El Salvador currently has Bitcoin (BTC), which is its only legal tender. There have been many changes, but also some resistance to this move. El Salvador still drives BTC adoption despite protests, market volatility and technical issues.
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In its latest Bitcoin adoption move, 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 El Salvador’s Bitcoin Week conference on Saturday night. The conference is a celebration of Bitcoin’s mainstream adoption in the country.
Partnering with crypto companies Blockstream and BitFinex, Bukele plans to issue $1 billion in tokenized USD-denominated 10-year bonds to fund this project.
The Proposed Bitcoin City
Paolo Ardoino, Bitfinex CTO, says the exchange will support the initiative by launching a securities platform to hold the bonds.
Finex will launch a securities platform that will be the home of ES #bitcoin bonds soon many local foreign digital assets offerings developing new digital asset regulation for the country!
El Salvador, @bitfinex and @blockstreamTogether, we are creating history.
— Paolo Ardoino (@paoloardoino) November 21, 2021
Blockstream Chief Security Officer Samson Mow explained that the possibility of procuring $1 billion Bitcoin bonds is possible.
“With Bitfinex, they have a lot of whales. I don’t see a problem filling up a $1 billion bond.”
Blockstream also announced that $1 billion would be divided into two portions. 500 million of the funds will be used to build energy infrastructure and Bitcoin mining infrastructure. BTC worth $500 million will remain locked up for five year. Mow further stated that after the five-year lock-up period, El Salvador would start selling some of the bitcoin used to fund the bond to give investors an “additional coupon,”
“This is going to make El Salvador the financial center of the world,” he said.
Source: BTCUSD on TradingView.com| Source: BTCUSD on TradingView.com
In addition, the Salvadoran President stated that the bonds would become available in 2022. He intends to locate the Bitcoin City proposed near a volcano. According to him, the goal is to supply energy for both bitcoin mining as well as the city.
Bukele claims that Bitcoin City is a fully-fledged metropolitan area with commercial and residential areas. The city would have shopping centers and restaurants as well as an airport, port, and railway service. Income, property and capital gains taxes would all be exempted. The only tax that residents will be charged is the Value-added Tax (VAT). This tax will go towards paying for the municipality’s bonds, public infrastructure, and city maintenance.
“In BitcoinCity, we will have digital and technological education. Geothermal energy for the entire city and efficient and sustainable public transport” said Bukele.
El Salvador’s Infrastructure Development Projects
When El Salvador made Bitcoin legal tender, the government began to reinvest unrealized profits in several projects.
The government revealed earlier this month that it plans to make 20 schools with some profits from the Bitcoin Trust. The new buildings will help educate residents about cryptocurrency.
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The profits would be used to build a new vet hospital, as President Nayib Bukele announced in October. Some criticised the move and argued that investing in human health facilities was more important.
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