El Salvador is planning to build the world’s first bitcoin city
El Salvador plans to build the world’s first “Bitcoin City”, initially funded by bitcoin-backed bonds, President Nayib Bukele said on Saturday, in a bid to boost investment in the Central American country’s crypto currency. Doubled your bet to use.
Speaking at an event kicking off a week-long promotion of bitcoin in El Salvador, Mr Bukele said the planned city in the eastern region of La Union would get geothermal energy from the volcano and excluding value-added tax (VAT). No tax will be levied.
At the beach resort of Mijata, dressed in all white and a reversed baseball cap, Mr. Bukele said in English, “Invest here and make all the money you want.” “It’s a completely ecological city that works and is activated by a volcano.”
Half of the VAT imposed will be used to fund bonds issued for the city’s construction, and the other half will pay for services such as garbage collection, Mr Bukele said, estimating public infrastructure would be around 300,000. Bitcoins will cost.
In September El Salvador became the first country in the world to adopt bitcoin as legal tender.
Although Mr. Bukele is a popular president, opinion polls show Salvadorans are skeptical about their love of bitcoin, and its bumpy introduction has fueled protests against the government.
Comparing his plan to the cities founded by Alexander the Great, Bukele stated that Bitcoin City would be circular with an airport, residential and commercial areas, and a central plaza designed to look like a bitcoin symbol from the air. Will happen.
“If you want bitcoin to spread around the world, we must build some Alexandria,” said Mr Bukele, a tech savvy 40-year-old who, in an outspoken joke on Twitter in September, called himself the “dictator” of El Salvador. was declared.
El Salvador plans to issue an initial bond in 2022, Mr Bukele said, suggesting it will happen in 60 days’ time.
Samson Mo, chief strategy officer at blockchain technology provider Blockstream, told the gathering that the first 10-year issue, known as a “volcano bond,” would be valued at $1 billion, backed by bitcoin and a 6.5 percent coupon. He said half the amount would go into buying bitcoin in the market. Other bonds will follow.
After a five-year lock-up, El Salvador will begin selling some of the bitcoin used to fund the bonds to offer investors “extra coupons,” saying the crypto currency’s value will continue to rise strongly.
“It’s going to make El Salvador the financial center of the world,” he said.
The bonds will be issued on the “Liquid Network”, a bitcoin sidechain network. To facilitate the process, the government of El Salvador is working on a securities law, and the first license to operate the exchange will go to Bitfinex, Mr. Mo said.
Crypto exchange Bitfinex was listed as the book runner for the bond on a presentation behind Moe.
Once 10 such bonds are issued, $5 billion in bitcoin will be taken off the market for several years, Mr. Mo said. “And if you get 10 more countries to bond these, that’s half the market cap of bitcoin.”
The “game theory” on Bond gave the first issuer El Salvador an advantage, with Moe arguing, “If bitcoin reaches $1 million at the five-year mark, which I think it will be, they will be in two quarters.” Will sell bitcoins and make up for $500 million.”
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