El Salvador is currently the only country in which Bitcoin (BTC) is legal tender. This move has witnessed many developments, as well as some pushback. Amid protests, technical glitches, and inevitable market volatility, El Salvador continues to drive BTC adoption.
Related Reading | There Are More People Using Bitcoin Wallets Than Bank Accounts, Says El Salvador President
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. This conference is a celebration of Bitcoin’s mainstream adoption in the country.
In partnership with crypto firms 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 and soon many local and foreign digital assets offerings developing new digital asset regulation for the country!El Salvador, @bitfinex and @blockstream are making history together.
— Paolo Ardoino (@paoloardoino) November 21, 2021
Blockstream Chief Security Officer Samson Mow also clarified the feasibility of sourcing the $1 billion Bitcoin bonds.
“With Bitfinex, they have a lot of whales. I don’t see a problem filling up a $1 billion bond.”
In an announcement by Blockstream, Mow also said that the $1 billion will be split into two parts. $500 million will go towards building energy and Bitcoin mining infrastructure in the region. The other $500 million worth of BTC will be locked up for five years. 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.
BTC trading at $58.866K | Source: BTCUSD on TradingView.com
The Salvadoran president additionally said that the bonds will be available in 2022. He plans on locating the proposed Bitcoin City near 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 centers, restaurants, a port, an airport, and railway services. There would be no income, property, capital gains, or payroll taxes. Residents would, however, be subject to just 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
After El Salvador adopted Bitcoin as legal tender, the government started reinvesting unrealized profits into several projects.
Earlier this month, the government announced its plans to use some of the profits from its Bitcoin Trust to build 20 new schools. One of the purposes of these new facilities will be to educate locals about how cryptocurrencies work.
Related Reading | New York Mayor Says Cryptocurrencies Should Be Taught In Schools
In October, President Nayib Bukele had announced plans to use the profits for a new veterinary hospital. However, some criticized this move, arguing that investment in medical facilities for humans was more urgent.
Featured image by Shutterstock, Chart from TradingView.com