El Salvador announces the first Bitcoin city in the world
Bitcoin city – El Salvador is currently the only country where Bitcoin is the legal means of payment. This movement has witnessed many developments as well as some rejections. Amid protests, technical errors, and the inevitable volatility of the market, El Salvador continues to stimulate the adoption of BTC.
In the latest move to adopt Bitcoin yet, the Central American country plans to build a city based on the world’s largest cryptocurrency. President Nayib Bukele announced the Bitcoin City initiative at the Bitcoin Week conference in El Salvador on Saturday night. This conference is a celebration of the main adoption of Bitcoin in the country.
In partnership with crypto companies Blockstream and BitFinex, Bukele intends to issue $1 billion in 10-year bonds, denominated in USD, to finance this project.
The proposed Bitcoin City
Paolo Ardoino, the CTO of Bitfinex, says the exchange will support the initiative by launching a securities platform to hold the bonds.
Blockstream chief security officer Samson Mow also clarified the feasibility of supplying $1 billion in Bitcoin bonds.
“With Bitfinex, they have a lot of whales. I don’t see a problem filling up a $1 billion bond.”
In a Blockstream announcement, Mow also said that the billion dollars will be divided into two parts. First, $500 million will be allocated for the construction of energy and Bitcoin mining infrastructure in the region. The other $500 million will be locked for five years. Mow also said that after the five-year lock-up period, El Salvador will start selling part of the Bitcoin used to finance the bond to offer investors an “additional coupon”.
“This is going to make El Salvador the financial center of the world,”
The Salvadoran president also said that the bonds will be available in 2022. He intends to establish the proposed Bitcoin city next to a volcano. The idea, he said, is to provide energy for both the city and Bitcoin mining.
According to Bukele, Bitcoin City will be a full-fledged metropolis with residential and commercial areas. It would also have shopping malls, restaurants, a port, an airport, and rail services. There would be no income, property, capital gains, or payroll taxes. However, residents would only be subject to Value Added Tax (VAT). This tax will be used to pay the obligations of the municipality, public infrastructure, and maintenance of the city.
“In #BitcoinCity we will have digital and technological education. Geothermal energy for the entire city and efficient and sustainable public transport” said Bukele.
Infrastructure development projects in El Salvador
After El Salvador adopted Bitcoin as a legal means of payment, the government began reinvesting unrealized profits in several projects.
Earlier this month, the government announced plans to use some of the profits from the Bitcoin Trust to build 20 new schools. One of the purposes of these new facilities will be to educate locals about how cryptocurrencies work.
In October, President Nayib Bukele announced plans to use the profits for a new veterinary hospital. However, some have criticized the move, arguing that investment in medical institutions for people is more urgent.
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