Prospera startup city in Honduras offers low taxes and biotech

A new kind of city is taking shape on the Caribbean island of Roatan, off the coast of Honduras. Called Prospera, it is a privately run special economic zone backed by some of the world's richest tech billionaires, including Palantir's Peter Thiel and OpenAI's Sam Altman. The project aims to create a libertarian 'start-up city' with its own civil laws, a very low tax regime, and a heavy reliance on cryptocurrency. Prospera is part of a broader movement known as 'network states', where digital communities try to form new societies from scratch on physical territory.

Prospera was originally 58 acres and has since expanded to over 1,000 acres. It operates under a legal framework called ZEDE (Zonas de Empleo y Desarrollo Económico), which was created by the Honduran government. The city has its own legal system, and residents must agree to abide by its rules. Inside, a cash machine converts bitcoins to dollars, and cryptocurrency is described as the lifeblood of the community. The project has received nearly $200 million in investment from Silicon Valley figures who believe in granting entrepreneurs as much freedom as possible.

Currently, around 200 people live in Prospera, many of them foreigners. The city is still a work in progress: food deliveries and waste collection come from the rest of the island. Some residents see themselves as pioneers. One Ukrainian-born resident, Evan, said he always wanted to build a city and that moving there is a way to invest his time and money. A Honduran filmmaker and comedian who now lives in Prospera compared the founders to 'that guy you knew in middle school who had a really cool treehouse', but added that he would rather be in the hands of well-meaning billionaires than the corrupt governments Honduras has had for 200 years.

A major focus of Prospera is experimental biotechnology. Companies based there have been implanting data chips into people and offering treatments to reverse aging. These procedures are not legal in most other countries. Proponents argue that cutting red tape allows pioneering companies to thrive and that individuals have a 'right to try' experimental treatments, even if there is risk. Critics accuse them of endangering patients.

Prospera has been controversial within Honduras. It was set up with the help of a right-wing government, but a subsequent left-wing prime minister repealed the ZEDE legislation, leading Prospera to launch an $11 billion lawsuit against the state. That lawsuit is unaffordable for a poverty-stricken country. Supporters of Prospera are now back in power. Some Hondurans accuse the project of being neo-colonial, pointing to a history of multinational companies owning land in Central America with poor outcomes for local people. The technical secretary of Prospera, effectively its mayor, insists there is actual state presence in the city to enforce labour, environmental, and medical ethics standards. He believes the ZEDEs will bring Honduras into a new stage of economic growth.

Next to Prospera lies the small fishing village of Crawfish Rock. Some residents fear the project will swallow up their land and force them out, while others work for Prospera and see it as an economic opportunity. The ultimate success of the start-up city will depend on whether enough people buy into its vision and actually move there.