The president of El Salvador, the first country to adopt Bitcoin as legal tender last 7 September, has announced plans to build the world’s first Bitcoin City in the country.
How it started. How it’s going #Bitcoin pic.twitter.com/m0yqVVpbfc
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Summary
The Bitcoin City of El Salvador
Nayib Bukele said that this new city will have no property, income or capital gains taxes. Its infrastructure and other costs will be funded by a sales tax and money raised from bond issues.
It would be a carbon-neutral city that will be “powered” primarily by geothermal energy from volcanoes.Â
“Invest here and make all the money you want. This is a fully ecological city that works and is energized by a volcano”,
the president said during an event.
The Bitcoin bond
A $1 billion Bitcoin bond will be issued to finance the project. Bukele also announced that El Salvador will partner with Blockstream, a leading company in blockchain technology for Bitcoin services, to complete this operation, using its network to issue the said bond.
The $1 billion expected to be raised through the issuance of the bond is expected to be divided into two parts.Â
Samson Mow, Chief Strategy Officer of blockchain technology company Blockstream, explained:
“The bonds will be US dollar-denominated 10-year bonds, with half the funds converted to bitcoin and the other half used for infrastructure and bitcoin mining”.
The country will have to pass an ad hoc securities law to allow Bitfinex, the exchange selected to financially lead this operation, to arrange precisely for the bond issue. The issue is expected to take place by the end of January 2022.
Bitcoin increasingly popular in El Salvador
After some initial problems, related to the cryptocurrency app Chivo, the first months of Bitcoin adoption in El Salvador can definitely be called a success.
Between September and October, Salvadorans abroad sent around $32 million in remittances home using cryptocurrencies through the Chivo wallet, according to a bulletin issued by the president of the country’s central bank. The figure represents about 2.5% of all remittances sent in those months.
Bitcoin is also used to make small purchases, and President Bukele said in recent days that the country has now become the world’s leading user of Bitcoin.
Assuming that the value of the cryptocurrency will continue to grow consistently, Blockstream’s CSO said he was confident that the entire project:Â
“will make El Salvador the financial centre of the world”.
