Closing off a week-long promotion of Bitcoin in El Salvador, Bukele said the city planned in the Eastern region of La Union would get geothermal power from a volcano and levy no taxes except for VAT.
El Salvador President Nayib Bukele has announced plans to build the world’s first “Bitcoin City”. The city will use bitcoin-backed bonds to fund its initial construction, with the hope of then establishing bitcoin as a reliable investment option.
The president of El Salvador, Nayib Bukele said at a conference or bitcoin held this week in the eastern area of La Union that the city would provide geothermal power from a volcano and would levy taxes only on value-added tax.
“Invest here and make all the money you want,” Bukele said speaking in English. He was at Mizata Beach Resort.
Half of the funds levied will be used to help finance the bonds issued for building the city and its services, while the other half will go towards financing public infrastructure. This would cost about 300,000 bitcoins.
El Salvador has made history by officially adopting Bitcoin as legal tender.
President Salvador Bukele is popular, but it’s been difficult for his Bitcoin to make a smooth state. There have been protests against the government because of this.
Bukele described his vision for Bitcoin City as circular in design. The city would be situated next to an airport, with residential and commercial zones in the middle. To provide a clear view of the project’s layout from above, Bukele suggested designing the plaza in the shape of a bitcoin.
Building Alexandria is one of the ways young, tech-savvy entrepreneurs in El Salvador believe they can help bitcoin’s growth. Julio Bukele, a 40-year-old who proclaims himself “dictator” on Twitter and even recreated Salvadoran currency in an online game, said: “If you want bitcoin to spread over the world we should build some Alexandrias”
El Salvador is trying to issue bonds in 60 days’ time. President Bukele suggested it will be in 2022, however, there is no exact date yet. Samson Mow, Chief Strategy Officer of Blockchain Technology Provider Blockstream, told the gathering the first 10-year issue with his company’s new cryptocurrency, known as “volcano bonds,” will be worth $1 billion. The issuers of this crypto are eligible to receive 6.5% in interest payments twice a year in bitcoins.
“Half of the sum would go to buying bitcoin on the market,” he said. “Other bands would follow.”
El Salvador has been using bitcoin as a funding source for the country’s five-year bond and it’s now planning to sell some of these holdings. The value of cryptocurrencies is likely to rise so we’ll offer investors an ‘additional coupon’. “This is going to make El Salvador the financial center of the world,” he further added.
The bond can be issued on the liquid network, which is a bitcoin sidechain network
To help facilitate the process, El Salvador’s government is working on a securities law, and the first license to operate an exchange would go to Bitfinex.
Bitfinex was listed as the book runner for the bond on a presentation behind Mow.
“If 10 such bonds are issued, bitcoin worth $5 billion will not be in circulation for years to come,” Mow said.
“And if you get 100 more countries to do these bonds, that’s half of bitcoin’s market cap right there.”
The bonds gave El Salvador’s first issuer an advantage, and Mow argues that if the value of bitcoin reaches $1 million within five years, they will be able to sell it and ‘recoup’ the money they lost.