It’s a new step in the crypto-revolution: El Salvador plans to create the world’s first “Bitcoin City. An ambitious project that will be financed by issuing $1 billion in Bitcoin-backed bonds.
Bitcoin, the official currency in El Salvador
Since September 7, El Salvador has been using bitcoin as its official currency, along with the US dollar. The small Central American country thus becomes the only nation in the world where Bitcoin is legal tender. But it doesn’t stop there. At the end of Bitcoin Conference Week, an event designed to promote bitcoin to the citizens of El Salvador, President Nayib Bukekle, a big cryptocurrency lover, announced the creation of a city dedicated to the first of the cryptocurrencies .
A city dedicated to Bitcoin
The city will be located in the east of the country, near the Conchagua volcano, which will provide its energy. In Bukele’s words, it will bea “completely ecological” city thanks to the use of geothermal energy. The volcano should also be able to power energy-intensive mining activities. In addition, the city will unfold in a circular fashion, “like the cities founded by Alexander the Great,” said the president. It will be a full-fledged metropolis with residential and commercial areas, a railway network, a port and an airport. At its center, a plaza will be designed to look like a Bitcoin symbol from the sky.
Moreover, according to Bukele, the residents of the city will not be subject to any tax except the VAT at 10%. Half of the revenue from this tax will go back to the city to keep it running, while the other half will be used to pay off the debts incurred to build the city.
Indeed, to finance the construction of the city, El Salvador will issue a $1 billion bond with Blockstream, a company that provides the blockchain technology on which cryptocurrencies are based. 50% of these funds will be converted into Bitcoins, while the rest will be used for infrastructure and Bitcoin mining. For the issue, the government selected cryptocurrency exchange Bitfinex.
New step in the crypto-revolution in El Salvador: president Nayib Bukele wants to build “Bitcoin City”, a new city powered by energy from a volcano and financed by cryptocurrency debt.
El Salvador residents concerned
Meanwhile, the IMF has warned El Salvador about the risks of Bitcoin: “Given the high volatility of Bitcoin, its use as an official currency generates significant risks to consumer protection, to the integrity of the financial system and to financial stability. Bitcoin should not be adopted as an official currency. “
Moreover, according to an article in Le Monde three quarters of the country’s inhabitants fear instability and inflation caused by the volatility of this currency. The establishment of this city is likely to be controversial, to say the least, for the Salvadorans.
It remains to be seen whether this project will see the light of day, and if so, whether it will encourage the creation of similar projects throughout the world!