El Salvador plans to build the world’s first Bitcoin City, funded with bitcoin-backed bonds. We will tell you how the city’s economy will work.
El Salvador’s President Nayib Bukele said that you will double your bet to take advantage of cryptocurrency to boost investment in the Central American country.
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Bukele compared his plan to create the first Bitcoin city with the cities founded by Alexander the Great. The President of El Salvador said that Bitcoin City will be circular, It will feature an airport, residential and commercial areas, and a central plaza designed to look like a bitcoin symbol from the air.
Despite Bukele’s plans, opinion polls show that Salvadorans are skeptical about bitcoin, and the news of Bitcoin city it has fueled protests against the government.
What the economy of Bitcoin City will be like
To start the economy from Bitcoin City, El Salvador plans to issue the initial bonds in 2022Bukele said, suggesting it would be in 60 days.
The first Bitcoin City It will be developed in the eastern region of La Unión and will move with geothermal energy, obtained from a volcano, and will not charge any tax, except for the value added tax (VAT).
“Invest here and earn all the money you want (…) This is a totally green city that works and is energized by a volcano, “said Bukele. At the meeting, Samson Mow, the technology provider’s chief strategy officer blockchain Blockstream, said the first 10-year stage, known as the “volcanic bond“It would be worth a billion dollars, will be backed by bitcoin and with a coupon of 6.5%.
Half of this sum will go to the purchase of bitcoins on the market and after a five-year lockdown, El Salvador will start selling some of the bitcoins used to finance the bond to give investors an “additional coupon,” explained Mow, who predicted that the value of the cryptocurrency will continue to rise strongly.
“This is going to make El Salvador the financial center of the world”said Mow. The bond 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 an exchange would go to Bitfinex.
Once 10 of those bonds are issued, $ 5 billion worth of bitcoins would be withdrawn from the market over several years. “And if you can get 100 more countries to make these bonds, that’s half the market capitalization of bitcoin. If bitcoin at the five-year mark hits $ 1 million, which I think it will, they’ll sell bitcoin in two quarters and get that $ 500 million back, “Mow said.
According to what was announced by President Bukele, we are 60 days before the development of Bitcoin City begins, the first city sustained by a cryptocurrency, powered by the energy of a volcano and without taxes.