great features of blockchain is its ability to create tremendous back-office efficiencies in the way we authenticate the validity of documents. This is big, though it might sound boring. Today, in most of the world, we have notaries and government-authorized apostilles who stamp physical sheets of paper to say they are valid. How do we know these documents aren’t forgeries? We make phone calls to often different timezones and clog inboxes, but mostly, we look at a seal thinking its official and pass it on. The process didn’t really verify much at all while wasting a lot of time and insulting the technological progress of humanity with a bureaucratic lull.

By storing files or hashes when file contents need to be private, the speed of doing business would increase exponentially without the need to wait days to verify health records, business registration documents, bank certificates, letters of credit, academic diplomas, and more. Dubai is working to move an arcane, paper-based, system to this method of authentication by 2020.

Catalonia has an opportunity to build a national government with this at the core. It really doesn’t take long, and the technology already exists pretty much out of the box. See Proof Docs. Of course, there is the migration of existing government records and switching of methodologies that is “compliant”, but laws could be written that make these blockchain-based processes recognizable by businesses for future verification with the confidence of government-backing. What’s the point of becoming sovereign if you don’t use any of it benefits?

3. Trade Finance

When medium-to-large companies order and ship products to one another, often times this trade dance involves letters of credit from the receivers’ bank, some insurance policies, and a trading of securities between banks. This happens in money markets, and it was these very markets (not the bond markets and equity markets) that first shook the world before the Great Recession in 2008.

When money for trade dries up, other stuff does too. For instance: commerce in general. To mitigate these risks, Catalonia can leverage liquidity pools within the blockchain markets via tokenized instruments to provide crypto-investors with a new kind of token, helping drive trade while things are shaking up with Spain. Furthermore, this opens businesses up to potentially better rates, as global citizens and not just Spanish/EU banks can compete to finance trade deals. Not to mention, as IBM Blockchain is focusing on this area (and for good reason, however misplaced their intent).

Blockchain brings with it all kinds of advantages when it comes to the above mentioned authentication of where goods come from via notaries that travel on the blockchain as those goods move through the supply chain. This helps the aforementioned global citizens make wise decisions about the trade deals they finance. Why have a bank do it with their money and scrape the return, when the people can do it themselves with their own capital? This is real free trade. This cuts costs tremendously and adds efficiencies in spending that could provide a major boost to the Catalan economy.

4. Property Records

Currently, most property records in Catalonia are stored on national property registries. They will need to transition to a new system separate from Spain if a secession takes place. Dubai is innovating in this area for their 2020 Blockchain initiative. It provides immutable , tamper-proof, records of who owns what and who transfers that ownership to whom. This can be beneficial to Catalonia as it opens up its real estate markets more to global investment, not to mention its own citizens, like never before.

This would be beneficial for Catalonian retail investors (ie. everyday people) as well as the rest of the world. Catalans would be able to tokenize, and therefore fractionalize, ownership bringing in larger liquidity pools to the region’s real estate. In the current market, wealthy investors hold onto properties in order to prop up prices while this influx of liquidity would create greater price efficiency. This creates a real-time price transparency that can have ripple effects across the globe. Luckily for Catalonia, they are one of the most affluent areas in Spain with some of the highest salaries and lowest unemployment rates. With this, there is a sort of weapon in their pocket for property values across Spain. One could read between the lines here.

5. Pensions

Of course, many Catalonian citizens’ pensions are tied to funds that are either located in Spain or the greater EU. Like anywhere else in the world, these funds need to be protected and cultivated through investment in order to support the aging population.

Blockchain provides some solutions here, as many of the assets in Catalonia could become tokenized and thus traded on blockchains such as Ethereum. And with smart contracts’ ability to administer funds free of banks and institutional crooks’ abilities to withhold them combined with the previously outlined systemic transparency, the public trust would grow on the public’s terms.

As Spain looks to penalize Catalonia, one way to protect funds would be to move them to forms of crypt-fiat and other investments free of government sanctions and other controls. Furthermore, as the debacle dies down, if Catalonia succeeds in its secession, you have pension funds in a much more transparent vehicle, which has always been a problem when people get confused later regarding where their retirement plans went.

These are just a few areas in which Catalonia could benefit by integrating blockchain technology into its plan of sovereignty. Blockchain, when leveraged the right way, can provide what is most needed when it comes to state sovereignty: financial sovereignty. In regards to Catalonia, this might be a very good thing.

Now the question is how Catalonia could pull this off:

1. Pilot a program using Proof Suite for record-keeping, transaction management, tokenization, legal agreement generation, and mobile (peer-to-peer or in-store transactions. You can even try to create your own sovereign state with its cryptocurrency in seconds using the Proof Wallet. Here’s a video how.
2. Contact our head of partnerships Phil Jun (phil@proofsuite.com) to get the ball rolling on custom integrations into existing systems. You might need that for a government rather than out-of-the-box solutions, though you might be able to pull that off as well. With Proof’s censorship-resistant AMP launches soon peoples and governments all over will have access to a zero-trust-needed system with inherent censorship-resistance even in the shadow of nations looking to control others’ financial liberty.
3. Hodl.