El Salvador’s own progression of Bitcoin adoption is not slowing down. This time, President Nayib Bukele has announced plans to build a Bitcoin City. Special bonds are to be issued for this purpose, which will be based on the king of cryptocurrencies.
A venture like never before
While the International Monetary Fund continues to make critical reports about the adoption of Bitcoin as legal tender in El Salvador, the country, unperturbed, is focusing its energies on developing the path taken so far. Recall that El Salvador in September this year, became the first country in the world where you can use Bitcoin in every aspect of daily life. The country has also set its sights on its own cryptocurrency mines, harnessing the thermal energy of a volcano for carbon-free Bitcoin mining.
The country’s charismatic president’s latest idea is Bitcoin City, a city whose idea will be entirely based on Bitcoin, of course. Bitcoin City would be built in the La Union region, in the east of the country. It would be ecological in nature, as similar to the mining of the king of cryptocurrencies, thermal energy would be used to power the newly created space. The city would be built on a circular plan, which by design is a reflection of the coin. In its area there will be housing estates, shopping malls, office buildings and even an airport. The central point will be a square, which from a bird’s eye view will resemble the Bitcoin symbol.
Bonds in BTC and zero tax
However, it is not so much the idea of the city itself that raises great emotions, as the form of investment financing. According to Nayib Bukele’s plan, bonds are to be issued, whose ten-year issue is to be equal to the value of 1 billion dollars. They are called “volcano bonds”, and their interest rate will be 6.5%. Half of the amount raised from the sale, is to be used to purchase Bitcoin. After five years, some of them will be sold so as to begin the process of repaying investors.
Right now, El Salvador is working on a securities law to allow the issuance of “volcano bills”. These are to be launched on the Bitcoin side-chain, and the Bitfinex exchange will most likely be responsible for the technical support of this issue. The total investment, according to Nayib Bukele’s estimates, is expected to be as much as 300,000 BTC.
An interesting and at the same time very emotional solution is the fact that the residents of Bitcoin City will be exempt from tax obligations. The only levy they will be forced to pay will be VAT. Half of the tax will be used to repay previously obtained bonds, and the other half for cleaning the city.
The implementation of the idea will take place as soon as the legal issues are settled, and it is expected to start in the first quarter of 2022.