Bitcoin City in El Salvador
El Salvador is currently the only country where Bitcoin (BTC) is legal tender. Despite some protests, the country continues to promote the adoption of BTC. This time, President Nayib Bukele announced the creation of Bitcoin City, a city entirely dedicated to the most famous of cryptocurrencies.
The president envisions Bitcoin City becoming a fully functional city with residential areas, shopping malls, restaurants, a port, and “it will all revolve around Bitcoin. In addition, residents will only be subject to value added tax (VAT), which Bukele says will be used to pay municipality charges and town maintenance.
The initiative was first announced by Mr Bukele during El Salvador’s Bitcoin Week conference, which aimed to celebrate the adoption of BTC in the country and increase citizen buy-in. According to the president:
“Within Bitcoin City, we will have a digital and Bitcoin-oriented education. Geothermal energy for the whole city and efficient and sustainable public transport. “
Indeed, the President of El Salvador had declared last summer that he was going to use the country’s volcanoes to extract BTC via “100% clean, 100% renewable and emission-free energy”.
BTC bonds to finance the project
In order to fund the project, El Salvador could issue Bitcoin-denominated bonds through Blockstream’s Liquid Network. This is because the government of El Salvador has struck a deal with the Bitfinex exchange and the Blockstream company to issue bonds worth $ 1 billion. In a Twitter ad:
“El Salvador is ready to issue BTC bonds to accelerate hyperbitcoinization and set up a new Bitcoin-centric financial system. ”
Blockstream specifies that the funding will be divided into two parts. $ 500 million will be spent on building infrastructure. The second part, worth $ 500 million, will be blocked for five years.
The Salvadoran president also specified that the bonds would be available during 2022.
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About the author: Florent David
Engaged in the crypto ecosystem since 2017. I am particularly interested in decentralized finance (DeFi), Ethereum 2.0 and non-fungible tokens (NFTs).
All articles by Florent David.