In 2022, the small island nation of Palau launched a digital residency program using blockchain technology. Known as the Root Name System (RNS), the program is a Palauan ID that will be useful for online workers, including freelancers, as it provides legal entity status, which will be useful for online platforms, and also simplifies tasks such as identity verification, especially for financial transactions.

Palau’s decision to launch the Palau ID system is a step towards diversifying its economy. By implementing this technology, Palau is opening up new opportunities for its digital economy, potentially attracting more people and businesses to participate in its online offerings.

Let’s learn more about what Palau ID offers.

Where is Palau located?

The Republic of Palau is part of the Caroline Islands in Oceania. The islands are located west of Micronesia, north of Western New Guinea and east of the Philippines.

The Palau group includes more than 200 islands, but only eight of them are inhabited: Babeldaob Island - the largest, where the capital is located - Melekeok, and the islands of Koror, Sonsorol, Peleliu, Anguar, Rock and others.

Palau gained independence from the United States of America on October 1, 1994. The US dollar (USD) remains the official currency of the country.

The islands are known for the fact that the seabed and water have a temperature of 29° all year round, which makes them a paradise for divers. The Republic of Palau lives mainly on tourism.

However, the Palau Islands also have an amazing feature: you can apply for a residence permit here without leaving your home, using only your computer and blockchain.

How to buy Palau citizenship?

It should be noted right away that this digital identity card (Palau ID), which will be discussed in this article, is neither a visa, nor a residence permit, nor citizenship, nor does it give the right to obtain Palau citizenship in the future.

The only declared immigration privilege is a one-time opportunity to extend a tourist stay in Palau for a period of more than 180 days. This document confirms the "digital residence" of the state of Palau. It is also not a tax residence.

What is Palau ID?

The Palau ID, officially called Sovereignty-Backed Web3 ID, is a state-issued and globally recognized identification card.

It serves as legal proof of identity in a variety of situations: in everyday activities - business transactions, confirming identity to enter establishments such as bars, using online banking services, shopping at large retailers such as Costco, or subscribing to services such as T-Mobile.

In addition to these standard uses, the Palau ID is particularly useful in digital finance and is attracting cryptocurrency enthusiasts. The platform that supports this identifier, the Root Name System (RNS), highlights its usefulness for traders targeting the international cryptocurrency market. This provides a unique advantage by allowing users to bypass certain restrictions. For example, residents of certain countries, including the United States, who face restrictions on access to unregistered exchanges or certain high-risk investment products can use the Palau ID. This ID allows them to present an identity separate from their country of residence, which can help conceal their place of residence.

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Palau ID Benefits

1. Legal Entity Verification: Palau ID is a legal ID for KYC processes on major financial platforms such as Binance, Kraken, and Coinmama. This makes it easier to access international financial services without the typical verification hurdles. In addition to these platforms, Palau ID can be used for identity verification at Airbnb, Costco Pharmacy, T-Mobile, and even the Department of Motor Vehicles (DMV). It is widely accepted by most crypto exchanges, traditional banks, neobanks, and non-bank payment providers, adding to its global reach.

2. Efficient Tax System – Freelancers benefit from not being taxed on income earned outside of Palau, which is especially beneficial for those earning from other countries. Palau ID holders also report significant financial opportunities. They can open Wise accounts to transfer and receive money in 170 countries and 50 currencies. Additionally, Palau ID has partnered with Interactive Brokers, allowing users to preserve their wealth by storing gold or purchasing securities, which is especially beneficial for individuals in inflation-prone regions.

3. Global Access – The program provides a physical address in Palau, assists with business activities that require a physical location, and helps establish a global presence. Exciting upcoming products will further expand global access for Palau ID holders. Soon, holders will be able to rent land in Palau remotely through the RNS system while receiving a physical address. In addition, a Palau phone number (+680) will be available, with priority access given to Palau ID holders on a first-come, first-served basis.

4. Improved Mobility – The ID is useful for everyday tasks such as checking in to hotels and purchasing train tickets, making travel and daily life more manageable for its holders.

5. Community and Rewards – The RNS platform offers rewards that can be redeemed for unique benefits with partner companies, such as discounts on hotels, flights and car rentals.

How to apply for a Palau ID?

The Palau ID application process is a simple online process. You don’t even need to travel or go to the embassy to apply for the card, as everything is done through the website.

Step-by-step instructions below.

Step 1 – Apply online

Go to the RNS website and fill out the application form.

Step 2 – Pay the government fee

A fee is required to obtain the permit.

Three digital residency options are available in Palau, with different prices and durations. You can choose between a 1-year residency for $248, a 5-year residency for $1,039, or a 10-year residency for $2,039.

You can choose between two different payment methods: credit card or Bitcoin.

Step 3 – Quick Verification and Approval

After your ID and Anti-Money Laundering (AML) checks are verified, your ID will be processed and sent to you.

Step 4 – Receive your ID

Once your application is approved, you will receive two documents:

1. A physical ID, which is your official government-issued ID.

2. A digital ID provided as a non-fungible token (NFT) on the blockchain. This serves as your official digital identification for legal and verification purposes.

This simple process makes obtaining a Palau ID convenient for everyone, no matter where you are.

Palau ID Outlook

It is predicted that by 2025, Palau ID holders will receive the following benefits:

- Foreign Business Registration;

- Access to Palau's telecommunications network (phone number, Internet services);

- Purchase of a private network (VPN) in Palau;

- Buying and selling real estate;

- Insurance subscription;

- Access to a digital broker;

- Digital nomad registration;

- Digital notarization;

- Mail routing from Palau to your country of residence.

Palau ID is an important innovation that allows people to enter the global digital market. It is a visionary project that demonstrates how governments can use blockchain technology to improve their services and economy.

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