At the beginning of September, El Salvador was the first country in the world to adopt bitcoin as the official currency. However, President Nayib Bukele wants to go even further in the plans for this biggest cryptocurrency. During the last weekend at the presentation of Bitcoin Week, he announced a plan to build the first city that will operate thanks to bitcoin, informs Coindesk.
Bitcoin became the official currency in the country on September 7 this year, but the start itself met with great resistance from the local population. As many as 70% of the population were against the introduction of cryptocurrency.
Nevertheless, this Central American country has been operating on bitcoins for the third month in a row and is definitely not changing its plans. On the contrary. After the local government bought more bitcoins during the price declines, an even bolder goal came.
El Salvador will build the world’s first bitcoin city
Bitcoin City, the first city to be built on bitcoin and covered by bitcoin bonds, is said to be growing near the Conchagua volcano in Fonseca Bay. The location of the city by the volcano is crucial to ensure sufficient energy for cryptocurrency mining, as well as for the city itself. At the same time, the country has been using volcanic energy for a long time to power bitcoin-producing equipment. El Salvador uses large containers full of mining rigs and ASIC computers.
So far, however, these are only the first steps towards expanding the mining network and more environmentally friendly bitcoin mining. The bitcoine-based city itself is then to attract a number of new investors to the country. According to the country’s president, Bitcoin City will be a full-fledged metropolis, where we will find a number of residences, shops, restaurants, as well as an airport and a railway line.
New Age. The world capital will be the epicenter of cryptocurrencies, the mayor will receive a paycheck in bitcoins
The fact that the city will be given a circular shape similar to a bitcoin coin and a square with a huge symbol of this cryptocurrency will also indicate that it will be a magnificent project that will also honor bitcoin itself.
And what can attract potential investors and residents the most? The city will not pay any taxes on income, property or capital gains. The only tax here will be value added tax.
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To build the city, El Salvador wants to issue a tokenized financial instrument – $ 1 billion bitcoin bonds, which will be locked for 5 years and the country will then sell part of its bitcoin reserves to pay dividends to bondholders.
The president wants to use half of the money to build energy and mining infrastructure for bitcoin and the remaining 500 million will go to buy more bitcoins. The first bond should be created in 2022 and the construction of the city will then begin 60 days after securing the finances.
A country with economic problems can become a global financial center
This can be an extremely profitable business for El Salvador. After the issuance of several such bonds, up to $ 5 billion in bitcoin will be withdrawn from circulation for several years, which will fundamentally affect its price on the market. And after 10 years, the annual percentage return should reach 146%.
According to Blockstream Chief Strategy Officer Samson Mow, the price of bitcoin could reach $ 1 million for another 5 years. Then El Salvador would be able to sell the required bitcoin in just two quarters and get $ 500 million back.
And while the country currently has really bold plans with bitcoin that no other government in the world has embarked on, many experts are predicting a great future for this cryptocurrency. According to Mow, El Salvador may become “Singapore of Latin America” and “financial center of the world.”