The virtual currency bitcoin continues surging to new highs as a frenzy of investors get in on the action. WSJ's Paul Vigna explains what you need to know, and how to invest should you want to join the mania. Photo: Alexander Hotz/The Wall Street Journal.

Bitcoin 101: What It Is, How to Invest

THEY have become super-rich virtually overnight thanks to cryptocurrencies. And now, dozens of entrepreneurs are preparing to move to Puerto Rico to build their version of crypto-utopia, a new “city” that will be their ultimate playground.

After spending more than a year searching for the perfect spot, the businesspeople are selling their homes and cars in California and heading for Old San Juan. The top attraction of the Caribbean island is the ability to avoid paying taxes on their burgeoning fortunes.

There are no federal personal income taxes, no capital gains tax and decent business taxes for Americans in Puerto Rico. It essentially operates its own parallel tax system and is the perfect haven to continue to grow their riches, The New York Times reports.

As a bonus, it’s also pretty stunning, with picture perfect beaches and a colourful culture.

More than 3.7 million people call the island home, which shares common defence, stock market, currency and citizenship with the US. Unfortunately it has been plagued with economic issues for years and is currently a staggering $91 billion in debt.

The group first saw the opportunity to move in after Hurricane Maria hit last September, leaving widespread destruction in its wake and creating the option of “rebirthing” the region.

Convinced that blockchain — the technology that underpins the notorious bitcoin — could reinvent society, they hope to create a new city where all the money will be virtual.

At first they planned to call it “Puertopia”, but after hearing that means “eternal boy playground” in Latin they may change the name to Sol.

The group is headed by Brock Pierce, the director of the Bitcoin Foundation, and co-founder of the start-up block.one, who has around $US6.5 billion ($A8.2 billion) worth of the virtual currency EOS.

Mr Pierce, 37, a former child actor and professional gamer, landed in Puerto Rico in December and insists the group has grand intentions.

“I’m worried people are going to misinterpret our actions,” Mr Pierce said. “That we’re just coming to Puerto Rico to dodge taxes.”

Instead, he highlights his bid to create a charitable token called ONE with $US1.2 billion ($A1.5 billion) of his own money.

The New York Times shared details of how Mr Pierce, who often sleeps just two hours at night, has a very spiritual presence and was spotted kissing an old man’s feet, hugging a tree for 10 minutes and blessing a crystal.

Together those hatching the plan will take over hotels and even a museum and have been discussing whether to buy the Roosevelt Roads Naval Station, which has an adjacent airport. It’s an exciting time for the group. It’s like they have more money than they know what to do with.

“We’re going to make this crypto land,” Bryan Larkin, 39, chief technology officer of Blockchain Industries, who has poured about $US2.5 billion ($A3.17 billion) into bitcoin, said.

Reeve Collins, 42, has raised over $US20 million ($A25 million) from his app store for the blockchain, BlockV, also jumped at the chance to join in. The co-founder of Tether, which backs cryptocurrency, he has tokens worth about $US2.6 billion ($A3.3 billion).

“When Brock said, ‘We’re moving to Puerto Rico for the taxes and to create this new town,’ I said, ‘I’m in,’” Mr Collins said. “Sight unseen.

“ ... No, I don’t want to pay taxes. This is the first time in human history anyone other than kings or governments or gods can create their own money.”

Another businessman to make the move to Puerto Rico is Halsey Minor, the founder of CNET and owner of a new blockchain company called Videocoin.

“While it (the hurricane) was really bad for the people of Puerto Rico, in the long term it’s a godsend if people look past that. You’ve never seen an industry catalyse a place like you’re going to see here,”

So far, the local government is on board, with the governor set to speak at the blockchain summit conference called Puerto Crypto next month.

However, the move is concerning to some including hedge fund manager Robb Rill, based in Puerto Rico and who runs a social group for those taking advantage of the tax incentives.

“They call me up saying they’re going to buy 250,000 acres so they can incorporate their own city, literally start a city in Puerto Rico to have their own crypto world,” said Mr Rill. “I can’t engage in that.”