Bitcoin lets anyone live and thrive wherever they want, ending government monopoly on our jurisdictions.

This is an opinion editorial by Katie The Russian, CEO of Plan B Passport and co-host of the “The Bittersweet Podcast.”

Because you are born into a nonconsensual monopoly brought upon you by the government, you have no real options — no real choices to pick the services that you want to receive from the State, the taxes you are willing to pay for it or the regulatory environment under which you decide to operate.

Unless, you decide to enter the game of jurisdictional arbitrage and limit your dependency on any one particular state.

What is jurisdictional arbitrage, you may ask. It is usually defined as a practice of taking advantage of the regulatory differences between legal jurisdictions. “Everything which is not forbidden is allowed,” as the old saying goes. In many ways, this is what jurisdictional arbitrage is built on. You learn the rules of the game in multiple jurisdictions, pick the one that serves you best for a particular purpose and then decide how to play it to your benefit.

To give you a simple example: In order to get the highest-quality food, you might want to hit your local rancher for the best beef, then you buy fruits and veggies at a farmer’s market, snacks at a nearby Whole Foods and get a water delivery on top of it all. In the same way, you shop for jurisdictions according to your goals.

However, governments do not like this phenomenon, and try to prevent it in any way that they can. Quoting from one of my favorite books, “The Sovereign Individual”: “This habit of charging far more than government’s services are actually worth developed through centuries of monopoly.”

But what do they mean by “monopoly” here?

Well, this is where we currently stand: Only about 3.6% of people live outside of the country of their origins. Applying market terms, that means that only 3.6% of people have turned toward a “competitor” jurisdiction, making these governments of their birth effective monopolies, with more than 96% market domination.

But once a strong competitor comes on a market’s radar with a streamline process to enable a “trade,” this is where the competition evolves.

This is why I’ve spent the last few years focusing on “investment migration,” the term we use in the jurisdictional arbitrage industry to describe the immigration programs that involve investment or donation as a basis for acquiring a visa, residency or a passport.

Once the free market of competition between jurisdictions is truly established, just like in any capitalistic environment, there will be two driving factors: the price race to the bottom and the quality race to the top.

But What Exactly Is ‘Jurisdictional Arbitrage’?

Let’s clarify a few misconceptions about this term I’ve been throwing around a lot.

Jurisdictional arbitrage is by no means a new phenomenon and these days, it doesn’t only apply to highly-wealthy individuals. However, up until about a decade ago, it did.

Jurisdictional arbitrage was a game played by oligarchs and highly-successful business people simply because it didn’t make sense and didn’t work for “smaller fish.” Why? Because typically, immigration was used for only two reasons: to be (physically) closer to opportunities or escape (flee) danger, dictatorship and war

Nowadays, the best opportunities no longer solely exist in Silicon Valley offices or New York skyscrapers.. The best talent is now hired via Zoom calls and, if something good came out of COVID-19, it has been the normalization of remote work. All of this has made it possible for the general population to start building a “flag strategy” (based on the larger idea of flag theory).

At Plan B passport, we define flag theory as a concept of limiting your dependency on any one particular state by “stacking flags” in jurisdictions that are beneficial for you in various ways.

Some of the goals you may try to pursue in building you flags strategy are:

• Paying lower taxes (or no capital gains taxes)
• Improving safety and security (FU passports)
• Achieving freedom
• Improving lifestyle and community (e.g., moving to Austin or Nashville)
• Building new experiences (e.g., moving to a surf town)
• Improving cost of living
• Innovating in a more favorable regulatory environment
• Finding political stability

What is the right set of flags? There is no “right” that suits all, depending on your goals, needs and the flags you currently hold, the set of jurisdictions that suits you needs to be customized for you, specifically.

Flag theory has also been undergoing a lot of changes and is not something steady. Due to changes in geopolitics, regulations, evolving cultures and one’s own priorities, the perfect jurisdictions can change as well.

When the concept was born, people referred to it as “Three Flag Theory,” which turned into Five Flags and later Seven Flag Theory. However, unlike other industry players, I believe the number of needed flags is much lower now, thanks to Bitcoin.

Cyberspace is the new flag, arguably the most important one, which takes away the necessity of many earlier flags. SHA-256 is the ultimate asset protection mechanism, which lowers the complexity of your flag strategy, while also making expatriation more attractive.

This article is the second in a series inspired by the limitations imposed by governments on their citizens and the need for Bitcoiners to find sovereignty through unrestricted, global travel. The next entry in this series explores how Bitcoiners develop their flag strategies.

This is a guest post by Katie The Russian. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.