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Katie The Russian, CEO of Plan B Passport and co-host of "The Bittersweet Podcast," has written an opinion piece.

Because you are born into a nonconsensual monopoly imposed by the government, you have no real options — no real choices in terms of the services you desire from the state, the taxes you are ready to pay for them, or the regulatory framework in which you choose to operate.

Unless you opt to play the game of jurisdictional arbitrage and limit your reliance on any one state.

You may be wondering what jurisdictional arbitrage is. It is commonly characterized as the practice of exploiting regulatory disparities between legal countries. "Everything that is not forbidden is permitted," as the ancient adage goes. In many ways, this is the foundation of jurisdictional arbitration. You learn the rules of the game in several jurisdictions, choose the one that best serves you for a specific objective, and then decide how to play it to your advantage.

To give you an example, if you want the best beef, you might go to your local rancher, then buy fruits and vegetables at a farmer's market, snacks at a nearby Whole Foods, and have a water delivery on top of it all. Similarly, you shop for jurisdictions based on your objectives.

Governments, on the other hand, despise this occurrence and work hard to prevent it in every way they can. "This habit of charging far more than the government's services is actually worth developed through decades of monopoly," says one of my favorite books, "The Sovereign Individual."

But what exactly do they mean by "monopoly" in this context?

So, where are we now? Roughly 3.6 percent of people live outside of the country of their birth. In market terms, this means that only 3.6 percent of people have chosen a "competitor" jurisdiction, effectively rendering the governments of their birth monopolies with more than 96 percent market dominance.

However, once a powerful competitor enters a market with a streamlined method to permit a "trade," the competition evolves.

This is why I've spent the last five years focused on "investment migration," a term used in the jurisdictional arbitrage sector to characterize immigration programs that include investment or contribution as a foundation for obtaining a visa, residency, or passport.

When the free market of competition between jurisdictions is actually formed, there will be two driving factors: the price race to the bottom and the quality race to the top, just as in any capitalistic setting.

But What Is 'Jurisdictional Arbitration'?

Let's clear up some misconceptions regarding this term I've been using a lot.

Jurisdictional arbitrage is not a new phenomenon, and it no longer applies just to wealthy people. However, it did until roughly a decade ago.

Jurisdictional arbitrage was a game played by oligarchs and wealthy businesspeople because it made no sense and did not work for "smaller fish." Why? Because immigration was traditionally employed for only two reasons: to be (physically) closer to opportunities or to escape (flee) danger, dictatorship, and war.

The best chances are no longer limited to Silicon Valley headquarters or New York skyscrapers. The top talent is now hired via Zoom calls, and if COVID-19 accomplished anything, it was the normalization of remote work. All of this has enabled the general public to begin developing a "flag strategy" (based on the bigger concept of flag theory).

Flag theory, as defined by Plan B passport, is the concept of reducing your reliance on any one state by "stacking flags" in jurisdictions that are favorable to you in various ways.

Some of the objectives you might strive to achieve when developing your flag strategy are:

  •  Lowering your tax burden (or no capital gains taxes)
  •  Improving safety and security (FU passports, obtaining liberty)
  • Enhancing the lifestyle and communities (e.g., moving to Austin or Nashville)
  • Creating new experiences (e.g., moving to a surf town)
  • Increasing the cost of life
  • Creating new products in a more favorable regulatory environment
  •  Establishing political stability

What is the appropriate set of flags? There is no "right" that fits all; depending on your goals, wants, and current flags, the set of jurisdictions that suit you must be tailored to you precisely.

Flag theory has likewise undergone significant alterations and is far from stable. The ideal jurisdictions can alter as a result of changes in geopolitics, rules, shifting cultures, and one's personal interests.

When the notion first emerged, it was dubbed "Three Flag Theory," then "Five Flags," and finally "Seven Flag Theory." However, unlike other industry participants, I feel the number of required flags has decreased significantly as a result of Bitcoin.

Cyberspace is the new flag, possibly the most important one, which eliminates the need for many previous flags. The ultimate asset protection measure, SHA-256, reduces the complexity of your flag strategy while simultaneously making expatriation more appealing.

 

Katie The Russian has written a guest post for us. The author's views are solely his or her own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

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