El Salvador plans to construct the first Bitcoin City across the globe that is initially funded by the Bitcoin backed bonds as said by the El Salvador President Nayib Bukele on Saturday, doubling down on his bet to use the digital currency to navigate investment in the Central American Country.
Discussing at an event closing promotion which was a week-long of BTC in El Salvador, Mr. Bukele asserted the city intended in the eastern region of La Union would receive geothermal power from a volcano and not impose any taxes except for VAT (value added tax). The government of El Salvador is already operating a pilot Bitcoin City mining venture at another geothermal power plant which is beside the Tecapa volcano. Bukele said,
“Invest here and make all the money you want. This is a fully ecological city that works and is energized by a volcano.”
Half of the value added tax imposed would be utilized to fund the bonds released to construct the city, and the other half would pay for the services like garbage collection as said by Mr. Bukele, predicting the public infrastructure would cost nearly 300,000 BTC.
In September, El Salvador became the first nation across the globe to accept Bitcoin as a legal tender. Even though Bukele is a famous president, as per the opinion poll, Salvadorans are doubtful of his love of BTC, and its hiked introduction is the reason for protests against the government.
Comparing his plans to cities that were founded by Alexander the Great, Bukele said that Bitcoin City would be round with a residential, airport, and commercial area, and offer a central plaza that has been created to look like a BTC symbol from the air. He said,
“If you want Bitcoin to spread over the world, we should build some Alexandria”
El Salvador decided to release the initial bonds in 2022, as stated by Mr. Bukele, recommending it would be in 60 days’ time. Samson Mow, who is the chief strategy officer of Blockstream which is a blockchain technology provider, told the masses the first 10-year issue, called the “volcano bond”, would be worth $1 billion, which is backed by Bitcoin and carrying a coupon of 6.5%. Half of the total sum would go to purchasing Bitcoin on the market, he mentioned. Other bands would follow the rest.
After a span of five years, El Salvador would initiate selling some of the BTCs in its Bitcoin City project that is used to fund the bond to offer investors an “additional coupon”, Mow stated, positing that the price of the digital currency would prevail to increase robustly. He said,
“This is going to make El Salvador the financial center of the world.”
The bond for the Bitcoin City El Salvador would be released on the “liquid network” which is a Bitcoin sidechain network. To navigate the process, the government of El Salvador is working on the securities law, and the initial license to function a digital currency exchange would be received by Bitfinex, as stated by Mr Mow.
The Bitfinex crypto exchange was listed as a book runner for a bond on a presentation behind Mow. Once 10 similar bonds were released, $5 billion in BTC would be taken off the crypto market for many years, Mr. Mow said.
“And if you get 10 more countries to do these bonds, that’s half of Bitcoin’s market cap right there.”
The “game theory” on the bonds offered the first issuer El Salvador and benefit, Mow argued, stated,
“If Bitcoin at the five-year mark reaches $1 million, which I think it will, they will sell Bitcoin in two quarters and recoup that $500 million.”
Conclusion
Since El Salvador has accepted Bitcoin as a legal tender, it has been in the headlines. And now, the President of El Salvador Nayib Bukele has announced his plans to create the first Bitcoin City. He has also shared his plans on how he wishes to proceed which has been mentioned in this article. Other than El Salvador, there is also news about Bitcoin City Slovenia. Slovenia, which is among the smallest countries in the EU, has stated that the largest shopping center in the nation, which is dubbed as BTC City, is ready to turn into a complete city of Bitcoin.
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