El Salvador is currently the only country where Bitcoin (BTC) is legal tender. This move has brought about a lot of developments as well as some setbacks. Amid protests, technical glitches, and inevitable market volatility, El Salvador continues to push the adoption of BTC.
Related reading | There are more people using Bitcoin wallets than bank accounts, says the President of El Salvador
In its latest move towards introducing Bitcoin, 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 evening. This conference is a celebration of the mainstream adoption of Bitcoin in the country.
In partnership with crypto companies Block stream and BitFinex, Bukele plans to issue ten-year bonds in the form of tokenized USD-denominated bonds totaling US $ 1 billion to fund this project.
The planned Bitcoin city
Bitfinex CTO Paolo Ardoino says the exchange will back the initiative by launching a securities platform to hold the bonds.
Finex will launch a securities platform that will be home to ES # Bitcoin bonds and soon many local and overseas digital asset offerings developing new digital asset regulation for the country!
El Salvador, @bitfinex and @blockstream are making history together.
– Paolo Ardoino (@paoloardoino) November 21, 2021
Samson Mow, Blockstream’s chief security officer, also clarified the feasibility of raising the $ 1 billion bitcoin bonds.
“With Bitfinex, they have a lot of whales. I don’t see any problem replenishing a $ 1 billion bond. “
In an announcement from Blockstream, Mow also said the $ 1 billion would be split in two. US $ 500 million will be used to build energy and bitcoin mining infrastructure in the region. The other $ 500 million BTC will be banned for five years. Mow went on to explain that after the five-year lock-up period, El Salvador would begin selling some of the bitcoins used to fund the bond in order to give investors an “additional coupon”.
“This will make El Salvador the financial center of the world,” he said.
BTC trading at $ 58,866K | Source: BTCUSD on TradingView.com
The Salvadoran President also said the bonds will be available in 2022. He plans to locate the proposed Bitcoin City near a volcano. The idea, he said, is to power both the city and bitcoin mining.
According to Bukele, Bitcoin City will be a full-fledged metropolis with residential and commercial areas. There would also be shopping malls, restaurants, a port, an airport, and rail links. There would be no income, wealth, capital gains or wage taxes. However, residents would only be subject to Value Added Tax (VAT). This tax is used to pay for community loans, public infrastructure, and city entertainment.
“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 legal tender, the government began reinvesting unrealized profits in several projects.
Earlier this month, the government announced its plans to use a portion 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 | The Mayor of New York says cryptocurrencies should be taught in schools
In October, President Nayib Bukele announced that the profits would be used for a new veterinary clinic. However, some criticized this move, arguing that investing in medical facilities is more urgent for people.
Featured image from Shutterstock, chart from TradingView.com